Economy can cope with $3b quake bill

The cost of the Kaikoura earthquake is estimated to be between $2 billion and $3b, Treasury secretary Gabriel Makhlouf has confirmed.

He was one of a number of officials that fronted to MPS yesterday, across select committees – many with an earthquake focus.

But despite the cost reaching into the billions, there would be minimal impact on economic activity overall, Makhlouf said.

The $2b to $3b figure was the direct fiscal cost of the earthquakes and did not take into account future government decisions about the rebuild.

Some of the costs would be offset by the repair and rebuild, he told MPS sitting on Parliament’s Finance and Expenditure Committee.

Makhlouf’s appearance in front of the committee precedes the Half-yearly Economic and Fiscal update, due to be released by Finance Minister Bill English next week. While Government Ministers have been briefed on the full set of figures, other MPS would have to wait to see how the quakes had impacted the Government’s books overall.

Meanwhile, in a separate committee room, MPS from the Government Administration Select Committee heard from Department of Prime Minister and Cabinet head Andrew Kibblewhite and Civil Defence Controller Sarah Stuart-black.

Under questioning from Labour MP Kris Faafoi, Stuart-black said there was inconsistency in tsunami warnings when the quake struck in early hours of November 14.

‘‘But what I need to do is understand more about what actually occurred and what happened to result in that.’’

The challenge was the legislative framework for Civil Defence Emergency Management (MCDEM) was based on ‘‘devolved accountability’’.

It meant that as national Civil Defence Controller, Stuart-black’s responsibilities only extended as far as putting the correct warnings out to regional Civil Defence groups.

It was up to those groups to assess how to relay warnings and information to their own communities.

‘‘But I think there are some important questions that need to be asked about whether we can do things differently to ensure both consistency and the ability to be more efficient with the timing.’’

Part of the issues around the delays that some regions encountered before a tsunami warning was alerted were to do with threshold agreements with GNS Science.

If a quake was above a certain threshold for magnitude and depth, then automatic warnings are triggered. However, the Kaikoura quake – despite it being later upgrade to a 7.8, did not meet that point.

Stuart-black said she agreed there was ‘‘huge disparity’’ around the country, in the way regional groups responded to the natural disaster.

But following on from a public conflict in which Civil Defence Minister Gerry Brownlee expressed anger over some public comments made by a GNS scientist, Stuart-black was careful not to present frustration at the structure within which she operated.

‘‘I think the CDEM framework means decisions taken as close to the emergency as possible, mean that it’s based on that local knowledge and local information.

‘‘That’s the evidence we’ve seen both internationally and domestically, that works really well. But the question about whether or not, in all settings, that that’s correct or not, that is a consideration for Government to look at.’’

The education around what to do in an major quake and when to selfevacuate, underpinned all their work, she told MPS. – Fairfax NZ