PM: Labour's quake policy a 'blank cheque'

Photo / Brett Phibbs

Prime Minister John Key has dismissed Labour's Canterbury earthquake policy package as "a blank cheque" that would prove "tremendously expensive".

However, Mr Key still wouldn't rule out his Government providing financial guarantees to the local insurance industry if it remains significantly without reinsurance for too long - a position similar to that revealed by Labour today.

Labour earlier today said it would actively "intervene" to kick start the Christchurch recovery, including entering the land development and insurance markets if it felt that was necessary.

The package included a plan to acquire 1500 sections and on-sell them at cost to Red Zone residents to try and control soaring prices for land suitable for rebuilding.

Labour would also "resolve the insurance standoff and, as a last resort, be prepared to intervene in the insurance market on a short-term basis to get the market functioning again".

Leader Phil Goff later confirmed that could include the Government becoming the insurer of "last resort" - essentially underwriting local insurance companies who could not secure reinsurance.

However, Mr Goff reiterated that Labour preferred to see a private sector solution and would only consider entering the market if insurance issues delayed rebuilding by a further six, 12 or even 18 months.

Mr Key, however, said Labour's plan was ill informed and costly.

"If the Government walks in today and writes a blank cheque it won't be a short term fix it could be tremendously expensive and it will be very difficult to exit."

"There is no free lunch here if we want to be the insurer of last resort right here as we stand today everyone needs to understand what we're signing up for."

Mr Key's Earthquake Recovery Minister Gerry Brownlee last week said the National Government would consider becoming the insurer of last resort as an option if rebuilding was severely delayed by the insurance issue.

This afternoon, Mr Key was not ruling that out.

"My view having assessed it all is that we need try and work with the private sector providers and if in the end having tried everything, that all fails then we'll come back and have another look at it but I'd rather give it a bit more time."