Fran O'Sullivan: Key should not hesitate to seek nation's help to finance rebuild

When the "big one" struck this week, I was at the Pescatore restaurant on the edge of Christchurch's Hagley Park.

Five minutes later, I was outside The George hotel half-joking - in the way people do when they have just had a shock - that I now knew what it was like to be in a rugby scrum. (About a dozen of us - including Michael Cullen, businessman Wayne Boyd and former US Assistant Secretary of State Chris Hill - dived under our table while the quake rattled us interminably).

It was not until we started the trek back into the heart of the city to find others of our group that the impact of this frightening earthquake became apparent.

Dazed and bloodied people walking away from the historic heart of the CBD told us of the devastation that lay ahead of us.

Even at that early stage, the tragic toll on human life was heart-breaking as two young women related how a building facade had fallen in front of their eyes, killing people in a bus.

Others said commercial buildings had flattened workers. Tourists were also gone after part of Christchurch's historic cathedral fell on them.

Since the initial September 4 quake, many of us thought we were "doing our bit for Christchurch".

We've gone to conferences and events there. Indulged in some retail therapy there, believing any little thing we could do to help keep local business going would be appreciated by Cantabrians.

But it's obvious that mere amateurism will not help New Zealand's second-largest city up on its feet this time.

Mayor Bob Parker and Prime Minister John Key are strongly focused on the rescue and recovery effort. The international support has been extraordinary. The bravery of all the search and rescue teams has been outstanding.

The Cantabrians' fighting spirit has been invigorating. But the livelihoods of many small businesses and employees have been destroyed.

Domestic violence has risen as the strain of "going through it all again" exerts a punishing toll.

People can take only so much - we should not be surprised if some now want to up stakes and leave the city permanently.

So the rebuild effort will have to get under way quickly. But when Key returns to Wellington for Monday's Cabinet meeting he will face some tough choices as his attention switches to the needs of the living.

The brutal reality is that the February 22 earthquake will exhaust the Government sector's financial ability to deal with any other major unforeseen incidents.

Just 10 weeks ago Finance Minister Bill English said the Government's accounts were stretched.

"We've got to be in a position where we can handle another recession and another earthquake and frankly we won't be there until 2020," he said on December 14, foreshadowing a much slower return to growth than he predicted in last year's Budget.

Despite this week's spin it is clear that tolerance has evaporated. Key should not hesitate to ask other New Zealanders to play their part towards financing the rebuilding of Christchurch.

Major levy increases will be needed to restore the Earthquake Commission's fund in case it is called on by other New Zealanders before it can be replenished over time.

But the Government has many more levers at its disposal. Solid Energy's Don Elder invoked a concept called "force majeure" when his company could not immediately fulfil its coal orders as Lyttelton's port was out of action.

Those on the other side of Solid Energy's contracts could not hit it up for financial losses as it had been struck by an event outside its control.

Key should do the same. This is the opportune time for him to review the extent of his Government's tax-cuts, which are being funded through borrowing and not healthy surpluses, and the extent of the interest-free student loans and Working for Families tax credits bequeathed by the previous Government.

But it goes further than sacrifices Key might be able to exact at national level through a snap financial package to help the traumatised people of Christchurch.

This tragic event should also be the spur for Auckland's leadership to get on to its own feet and stop being a drain on the nation's finances. And for businesses to show the way by committing to reinvest in the city.

Put frankly, Auckland can no longer be the priority for the national infrastructure spend. It has had lots of Government cash spent there for the Rugby World Cup.

It's now time for Len Brown to flick a few of the Auckland Council's gold-plated assets to fund his pet infrastructure project instead of asking for tax funds.

And for Aucklanders to realise a strong, vibrant regional economy will benefit them in the longer term.