Time to fast-track rebuild
Christchurch's Robin Clements, a senior economist with research and investment house UBS, is calling on the Government to act.
It was perhaps poignant that on the same day Christchurch marked the first anniversary of the February 22 earthquake, New Zealand's largest building company announced a lower profit forecast, partly on the back of a slower than expected pace of rebuilding in Christchurch.
Aftershocks have pushed the rebuild out another six months and, despite "gaining momentum", the so-called ramp-up will not be until late 2012 or early 2013; that is, as officials at the Reserve Bank and Treasury have been suggesting of late, it could be another year before reconstruction gets under way in earnest.
We have an unprecedented opportunity to boost economic performance. Governments spend a lot of time, and money, being advised, and taking decisions (or not), trying to achieve incremental improvements in growth, employment, incomes, etc.
But, remember the magnitude of what is happening in Christchurch: the reconstruction is expected to cost in the vicinity of $30 billion (15 per cent of GDP); last five to 10 years; create over 35,000 jobs; and, potentially add 1-2 per cent to annual GDP growth during the ramp-up phase.
In other words, this is an unprecedented opportunity, to a large extent paid for by overseas insurers, to not only restore the quality of life for thousands of Canterbury residents but to have a meaningful impact on the entire economy.
A sizeable share of the inputs/materials needed will have to come from elsewhere in New Zealand. It follows that the Government should be doing all within its power to facilitate reconstruction as soon as possible, as an offset to global gloom. Delays are corrosive while the risk of depopulation and capital flight is increasing.
It's no secret the delays are causing frustration and anger in Canterbury. For homeowners, damaged houses, lack of services, vacant houses, difficulties in dealing with EQC and insurance companies, finding affordable land to rebuild, possible loss of employment, and so on may culminate in the decision to leave the city. For businesses, it might be damaged buildings, insurance companies, cramped working conditions or an inability to operate that leads to the decision to shift elsewhere.
For property owners, the problems include uncertainty about the city centre, insurance, getting tenants to commit to leases and building restrictions resulting in capital being put to work in other parts of the country, or overseas. Depopulation and capital flight could weaken the Canterbury economy and the rebuild.
There is no denying the incredible amount of work completed to repair and restore essential services. Demolition and deconstruction is over the halfway mark. However, the city is one year down the path of recovery and the idea that it could be another year before the reconstruction is in full swing - two years after the event - does not sit comfortably.
It isn't a question of government spending. It is more about clearing some of the hurdles, for example eliminating consent backlogs, removing unnecessary bureaucracy, opening up land supply, and allowing the private sector to get on with the job.
However, decisions do have to be made, and quickly, to reduce uncertainty. For example, decisions on the location for a new convention centre and sports hub would kickstart a raft of private sector decisions on hotels, food and beverage, entertainment and retail.
Someone has to think outside the square and the Government is the only body with the power to fast-track the process to make it happen. Now would be a good time.