Taxpayer’s Quake Bill Still Rising

06 September 2011 - Which Way to Pay

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Taxpayer’s Quake Bill Still Rising

Prime Minister John Key revealed that subsequent to a High Court decision late last week, the taxpayer’s share of the $29.5 billion bill for rebuilding Christchurch is set to rise yet again. It is anticipated a further $1 billion of taxpayer’s money will be required.

The court issued a declaratory judgment confirming the Earthquake Commission’s (EQC) maximum cover of $100,000 for properties and $20,000 for contents late this Friday. The judgement relates to all claims resulting from both major quakes in September and February as well as the aftershocks.

Friday’s decision shifts a large proportion of the liability for quake damage from private insurers to the EQC. The transfer of hundreds of millions of dollars to the EQC has resulted in a raised liability estimate of $7.1 billion from $3.05 last week.

Regarding the estimate that the liability for the EQC could be as much as $1 billion, Mr Key said:

"We think that's probably at the top end. My guess is it's considerably less than that, but we won't know for some time."

Given that the EQC's reserves are now effectively wiped out, the taxpayer will meet any shortfall as a result of the Government’s guarantee for the EQC.

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