Rebuild 'must not stall Auckland'

John Key. Photo / Mark Mitchell

Prime Minister John Key says rebuilding Christchurch must not come at the expense of Auckland "grinding to a halt" as he prepares the country for a flatline Budget.

There were concerns a fortnight ago that some major roading projects - including the Puhoi-to-Wellsford road and Waikato Expressway - would have to be delayed for at least a year to free up money for Christchurch.

However, the Government is now understood to be committed to continuing with those projects as well as the Waterview Tunnel.

Asked why major infrastructure projects could not be delayed and the money redirected to Christchurch, Mr Key said slowing economic growth in Auckland would only worsen the situation.

"While we are very supportive of Christchurch and want to see it rebuilt, we can't do that at the cost of grinding Auckland to a halt or delivering an infrastructure timebomb in Auckland, or Wellington, or other parts of the country."

Auckland's chances of a $2 billion rail loop still appear remote, but the $1 billion electrification of the rail network and other passenger rail projects are also still going ahead and $88 million was recently announced for Wellington's rail network upgrade.

The Government has to borrow about $5 billion for rebuilding Christchurch and Mr Key said its already limited plans for $800 million of new spending this year ended "at 12.51pm on Tuesday, 22 February".

Extra funding for health and education now had to come from other areas of government spending, he said.

"Everyone recognises we need to do something about it. The question is what - the options are: send the bill to the taxpayer or trim our expenditure? And I think most New Zealanders would support us in trimming our expenditure."

Yesterday Labour leader Phil Goff said borrowing for the earthquake was appropriate but there were better ways to make up a Budget shortfall than cutting services.

"If the infrastructure of Christchurch needs to be rebuilt, that comes before putting a new missile system on frigates, it comes before a 'holiday highway' north of Auckland."

Mr Key said it was unlikely future Budgets could be as austere as this year. He ruled out cuts to benefit levels and changes to superannuation, but said other areas of government spending were under review to try to find an extra $600 million to $800 million to put into health and education.

That included potential cuts to Working for Families payments for higher-income families, which Mr Key said was "a logical place to go".

Mr Key has also refused to rule out scrapping some government departments, including the Ministry of Women's Affairs.

"Some programmes will cease. Nobody is arguing this is easy - there is a constituency for every dollar you spend. But government is about the allocation of resources and at the moment the allocation that is required is, in our view, Christchurch and health and education."

Mr Goff said the Government could reverse its tax cuts for the highest income earners. He disagreed with cuts to Working for Families, saying that would hurt the middle-income families, but agreed an earthquake levy was also a bad idea, especially if it applied to low and middle-income earners.

TO BORROW:

$5b
for Christchurch rebuild

CANCELLED:

$800m
of new Budget spending.

NO DELAYS:

$1.2b-$1.5b
Puhoi-Wellsford highway.

$1.7b-$2.1b
Waikato Expressway.

$1b
Auckland rail electrification.

STILL REMOTE:

$2b
rail loop for central Auckland.