By Roger J Kerr
It may be too early for such conversations, however central and local Government leaders need to quickly consider the alternative debt financing options available to rebuild the city.
Businesses and commercial activity will rapidly abandon Christchurch unless a bold rebuild plan with plenty of incentives to stay is actioned.
Financing methods that springs to my mind, and which others will also be indentifying, include:-
- The prospective new Local Government Financing Agency will be a godsend vehicle for Christchurch City Council to borrow large sums from international wholesale, as well as domestic debt markets.
- Christchurch City Council issues its own retail “Earthquake Bonds” to Mum and Dad investors throughout NZ at a lower than market interest coupon to capture the mood of the nation (akin to the War and Liberty Bonds that rebuilt UK cities after the second world war).
- Central Government directly debt-financing special “economic reconstruction zones” in Christchurch’s CBD to spread the debt burden across the entire nation.
- Public Private Partnership (PPP’s) financing structures for major infrastructure and property financing. Lateral thinking is required to invite in big Australian and Korean construction companies to rebuild the inner city, as the local industry does not have sufficient resources to do the job quickly enough.
- At some future date (say in two or three year’s time) Christchurch City Holdings selling-off minority shareholding stakes in their airport, port and electricity network companies by way of stock exchange listed IPO’s. It’s not the time to be considering this right now.
New Zealand’s top 50 companies have been asked by the Government for ideas and help; however the rebuild must not be confined to only benefiting NZ construction companies.
We should utilise international expertise and resources for the rebuild, just as we have accepted such specialist resources for the urban rescue operations.
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* Roger J Kerr runs Asia Pacific Risk Management. He specialises in fixed interest securities and is a commentator on economics and markets. More commentary and useful information on fixed interest investing can be found at rogeradvice.com
2 Comments
Don’t rebuild the “City Centre” - as we knew it.
The idea of rebuilding the “City Centre” is wrong - too costly, unsafe and delays the urgent needed reconstruction of business complexes/ houses on safer areas - in the outskirt of Christchurch where people live. http://www.liveworknet.com/live-work-sec75-1.html
Do we need a CBD ?
All buildings considered unsafe should be demolished. The ones which are safe should be integrated into a completely new approach of designing and creating the City Centre. The most wonderful City Centre in the world at minimal costs - with the best outcome for the wider population and businesses – a “Giant Botanical Garden"- including recreational features, small shops/ cafes, works of art, beautifications and memorials etc. - all build with rubble left by the earthquakes.
Be strong Christchurch !
There are other options to consider:
1) New money not debt:
http://sustento.org.nz/wp-content/uploads/2007/05/A-New-Financial-Deal-for-Christchurch1.pdf
2) Liquidate the overseas portion of the Cullen Fund which is worth about $10-11bln at current values.
And as Kunst says we can rebuild Christchurch as a 21st century sustainable city.
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