No one knows how much quake will cost, says PM

No one knows how much how much the damage caused by the Christchurch earthquake will eventually cost, says Prime Minister John Key. Photo / NZPA
No one knows how much how much the damage caused by the Christchurch earthquake will eventually cost, says Prime Minister John Key. Photo / NZPA

No one knows how much the damage caused in Christchurch will eventually cost, but the government's balance sheet is still in a strong position to pay its part of the possibly $25 billion bill, Prime Minister John Key says.

The government's bill for the earthquake took a double hit last week, when Finance Minister Bill English on Tuesday released new estimates from the Earthquake Commission showing its costs had more than doubled to $7.1 billion, wiping out the EQC's disaster fund.

That was compounded on Friday night when the High Court ruled against the EQC, meaning homeowners could receive multiple claims of $100,000 in the same year, a decision that could carry a bill worth hundreds of millions.

With estimations for the overall cost of the quakes rising to around the $25 billion mark from $20 billion previously, Key said the government was still in a strong position. Key's cabinet is meeting in Christchurch today to discuss the damage and rebuilding efforts.

The EQC High Court ruling was a good news-bad news story, depending on how it was looked at, Key said.

"The bad news is it means EQC's liability is rising, and we don't know by exactly how much, but it's hundreds of millions of dollars," he said.

"Secondly, I guess from the good news perspective, it may give some more confidence to private reinsurers to stay engaged with Christchurch - that's one of the big issues, is making sure that people actually can get insurance and that's been quite tricky, depending on your circumstances."

"At the end of the day, we don't really know the total cost of this thing. Is it $20 billion? Is it $25 billion? No one's entirely sure. It'll be over a reasonable period of time," Key said.

"All I can say is that the government has a very strong balance sheet - one of the reasons we've worked very hard to not allow debt to blow out is because we need to be able to pay for these things. Budget 2011 as you remember, was a zero budget, despite being election year, to provision $5.5 billion for Christchurch. So I'm confident we'll get through it," he said.

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