Rebuild paying own way - leaders

Last updated 05:00 31/05/2014

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The Rebuild

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Christchurch leaders say it is a nonsense that Canterbury is guzzling funds from the Government and taxpayer for the rebuild.

Instead they want to assure the rest of New Zealand that the earthquake rebuild is paying its own way with no fiscal hit on the Crown.

Insurance and other money being spent on the Christchurch rebuild is subject to GST and other taxes that are in turn flowing back to the Government to the benefit of the rest of the country.

One estimate is that up to $12 billion in taxes could go back to the Crown.

Christchurch councillors are frustrated that the Government is playing up a message it is contributing more than $15b for the rebuild with about $7m of that the proceeds of selling the assets of the Earthquake Commission.

Canterbury Development Corp chief executive Tom Hooper said CDC had been looking at the "benefits accruing to the national economy as a result of the rebuild".

"There will also be a tax stimulus input. As a result of the insurance proceeds flowing into the economy they will generate tax benefits for the Crown as well and you will get a national benefit," Hooper told a breakfast audience this week.

Christchurch City councillor Jamie Gough said if the funds from the Earthquake Commission were excluded, the amount the Government would receive in taxes including GST from the rebuild could equal what it had pledged to pay.

"If you look at a $40b rebuild and you simply look at the GST take, the company tax take, income tax, it all mounts up."

Finance Minister Bill English recently estimated the taxpayers' contribution to the estimated $40 billion rebuild was $15.4b. A good chunk of that - about $7.3b, is related to Earthquake Commission costs and assets.

Gough said the issue of tax generated through the rebuild had been discussed in detail by CDC and others. He felt the Government would receive a strong tax take from the rebuild.

"You can do a back of the envelope calculation, that (shows) you're getting pretty close to a cost neutral contribution (by the Government). Don't get me wrong, I'm certainly most thankful the Government has come to the party and they're placing a huge emphasis on the rebuild and the success of it."

The goodwill "pouring around the country" towards Christchurch at the time of the 2011 earthquakes had now dissipated, Gough said.

"(But) the wider New Zealand public need to recognise it's not them just footing the bill for poor old Christchurch, it's actually going to cost them very little."

The Government had been "strangely quiet in this department," Gough said.

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Fellow councillor Raf Manji said Christchurch needed to better sell the message that the rebuild was largely being funded by "new capital" from overseas-owned reinsurers.

"We constantly hear about the $15.4 billion the Government is giving to Canterbury, the reality is that is not quite true . . . I think it is worth pointing out it is not all one-way traffic. (About) $7.8 billion of that has come from EQC, we should look at that as insurance, and most of that is reinsurance so that is coming from overseas."

Manji said the Crown was also buying assets including red-zoned land that could be sold later. As well it was getting GST and other taxes.

"If you crunch the numbers, you can estimate what the tax take might be, it could be $10 billion it could be more, you probably won't know after many years . . . (but) net-net the Government might actually be coming out with no fiscal hit."

- The Press


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