Do your bit with a quake bond, Kiwis told

The Christchurch Cathedral. Photo / Mark Mitchell

New Zealanders will be offered Earthquake Kiwi Bonds as a means to help finance the rebuilding of Christchurch via the Government's new Canterbury Earthquake Recovery Fund which was unveiled yesterday.

Costs associated with the Canterbury earthquakes were responsible for about $2.5 billion of the record $16.7 billion deficit reported in the Budget.

The Government's overall bill for the quake is put at $8.8 billion, with about $3.3 billion of that coming from the Earthquake Commission and the Accident Compensation Corporation.

The recovery fund has been set up to handle the remaining $5.5 billion which will pay for repairs to essential Christchurch infrastructure including water, roads, schools, hospitals and quake-related welfare support such as job loss cover and wage subsidies.

The fund will also meet the expected $500 million cost of the AMI Insurance bailout and the cost of repairing land damaged in the quake which may run to billions of dollars.

Finance Minister Bill English said the fund was intended to assure the people of Christchurch that the Government had set aside enough resources to rebuild their city.

Christchurch Mayor Bob Parker said the city was grateful for the country's contribution.

"It's a significant amount of money in the midst of a very difficult economic time for New Zealand ... I have to say to all the people of New Zealand: Thank you."

Earthquake Recovery Minister Gerry Brownlee said the fund would ensure transparency around the money spent on rebuilding.

About $740 million for the fund would come from reallocating money from other areas with the remaining $4.8 billion being new money - mainly borrowing.

Debt raised to pay for quake costs includes a new "Earthquake Kiwi Bond" which Finance Minister Bill English said was "a great opportunity for Kiwi investors who want to help fund the Government's contribution to the multibillion-dollar recovery in Canterbury while still getting a solid return on their money".

Mr Parker said the bond was brilliant. "I find it a very positive way to utilise the tremendous goodwill of people in New Zealand and overseas," he said. "It recognises that this is a nation where we do stand together."

New Zealand Debt Management Office investor relations manager Valerie Jeal said the bonds were likely to be taken up by people who might otherwise have donated through the Red Cross.

But in Auckland, members of the public were hesitant about locking up more than $1000 for four years - even if they wanted to help out.

"It's not really for me," said resident Trent Tonkin. "It would be good to help out but it's only 4 per cent and four years is quite a long while. I would probably use the money towards other things, like buying a house."

Mr Tonkin, who donated about $30 through earthquake appeals, said he would support the bond becoming part of his KiwiSaver portfolio.

Others said they would need more time to think about what to do with such large sums of money.

Reaction was also muted online as the Herald solicited comments on its Facebook page. "Good idea - but make it affordable to mum and dad investors who might not have $1000 or $5000 ... A smaller buy-in might get better take up," said Facebook user David Doggart.

After an hour, 15 people said they liked the scheme - the most out of Budget-related Herald Facebook posts on the day - but discussions failed to gain momentum.