Greens co-leader Russel Norman has proposed the introduction of a temporary levy on higher income earners to pay to rebuild Christchurch after the earthquake.
He argued a levy similar to the one imposed in Australia to pay for flood damage would be fairer and mean the government would not have to add to debt.
"A small temporary earthquake levy does appear to offer a fair way for all of us to do our bit to contribute to Christchurch’s recovery without adding to Government debt," Norman said.
"To make it fair, the levy would fall on those most able to pay it. Those earning between NZ$48,000 and NZ$70,000 a year could pay up to an additional one per cent income tax, while those earning over NZ$70,000 could pay up to an additional two per cent income tax to help pay for the reconstruction of Christchurch," Norman said in this blog post on Frogblog.
"People earning less than NZ$48,000 and all those living in the Christchurch region would be exempt from paying the levy," he said.
Such a levy would raise NZ$921 million per year and be tagged for disaster relief and reconstruction, he said.
Prime Minister John Key has left open the possibility of an earthquake levy, but has said he would prefer not to impose such a levy.
Key has said this was one of the issues Treasury would consider in coming weeks as it reassessed the government's budget situation.
Economists have estimated the rebuilding cost at more than NZ$10 billion. The EQC has reserves and reinsurance for the first NZ$4 billion while private insurers will also cover insured damage to commercial and residential buildings.
But public infrastructure such as roads, surage, water and government buildings was not covered and would have to be paid for by central government.
See more here from Norman's post.
There are those who argue against such a levy. Australia’s flood levy has been attacked by the Right who argue that further government cutbacks are the best way to find the necessary funds to pay for their flood damage. And a new, albeit tiny, tax raise for upper-income earners goes against the Key Government’s current pathway towards a flat tax structure. And of course we have already paid into the EQC kitty over many years.
However, we don’t believe these arguments against a small temporary levy are convincing. The public sector is already being cut and further cutbacks won’t help the jobs situation. A tax rise may go against National Party ideology but it is only temporary for a national emergency situation. And the size of the damage bill appears to be greater than current reserves and re-insurance.
With this small temporary earthquake levy we don’t wish to politicise the argument. We don’t wish to re-litigate the argument around National’s tax changes, nor do we think the Right should use the opportunity to promote their agenda of asset sales to pay for the damage. We need a pragmatic response to the situation we’re in. We can return to the arguments about tax rates and privatisation later.
73 Comments
Okay Bernard , we have to help our fellow countrymen, no question , but just how is the question . We need to think creatively
To simply raise a tax is not the way to go , but it could be part of a whole raft of measures in raising capital for re-construction.
Lets not lose sight that imposing a tax( levy) on income simply diverts that same dollar somewhere else . It will not increase production , its simply taken from the worker and given to someone else. Also , very few New Zelanders are net taxpayers , so taxing people earning over $48 000 is a joke anyway
All it means is that worker has precisely that amount less to spend on goods and services in the economy . Its in effect a zero sum game.
First , idea of raising Earthquake Reconstruction Bonds has been bandied about .
Its a VERY good idea.
These Bonds would be new money ( not money taken from somone else) , it could be say 3% , interest- tax- free , traded on the NZX , and Kiwisaver members could elect to invest a % of their funds in these.
They could also be sold to foreigners.
A second measure could be a 1 % payroll levy , like ACC, which will not affect the stated Corporate tax rate , (and render us uncompetitive).
In any event , we need to find some creative way of raising money for this , and simply resorting to tax already overtaxed woerks is not the solution
Increasing the tax maybe a zero sum game, but if it means a few cafes and retailers in Auckland have to shut because people are buying a few less coffees and expensive clothing so that the people of Canterbury can have a toilet to take a dump in then so be it. Donations are a zero sum game, everyone stop making donations as you are taking away money from retailers who need it!
Get a grip, since when is taking on more debt and creating more money a good thing, you are just passing on the interest cost to future generations so you dont have to pay for it now. I am guessing the boatman is a baby boomer.
Asher, my dear fellow ,I am a Baby Boomer , I am 50 years old , but you miss the point completely .
Take my case as an example , I would happily pay the tax , but I would not have to pay the proposed tax at all .
Let me explain.
I regard myself as well off . I have a net worth of around NZ$ 2,0 miillion in property, shares, Bonds and cash . I have no debt whatsoever.
This excludes my work income from which I draw about $50,000 a year . I pay my wife about another $45,000 as a part time employee . I would have to pay some tax on a meagre $2000
So we have a taxable income of around $100k per annum, we are well off by many standards , but we would not have to pay the Greens propsed tax.
I feel obliged to contribute to the earthquake rebuild , but why tax me?
Rather let me invest in the future/ rebuilt infrastructure,
What you also fail to grasp is the raising new capital is in itself stimulatory , which is exactly what the NZ moribund economy needs right now
Hi Boatman,
Appreciate your reply. I don't think I missed your point at all. I agree with you that you may be one of those who may not have to pay much, that just reflects the fact that our tax system favours those with wealth at the expense of those without. That is not a criticism of your accumulation but of of the fact that largely income is taxed not wealth increases. I could have another discussion with you on the tax system but most of the solutions to increasing equity in our tax system have been thrown out by your generation as Bernard regularly points out. Maybe the levy should be on property instead sounds fairer to me especially from your comment that you would be unfairly lightly taxed from an income tax.
Raising capital (which I would not equivocate with raising debt) is only stimulatory because it ends up increasing spending. We have $10 billion to spend in Christchurch that is a large increase in spending we are going to see a stimulation, but largely in the construction area and at the expense of wealth destruction in a lot of cases. Success cannot be measured from GDP increases, the destruction of all of that wealth is not captured by GDP.
You missed my point. Let me make it clear. Money doesn't grow on trees, bonds issued now need to be repaid and with interest. How is that interest going to be paid...through taxes. Two options raise taxes or reduce spending. Who hurts most when spending is reduced, the young and the less wealthy (whether old or yound).
To make this clear, I would be one of those who would be impacted by such a levy. From Auckland (read high rents), I have a young family with 2 little kids and a wife to support. Similar income to yourself but borne by a single taxpayer so probably twice as much tax. Mid 20s so very little assets. I have a good income, but I am not wealthy so of course 2k would hurt...but not as much as Christchurch is hurting. So pull your socks up put your shoulder to the wheel and help out.
Asher
The left always have their own interpretation on the word "fair".
Although what has happened in CHCH is very sad, I pay enough in taxes and don't want to see "one off tax events" . Either put it up permanently or better yet, manage the tax payers money better.
I am sure that there are alot of people living in Christchurch that rent a home and whose job is not affected so will not be financially affected. Is it "fair" that they have a lower tax rate because they live in a certain area?
Another brain fart from the Socialist Green party. Can't say I'm surprised.
And if the disaster happened in your area... No doubt you'd be on the opposite side demanding some compensation. Typical Greedy Selfish Right Winger.
The old ... "As I'm not affected it's everyone for themselves, if I am affected, it's a necessity that people pay for it."
I'm surprised you signed off as "Engineer" I'd have thought "Banker" would have been more appropriate... But with a "W"
*yawn*. Another rant from someone without any reading comprehension skills.
Please don't call me a greedy right winger. Its not greedy to want to keep the money you earn. Btw, I contribute a lot to society.
Why would I (or anyone) demand compensation for a natural disaster. I pay for insurance including income protection insurance as I believe it is the responsible thing to do. I live well within my means and have money set asside in case of an emergency.
Was it really necessary to try and call me a w@nker? Not sure why I deserve this label for disagreeing that a one off tax hike is not a good idea.
From Peter Dunne:
Dunne reminds Kiwis of tax credits for quake donations
Revenue Minister Peter Dunne today reminded New Zealanders that all Christchurch earthquake cash donations over $5 by individuals through approved donee organisations can gain a tax credit, and will be tax deductible when made by companies.
“This is worth being aware of at a time when New Zealanders are giving generously to the people of Christchurch in their hour of need,” Mr Dunne said.
A full list of approved donee organisations can be found at www.ird.govt.nz/donee-organisations/
Mr Dunne said that it was also gratifying to see that Australia, as well as supplying invaluable assistance in the actual rescue and recovery operations in Christchurch, has recognised the disaster for donation tax purposes for Australian taxpayers.
“There has been a tremendous amount of support flowing between our two countries in what has been a string of natural disasters on both sides of the Tasman in recent months.
“The help and heart that has gone both ways has indicated how strong the bonds that tie us are, and further strengthened them.
“It is very gratifying to see that the Australian Government has ensured that Australian taxpayers will now be able to claim an income tax deduction for donations to the relief effort in Christchurch,” he said.
Engineer take a look around you, down your street ,your house, look at your job, look at your immediate future, look at your next pay check, look at your some of your friends, umm in control of it are'nt you, now hold your breath for 15 seconds, and now it is all gone...think about it..now you know our position.
That's the usual easy option from a left wing party. There will now be people in Chistchurch who may have reduced incomes even if the have a job , so if their partners earn more than $48000 they will have to pay more tax. How fair is that. You are asking a solo parent who earns $60000 to pay more. What about a household where both partners earn $45000, they will contribute nothing,and yet between them are earning more
. If you want a fair tax system, it should be done on household income not individual. If someone loses their job and their partner is working they are not eligible for anything. This is not the time to be talking about putting taxes up unless you can take individual household earnings and circumstances into account. Perhahs much of inequality in NZ is because we tax on individuals rather than households.
Obviously no intelligent debate to be had on anything related to the earthquake. Might as well shut the comments down on this one.
My argument is that a one off tax increase would be too complicated to administer and could not be enacted fairly. I don't think fiddling with tax rates 6 months after they were changed is the answer.
For some reason, people here are trolling and being very agressive. Telling somone to leave the country because they disagree on how the earthquake repairs are to be funded is extreme to say the least.
Feel free to comment or give your point of view on the topic of this piece which is a targetted temporary tax hike.
I must admit, I thought that this may happen which then led to me thinking that high income earners may be less inclined to make significant donations. A possible catch 22? Would be good to get some indications from Govt as soon as practical of any levy, so that people can know how it would affect them.
@fmr ca just how many high earners are there in New Zealand ? I somehow doubt that taxing the small number of NZ high earmners will not raise the 20 Billion dollars needed .
The "rich" will be under no obligation to pay this proposed tax anyway , because we tax income (not capital) in New Zealand .
Most Rich Listers minimise their actual $ income and they do this becuse of the hostile rax regime introduced by Labour .
I am astounded as to how naive so many Kiwis are about wealth tax planning and how the very wealthy obtain and keep their wealth
My understanding is that NZ has insurance...so its not costing "us" 20billion...
"no obligation" if a tax is levied of course there is an obligation to pay....
"how the very wealthy obtain and keep their wealth"
I think thats become clear to some and I think its becoming clear to many voters, anyone who manages to earn a high income but effectively pays no tax should get the idea that that wont continue.....
regards
Actually Boatman has quite a good measured response. Increasing taxes is a last resort - there are better ways to do this. Increasing tax is a red herring, and an attempt by the Greens to get some headlines. The above extract from Norman is nothing but a thinly veiled attack on National's tax changes, despite his protestations that it isn't.
I do believe we should all contribute - I donated cash this morning, and will no doubt donate much more than any proposed tax increase during the next few weeks. Wish I could do more. Let's find a better way to help our friends in Chch.
"Another brain fart from the Socialist Green party. Can't say I'm surprised."
Surely the whole concept of Government help for the unfortunate Cantabs is socialist. A true libertarian would say tough luck, no state help for you guys.
Given that we do give a stuff and the chances of meeting the massive costs from public donations is remote, then it's more borrowing (and further damage to our debt levels and credit rating) or we raise a tax to cover the bill. I agree with Norman.
BTW Indian Kiwi the GST rate went up 20% not 3%
Release from Peter Dunne: IRD will take flexible approach to quake victims
Inland Revenue will take account of the impact of this week’s huge Christchurch earthquake when dealing with the tax matters of individuals and businesses affected, Revenue Minister Peter Dunne said today.
“Right now it is all about the human tragedy, saving lives and getting communities back on their feet and functional again.
“Tax will be the last thing on people’s minds if they have been affected by the earthquake, and they should not worry if they cannot meet a particular tax filing date,” Mr Dunne said.
“Tax legislation allows Inland Revenue to take a realistic and flexible approach in circumstances such as these, and the department has assured me they will take account of the circumstances of individuals and businesses.
“In particular, Inland Revenue will be able to waive penalties and interest if returns cannot be filed or payments made because of the earthquake.”
Inland Revenue will launch an advertising campaign in Christchurch this weekend to assure people and businesses that it will take a realistic approach to their plight. It has also updated its website, www.ird.govt.nz, with earthquake-related advice and information.
“We know that many businesses and families’ tax records will have been lost or destroyed. Inland Revenue will work with them to sort things out further down the track.
“Right now it is about survival and getting families back together and getting lives back together. These are the most important things,” Mr Dunne said.
He also assured people that all payments they are expecting from Inland Revenue, such as Working for Families tax credits, will be made as usual.
“We know that this is a terrible time. Inland Revenue will do everything it can to help people and businesses get back on track.”
He said people or businesses wanting to contact Inland Revenue could call its Disaster Response line on 0800 473 566 or visit its website.
Mr Dunne paid special tribute to Inland Revenue’s Christchurch staff who have not yet been able to get back to work.
“The Christchurch Inland Revenue office was evacuated immediately after the earthquake. Because the building is in the CBD shut-down zone, very close to some of the worst damage, it could be some time before it will be up and running again.
“Like all Cantabrians, Inland Revenue people worked incredibly hard to get back to work after the September earthquake. Now they are facing a huge recovery operation all over again.
“My heart goes out to them and all the people of Canterbury.”
Here's a suggestion- there is a sum of money sitting in the 'Cullen fund '-gIven the emergency, transfer out the billion dollars towards the situation, rather than have yet another tax, especially as such a tax would involve all sorts of costs to set up and operate at the IRD, especially once you have exemptions etc
In order to have a constructive discussion, and prior to offering solutions, it would be helpful to know how many properties (residential and commercial) are un-insured, and not carrying their weight. If their numbers were big enough that would be the sector to impose a levy on. ie $1000 residential, $5000 each commercial. And that's nationwide.
Doesn't surprise me hearing this from the greens but from BH???? How about stalling spending which is not really that important like the puhoi to Wellsford bypass and the navy buying 1 billion dollars of gear instead of attacking middle income NZ. Funny how someone on $48K-$70K is considered rich. Most people I know are on family incomes of 100K and live from check to check.
Leave the tax payers alone and think more wisely how to divert projects which are not that important in the scheme of things. We need low taxes to stop the brain drain, attrack new skilled migrants because the salaries certainly won't get them here or keep NZ's here.
The reality is that with expensive housing and high cost of living, you need to earn $150K a year to be considered rich and that's probably only a few percent of people.
I'm with Boatman on this one. Bonds over tax increases.
Unless the levy is ringfenced as such, it will just fall in to a black hole. There would also have to be six monthly reporting of levy income in/expenses out so that there is some transperancy on it.
If Norman is relying on Treasury to supply him with the $921mill figure then I think we can all be sure that it will not amount to any where near that much.
Look the Greenbeans an Labour have no idea on what it takes to earn real money.
Look none off them ever had a real job,working tax payers do not need another tax.
The Greens should stick to peeling mung beans,an Labours idea off taxing working people more is going down like a lead ballon.
NZ problem is that we have to many unskilled workers,even if there was heaps off jobs.The employers would still employ people from overseas,because they get stuck in an do the work.
Drive around any building site,or place off work an its Asian an Indians.
Its a good time to organise everyone an train them up so they can work.
Time to dig some holes sell the coal,grow anything that can be exported.
This country has to start earning more than its spending.
This could be sorted out in a week,just do it.
Why always suggest to pay extra tax to rebuild, if all the people who earn over $100,000 and working for Govertment ( pay by our tax ) , reduce their payment to $100,000 per year, that money enough to support their family . The money have been saved can use to rebuild the Christchurch
Daivd C you are quite succinct and to the point in your comments.
The reality is such that the problem is so huge that we are going to have to do all of the measures you suggest in some form or another .
Its just the mix or combination that matters now
The problem is that most people reading and commenting on this topic have not yet grasped the sheer size of the financial implications of what we are facing.
Take a look at my prior comments
In the meantime , go with your gut feel and let the rest of the world catch up with you later .....make a donation
Everyone who should know has stated there is already enough in the EQC fund to pay the share that is required of it. There is no need for a temporary tax increase to pay for the Christchurch quake.
However the point of an emergency fund is to be available in an emergency. If it's gutted this time it needs to be built up quickly to be ready for the next one (which hopefully is many decades away but will come). To do this needs to happen far faster than current EQC levies will achieve.
This fund is not to pay income its to pay for property so it should be raised from property, this also removes the disincentive created by payroll/income taxes. The tax should be on rates or property insurance (though still requiring people to have it which could be difficult) or even on rent (though that would be hard to police).
Brian Gaynor on the EQC fund
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10708745
Muzza, Cullen Fund is worth about $18bln at current levels, maybe more with markets rising recently. In terms of liquid assets I estimate about $10bln could be accessed now within say a week or 2 of judicious selling.
And I agree we should be accessing this cash now.
Has anyone put a figure on the ratepayer/govt obligation, after the private insurers and EQC have paid their bit? 4 or so billion? Or is that way off.
Use of the Cullen Fund would be a great idea. Increase EQC levies to build up reserves for next time. The 50 bucks a year I pay seems far too low.
Is the EQC fund not locked inbto assets? Wont they need to release those before they can pay out, how much are they worth in current market? Estimate comming out now os 30 billion. A lot of areas hit are low income with number state houses this will have an impact. My sister leaves today with her family a number of the schools will be closed for a very long time and is going to be a big problem, my wife leaves today to AKL as CBD will be closed for up to 3 months and no hope going in to work. There is huge damage to infrastructure so think the economic impact on NZ will be more than people think
Its good to see that Owen Glenn has donated a respectable amount of money to Chch. He can afford to. How about Eric Watson? Or Stephen Jennings?
This is something that does really get to me, the people who always have the biggest hearts and give the most are the ones who can least afford to. And in the meantime the super rich around the earth continue to avoid paying taxes and leave it up to middle class to carry the can.
Instead of a new levy why not just change all ETS levy to zero. Reasoning behind this is that after the earthquake there is now less buildings and less use of power and most likely the carbon foot print of NZ will have reduced anyway. Surely NZ could be forgiven anyway for suspending ETS while we recover from the economic effects of the earthquake!! We can also forgive ourselves for putting ETS to the bottom of the pile.
Absolutely no need for a levy according to EQC chef. EQC is very well funded and reinsured, City council infrastructure damage is insured, so are the assets of the lines companies, etc, etc so an call for a levy is premature and most likely unecessary.
The EQC stil has $3 billion of assets as well as reinsurance contracts to cope with future disasters. The fund is expected to pay out $1.5b on residential homes and reinstating the land under them - after it has met the forst $1.5b international reinsurers pay for the next $2.5b of claims.
EQC chief Ian Simpson says that despite calls for a rapid recapitalisation of the Natural Disaster Fund, the cover in place means that a recap is not an immediate priority.
http://www.stuff.co.nz/national/christchurch-earthquake/4709216/EQC-holds-funds-for-two-more-quakes
What will be needed is at least a 0.5% to 1% cut in the OCR and maybe further tax cuts in order to stimulate us out of recession 2.
Tourism will be hit hard and it's highly unlikely that Rugby World Cup will be held in ChCh as the field has liquification, the structural stability of the stands will need assessment, there will be a lack of accomodation and realistically how many rugby tourists would want to attend in ChCh?
Stop the carbon tax. Change it into the restoration levy and keep the money in NZ. The carbon tax is nothing more than a social political control tool and a huge proven fraud in any case. All it does is milk the NZ people and allow China, India etc and the huge carbon trading monopolies (Al Gore, Maurice Strong and others) to reap billiions. Still believe in the myth of man made global warming, go to www.friendsofscience.org and listen to what the scientist are saying that haven't been bought out.
No one can deny that there is a huge pollution problem in the world. However its a completely different issue and has nothing to do with Co2 emissions, which is a natural part of life on the planet. Wish our Greenies would become true environmentalist.
Eagle - that's one of the more foolish comments on the thread, and your underlying message is clesr: if it cost my in the hip-pocket, it ain't happening, everything else I agree with.
Actually, if we are a mature socoety, we must accept that CO2 is indeed a pollutant that we are producing, that if it is a problem it must be addressed, and that if it is uncertain, the consequences are such, and the lead time such, that precaution is the only rational, mature approach.
Taxing carbon, of course, is a bit flawed because the energy that it is the by-product of, 100% underwrites the activity required to generate the wealth needed to pay the tax.
Last time I checked, climbing up your parachute lines didn't lessen the impact speed much.
Not using fossil fuels at all is the real answer - one that, paradoxically, will be foist on us by depletion, just too late by half.
A fact which substantially more than half don't get.
http://www.stuff.co.nz/national/christchurch-earthquake/4709213/NZs-biggest-insurance-claim-ever
Civic is the trading arm of New Zealand Local Government Insurance Corporation (NZLGIC), which is owned by 59 local authorities spread from one end of the country to the other.
Civic and the Local Authority Protection Programme Disaster Fund, an associated entity within NZLGIC, have insured Christchurch City Council's above-ground assets such as buildings and their contents, and below-ground assets such as sewerage and water reticulation networks.
Civic specialises in providing local authorities with all manner of insurance cover and although the cheque it hands over to the Christchurch City Council as a result of damage caused by Tuesday's quake is expected to be the biggest payout made by any insurance company to a policyholder in this country, most of the money is likely to come from overseas. Civic reinsures its business with overseas insurance companies that are expected to pick up most of the bill for claims arising from last week's tragedy.
Civic Assurance general manager finance Roger Gyles said he did not expect there to be any problems with the overseas reinsurers meeting their payment obligations because the companies Civic reinsured with all had A (excellent) or better ratings.
Christchurch City Council owns about 2600 housing units rented to people on low incomes, making it the second largest housing provider after Housing New Zealand.
Civic said final figures for the claims by Christchurch and Waimakariri councils for September had yet to be finalised, but the Christchurch City Council claim from that event was likely to be around $150m, a record for a single payout in this country.
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However, the claim for last week's disaster is likely to be much higher.
Does anyone else find it extremely embarrassing that the PM of this country - a supposedly first world country is begging for money from the rest of the world? The PM of this country who happens to be a millionaire? And then has the gall to ask the New Zealand public to DIG DEEP? What about you John? How much have you donated?
So whats wrong with a tax? If we follow the concept of society, social responsibility etc, whats wrong with suggesting a tax of 1% for those who earn 48-70k, then how about 2% for 70-100, 3% for 100-150, 4% for 140-200 and so on and so on up to 500k and beyond. Yes there are some people here who earn that much and why dont they pay more?
Oh and by the way, what a fantastic job all those PUBLIC SERVANTS are doing - doctors, nurses, police, fireman, Civil Defence etc etc etc. All those people who are facing a slashing in pay and numbers because the public sector is a bloated overpaid mass.
Ehhhh????????
Creaming off a cut of currency going past your nose is 'labour'?
Sorry, you lost me.
Real wealth is only underwritten by what can be bought - goods and services.
If you don't produce those, then you're a parasite on those who do.
Pretty simple, really.
I think you miss my point - I'll rephrase it.
All 'wealth', is essentially a promisory note to draw down goods and/or services from only one place - the future.
Because profit and usury are charged, the go-round gets bigger each time - so bigger too, gets the expectation that the future will underwrite the promisory note.
This goes right to the truism that exponential growth within a finite system is unsustainable.
If you haven't read my stuff on that, here's a precis:
growth is expressed in 'doubling -time'. 3% growth p.a. doubles in 24 years, 10% in 7 years.
Double your way into a finite pile of resources, and you can work it backwards - last move was from 1/2 to finished. Before that, 1/4 to 1/2. Back further, 1/8 to 1/4, 1/16 to 1/8, 1/32 to 1/16.
Underwriting of profit, skimming and usury, only happens to the 1/2 way point. Yes, half of the underwrite still exists, but the opportunity to grow has ceased.
So as of around now (and the exponential bit means it will be very soon if not now) the ability to do what Key did, ceases to exist.
'Making a living' changes meaning at that (profit-ceasing) point too.
I've known this juncture would arrive, this decade, since 1975. The biggest anazement has been to note the number who don't get it - even yet.
I agree with Bernard, Greens and most commentators that the enormous cost of the ChCh quake have to be spread. Either the government borrows (which will cost us taxpayers all extra interest payments and a possible rating downgrade), or we start raising extra money in the short term. i agree that for the long-term a whole range of structural measuares need to be taken, but many of these are controversial and won't happen before next elections (probably at least 2 or 3 from: capital gains tax; raising retirement age; looking at WFF & interest free student loans; and other measures to improve savings; i don' think selling assets is structural at all).
Some more short-term money raising needs to be initiated. Thoughts: as these are largely infrastructure funds needed, why not look at infrsatructure type levies, eg. temp xtra rates-levy (easy to administer + easy to exclude ChCh-zone); and/or temp extra fuel levy to rebuild roads, etc (also easy to administer; will fade in light of other recent fuel price rises; also potential to exclude ChCh-zone from levy, although slightly more complicated). I haven't done any calculation on how much would be raised from any of the sources. A mix - to spread the effects over different winners&losers) might be a good option too.
"infrastructure type levies" are supposed to be your local rates. Insurers just need to step up and be forced to pick up the tab. Simple as that. No extra levies, no more borrowing. Just ownership of the problem by insurers. Otherwise the insurance industry has just become yet another group that get's 'bailout' by the little old taxpayer. Be careful what you wish for
All this extra levy talk is utter baloney! And how typical of the Greens to come up with a communist tax. It's simple , ALL insurers pick up the tab and from now on all CHCH residents will have to pay more in rates and insurance premiums just like they do in the US or anywhere else that is seen as an earthquake prone area.
Why are we becoming a nation with a serious case of "passing the buck" syndrome?
Hi Justice.
Yes, insurers should pay, but the preliminary analysis seems to be that home & business owners, EQC, City of ChCh and government (NZTA for rebuilding roads) are 'under'-insured/have excess to the collective tune of $ 5-10 billion (sorry very rough numbers).
We are not talking bail-out of insurers, but bail-out of ChCh & 'the little guy'. Whether you agree with that or not, the government has indicated that they are largely going to underwrite this (and I think they should). again the question is: 'How are we going to spread these massive costs'?
Cheers
Norman is a watermelon....green skin and red on the inside.....bloody waste of space.
I want to know more on who gets to decide if this 6.3 was a different faultline and therefore a different earthquake for insurance matters....and whether that means the cost is on the reinsurers....and whether Key is trying to bullshit the sheeple into paying out when the reinsurers should be paying out.....
What the feck is really going on here?
That's exactly what's going on. Anyone notice the definitive change in media line from "aftershock" to "separate earthquake event"only a day or two after?. Someone high up made it quite clear about such terms and the issue regarding insurers. Even on Radio NZ I heard some 'purposeful' corrections being made
Yeats says it generally takes many years before seismic activity can be considered a new quake rather than an aftershock of a previous one.
http://www.stuff.co.nz/national/christchurch-earthquake/4711189/Tuesday-quake-no-aftershock
In the US they are been very clear to define it as an aftershock and why. The battle lines are drawn :-) That is the rinsurance risk, the other risk is with old buildings in Christchucrh market value rather than replacement value policys were avaialble result is actually gross under insurance in the private sector commercial buildings. Have seen that in the majority of cases since the September quake. Market value at a quarter of replacement cost been the standard line BIG issue.
Typical of the greens to not have an original idea. Tax the rich, theres a thought.
Hang on I have already contributed to the Christchurch rebuild in a number of different ways.
Via an unsolicited donation, via my taxes, via the ECQ levy in my insurance for the past 30 years, via my share of the debt the government is borrowing to prop up Chrischurch and I am certain countless other ways that I cant recall.
The Government has relatively low levels of debt. Its the private sector that has borrowed big time on unproductive assets that is the big problem.
Insurance companies will ramp up premiums on the pretext of the earthquake but all with the exception of AMI probably will be fine. Thats why they make large surpluses each year to provide for big events like these. Their reinsurance will prop them up.
If the government really wants to kick start the economy, then focus on Central Government and Local Government waste and the RMA and all its hangers on and cut red tape.Then change their focus to ACC.
Hide tried but only got part of the job done.
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