Finance Minister Grant Robertson visits Redclyffe substation in Napier. Photo: RNZ/Lauren Crimp
Finance Minister Grant Robertson said Cyclone Gabrielle would have a "multi-billion dollar price tag" and that the amount of new money planned for this year's budget was being reassessed.
Robertson had been trying to stick to a previously-signalled allowance for the 2023 Budget of $4.5 billion in new operating spending and $12b in multi-year capital spending over fears additional spending would increase inflation.
Instead, last year, Robertson said some new initiatives would be funded by reprioritising funding from existing spending.
In an interview on Q+A with Jack Tame, Robertson suggested he might be forced to both increase new spending to fund the flood rebuild, whilst reprioritising existing spending because capacity constraints in the economy were making it difficult to do everything at once.
"That's what we're reassessing now. You can imagine the pressure that responding to a massive event like this will have," Robertson said.
"We save for a rainy day, we happen to be having a lot of them at the moment and we will respond," he said.
Robertson said that putting an exact price on the disaster right now was not possible, but that it would be smaller than national events like the Covid-19 pandemic and comparable to regional events like the Canterbury earthquakes.
"This is something more akin to Kaikoura and the Canterbury earthquakes because it is quite regional but there are a number of regions involved. Clearly the level of devastation in terms of infrastructure in terms of peoples homes and infrastructure is very high.
"It is going to be the biggest weather event this century and it is going to have a multi-billion dollar price tag," Robertson said.
Robertson said that the cost would be shared between the Crown and private insurers.
"It's very early days," Robertson said.
He hinted at "sector-by-sector" economic support packages to be rolled out for industries devastated by the cyclone, as well as regional support.
"This is where it's a bit different from Covid in the sense that things are going to be different in different places. My heart goes out to the primary producers in these regions who have potentially lost their whole crops or their whole herd," Robertson said.
He said these costs came on top of the cost of the Auckland floods. Waka Kotahi NZ Transport Agency estimated the damage to roads alone during those floods was estimated to be $1 billion. Put in perspective, Waka Kotahi spent $4.7b across all transport classes last fiscal year.
Robertson acknowledged that one of the challenges to the rebuild is a tight labour market, meaning there were not enough workers to do what the government needs.
Earlier this week, Robertson said the government was looking at visa settings that could be adjusted to increase labour supply for the rebuild - something that was done following the Canterbury earthquakes.
In Budget 2022, Treasury warned it was "not possible to deliver the total additional workforce sought" from spending. Robertson said that the government would look at sequencing what it was doing to make sure that the workforce was deployed where it was most needed.
He told Q+A that he would be shifting "sequencing - phasing".
"There might be some projects in those sorts of sectors in other areas of the country that won't go ahead so quickly," he said, noting that crews from the South Island had already gone north to help with the rebuild.
This story was originally published on the NZ Herald.