Finance Minister Grant Robertson is moving at pace to understand the fiscal consequences of Cyclone Gabrielle, and how they might change the Budget.
Robertson warned the cyclone would be a “significant event” for the Government with a cost “in the billions of dollars absolutely”.
In a lunchtime speech to the Auckland Business Chamber, Robertson said the cyclone would have a cost and he would have a look at adjusting the Budget, including its spending allowances - currently set at $4.5 billion in operating spending and $12b in multi-year capital spending.
Robertson had been under pressure to stick to those allowances because increased spending often leads to inflation.
He said Waka Kotahi NZ Transport Agency had put a cost of $1b on the damage from the flooding over Auckland Anniversary weekend.
“To put a dollar figure around it is impossible at this point,” Robertson said.
More positively, Robertson was able to say that the cost of the floods was “not Covid” in scale.
It was “regional” in scale and did not require business support for the whole country, as Covid did. He compared the scale of the crisis to the Kaikoura earthquakes of 2016.
Turning to the May Budget, Robertson confirmed there would be a cost from the cyclone to the Government, and that this was likely to play out over many years.
He said the Government was looking at its spending allowances in the Budget, opening the door for more spending.
Speaking to chamber chief executive Simon Bridges (who this time last year was Robertson’s opposite number - the finance spokesman for National), Robertson also said the Government was “working actively” on potentially allowing seasonal workers to stay in the country to help with the response and recovery from the cyclone.
“There are models from the past for us here, from the Christchurch earthquakes there were special purpose visas that allowed people to come in and help with the recovery work,” Robertson said.
Robertson said climate change was at the heart of his agenda as Minister of Finance.
He expected there would be more difficult conversations about climate adaptation and managed retreat in the coming weeks and months.
“Climate change is here, it is affecting the economic security of our country, our communities ... and it is not going away any time soon,” Robertson said.
He said weather events like the cyclone were not quite “unexpected” anymore, but rather they were “expected” and the country needed to brace for more of them.
“We know that from the science. We know that from the analysis. There is no point talking about one-in-100-year events anymore. We will be dealing with them regularly,” Robertson said.