Prime Minister John Key speaks to Newstalk ZB's Leighton Smith in the wake of Monday's 7.8 earthquake.

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The Prime Minister said it seems highly optimistic to believe the cost of the Kaikoura quakes will be less than two billion dollars.

However, Key said the government is in a good position to meet that cost because it is back in surplus and tax revenue is running at a faster rate than predicted.

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He told Smith that while an earthquake depletes cash, it also stimulates the economy.

He said businesses like Fulton Hogan, Fletchers and various contractors will be busy spending money to carry out rebuild work.

Key said the government has been fiscally conservative and returned to surplus for a rainy day - or a shaky one.