Rt Hon John Key

Prime Minister

10 September 2013

Making Progress: The Christchurch Rebuild

Speech to Canterbury Employers’ Chamber of Commerce

Thank you all for being here today.

I want to particularly thank the Canterbury Employers’ Chamber of Commerce for hosting this event.

None of us will forget three years and six days ago – in the early hours of September 4th, 2010 – when Canterbury was shaken by the first of what would turn out to be a series of strong earthquakes.

The most disastrous, of course, was the earthquake of 12.51pm, 22nd of February, 2011.

I don’t think anybody who was in New Zealand that day will ever forget what they themselves felt as the earth shook, or the images they saw in the media.

These were dark days for the people of Canterbury, and the people of New Zealand.

As a former Christchurch lad, who grew up here, went to school here, and started work here, it was shocking to see first-hand the huge impact of the earthquakes.

During the afternoon of 22nd of February, I flew to Christchurch and saw the destruction for myself.

I visited again many times in the days and weeks that followed, and met many residents, emergency staff, community leaders and others who were doing the very best they could to respond in the most difficult and challenging of circumstances.

I think we can all agree the community showed great resilience, and rallied around to support one another in the aftermath.

At this point, I want to publicly acknowledge and thank retiring Mayor Bob Parker for the contribution he made to both the emergency response and subsequent rebuild efforts.

Bob’s leadership at a time of great uncertainty will not be forgotten.

The relationship between central and local government is a close one, and we look forward to working constructively with the new Mayor and Council following next month’s local body elections.

And I want to acknowledge the leadership role members of the Christchurch business community, many of whom are here today, played in the aftermath.

You showed great resilience and flexibility to have kept your businesses operating, and employing people, during that difficult period.

And I also want to acknowledge the tenacity of the people of Canterbury, and their continuing patience as the recovery builds momentum.

I also want say at the outset that the disaster and its aftermath have resulted in quite natural and understandable frustration and unhappiness from some people.

That is to be expected given the scale of the dislocation and destruction, and the complexity of the recovery and rebuild.

Things can get very tough when people find their lives turned upside down, their houses in disrepair, their community services disrupted, and simple tasks like driving across town becoming difficult and time consuming.

The Government has had to make some difficult decisions; at times trade-offs have had to be made, and in a rebuild of such scale and complexity, there won’t always be perfect outcomes.

But I can tell you that we are fully committed to the rebuild, and good progress is being made.

Our Commitment to Canterbury

The National-led Government has four priorities this term.

These are to responsibly manage the Government’s finances, build a more productive and competitive economy, deliver better public services, and of course rebuild Christchurch.

I want to re-state that commitment to rebuilding Christchurch again today.

The Government is determined to keep driving the momentum of the rebuild.

Earthquake Recovery Minister Gerry Brownlee, and his Associate Amy Adams, are working hard on this, supported by their Cabinet colleagues.

The Canterbury Earthquake Recovery Authority was established in late March 2011 to help with the recovery, and the agency has been extremely busy ever since.

CERA is the lead agency for the delivery of nine of the 24 recovery programmes operating under the Recovery Strategy for Greater Christchurch, and it is supporting the agencies that are working on the other programmes.

These programmes range from residential red zone demolition and clearing, to the delivery of major Anchor projects in the CBD.

Largest economic undertaking in NZ’s history

I don’t think it’s a stretch to say that we collectively -- central and local government and the local community -- face a task of enormous complexity and difficulty.

A city has been shaken to its core, and the rebuild is on a unique and unprecedented scale.

To give you some idea of that scale, in the May Budget the Government increased the total estimated cost of rebuilding Christchurch to around $40 billion from the previous estimate of $30 billion.

The Government’s share of that cost is now around $15 billion – up from the previous estimate of $13 billion.

Of the Budget’s confirmed additional funding of $2.1 billion, some $900 million of new capital is to come from Share Float revenue which amongst other things will be spent on redevelopment of Christchurch and Burwood hospitals.

To put these figures into perspective, consider this: $40 billion is about 20 per cent, or one-fifth, of our annual GDP.

We are not only rebuilding a central business district that has been almost completely destroyed or demolished, but we are in the process of rebuilding and repairing tens of thousands of houses, and repairing and replacing hundreds of kilometres of roads, water, and wastewater pipes.

There can be no doubt that we are in the middle of the largest economic undertaking in New Zealand’s history.

But, despite the scale of the challenge before us, my message to you today is this: we are making good progress.

We are rebuilding this place and our vision is to make it one of the best small cities in the world to live in, work in, and raise a family in.

Regional economy steaming ahead

I want to turn now to the increasing signs of progress.

The regional economy is steaming ahead.

Growth is up, employment is up, unemployment is down, building consents are way up, and retail trade is strong.

The latest ANZ Regional Trends survey out last month showed Canterbury was dominating every region in New Zealand, with growth in the year to June 2013 of 6.6 per cent, far ahead of the next fastest-growing regions.

The bank noted that over the past 12 months, the rebuild has generated very strong growth in employment, dwelling approvals, commercial building consents, new car registrations, and retail trade.

The June quarter Household Labour Force Survey showed the region’s labour market continuing to strengthen, with the number of people employed growing by 16,800 -- or 5.5 per cent -- over the year.

At the same time, the employment rate has risen from 63.7 per cent a year ago to 67.6 per cent.

In building consents, statistics show just how much is going on. The number of new consents issued in July was the highest monthly value since 1990 in Christchurch.

The current monthly average is around 50 per cent higher than the pre-earthquake monthly average.

CERA figures show 456 new residential dwelling consents were issued in July in greater Christchurch, and 337 in June.

The June total was a 43 per cent increase on the same month a year ago, and the July figure was a 40 per cent increase.

But perhaps the most revealing figures are the total value of consents issued since September 2010, when the first earthquake occurred.

Since then, $3.7 billion worth of residential and non-residential building consents have been issued in greater Christchurch.

Of that total, $2.4 billion was for new residential dwellings and $1.3 billion for new non-residential buildings.

Progress in the Central Business District

I want to turn now to progress being made in the central city.

Last year we released a bold blueprint for the CBD’s redevelopment in the Christchurch Central Recovery Plan.

It’s fair to say the blueprint was very well received.

At its heart, the blueprint has a number of major Anchor projects. These include a Convention Centre Precinct, Retail Precinct, Bus Interchange, Justice and Emergency Services Precinct, stadium, Metro sports facility, Avon River Precinct, and Health Precinct.

In June came a major milestone with a cost-sharing agreement between the Christchurch City Council and Crown to split the cost of the Anchor projects, and horizontal infrastructure such as roads, water and wastewater.

The cost sharing agreement provides for the Crown to pay $2.9 billion and the council $1.9 billion.

As well as negotiating this agreement -- which has provided the certainty required to move forward -- land purchase for the Anchor projects has been proceeding apace.

As at 30 August, agreement had been reached for the purchase of 164 properties, which represents nearly 52 per cent of the total land area required.

The Avon River Precinct, which includes Margaret Mahy’s Amazing Place playground, will be completed by mid-2015, after starting in March. The first pilot section, Watermark, was opened near the end of last month.

It’s expected that construction of the Convention Centre Precinct will start late next year, with early works beginning later this year.

And last week the Government requested Expressions of Interest for a main contractor to build the Justice and Emergency Services Precinct.

When completed, it will accommodate up to 840 justice sector staff and 370 emergency services staff – a total of up to 1200 staff on one large site in the CBD.

There will be more news on progress on Anchor projects in coming weeks. But it’s not just with Anchor projects where we are making progress.

In mid-August, it was reported that building consent applications for projects in the CBD worth $43 million had been lodged in the preceding six weeks alone.

For months now, in fact, there have been more people building than demolishing in the CBD.

In June the final central city cordon came down and the Defence Force left, a hugely symbolic day for the city.

The Stronger Christchurch Infrastructure Rebuild Team (SCIRT) is making very good progress on repairing earthquake-damaged roads, freshwater, wastewater and stormwater networks both within the CBD and in greater Christchurch.

Businesses have been reopening in the central city. This includes critical hotel accommodation needed to support tourism given the city’s crucial role as gateway to the South Island.

The move by businesses back into the CBD is gathering pace.

Last month, for example, media reported that more than 1000 workers from the big banks are set to return to the central city, as their employers negotiate space with developers.

Public sector relocating to CBD

I think everybody would agree that the orderly return of people to live and work in the central business district is a vital part of the recovery.

In June, Gerry Brownlee and State Services Minister Jonathan Coleman indicated that the Government had received a good response to a call for proposals for public sector office accommodation in the CBD.

As you know, with the CBD all but closed since the earthquakes, government departments and agencies have been dispersed in temporary accommodation around Christchurch.

I want to announce today that the Government has decided that about 20 public sector departments and agencies will be relocating into the CBD, with the aim that this will occur during 2016.

It is planned that they will move into four new buildings around the Retail Precinct.

Negotiations over the leases are on-going with the developers of the preferred buildings, so I can’t go into any more detail about these developments at this stage.

However, this move will bring 1700 government employees into the central CBD.

This will help support the recovery of the central business district, and offers a long-term solution for government office accommodation in the city.

It will be a catalyst for more economic activity in the CBD, whether it is retail or associated businesses.

The departmental offices will occupy about 24,000 square metres of space in the preferred buildings.

Departments relocating will include the Ministry of Social Development, New Zealand Transport Agency, ACC, Department of Conservation, Statistics NZ, Ministry of Education, Ministry of Business, Innovation and Employment, Ministry of Health, Housing New Zealand Corporation, and Department of Internal Affairs, along with a number of smaller agencies.

The agencies will be clustered so they work better together, and the buildings will be built to at least 100 per cent of the building code.

Moving from temporary accommodation to these new buildings so rapidly will of course cost more, including the cost of lease tails as temporary accommodation is vacated before existing leases run out.

We have been advised that the move will mean a total additional cost of about $90 million over 20 years, or an average of $5.6 million a year from 2016-17.

However, I will be expecting Ministers and their departments to improve on that figure as we seek to get the best value for taxpayer money.

The move by these departments into the CBD is an integral part of delivering the Christchurch Central Recovery Plan.

And the decision clearly signals the optimism we have for the future of the city and region.

Housing progress

I want to turn now to housing. Again, much progress is being made.

But before I start outlining some of that progress, I want to talk briefly about the complexity of the unresolved housing-related issues that are being faced here in Canterbury.

The Government is spending a lot of time and effort on these issues, specifically Technical Category 3, the Port Hills, cross leases, and Residential Red Zone, where a recent court judgement went against the Crown.

When we examine some of these individual circumstances, resolving these issues is very complex and difficult indeed.

In relation to the recent residential red zone judgement, the Crown is appealing for a variety of reasons, not least of which is that Cabinet’s ability to make unfettered decisions is vital.

It is not only vital to the interests of the country, but to the interests of Canterbury as well, because we don’t want to see the rebuild stall.

Gerry Brownlee is leading a process with officials to work through these housing-related issues, including the Residential Red Zone, as rapidly as possible to find solutions.

What I can say is that we will continue to work as hard as we can on these issues, to find solutions that are as fair and equitable as they practically can be in the circumstances.

Turning now to progress that is being made on the city’s housing, I was pleased to see in June that repairs under EQC’s Fletcher Construction-managed repair programme hit the half-way mark with 40,000 homes repaired -- leaving around 40,000 to go.

Gerry Brownlee noted in marking this milestone that a major risk given the extent of residential damage had been confidence in the region’s housing stock falling.

However, we have instilled confidence, housing values have been maintained or enhanced, and the Government is working in partnership with others to address land and housing supply shortages.

The other significant achievement has been the near-completion of the residential red zone offer programme, which has seen sale and purchase agreements signed with 96 per cent of property owners as at 27 August.

The Government is well aware that a good housing supply is crucial as the city’s recovery progresses.

The housing market has of course reacted to the huge disruption the earthquakes caused, and more supply is coming on stream with new subdivisions and development occurring.

But the Government has also been concerned to ensure it plays its part.

So, after my speech I will be going to Rangers Park in Linwood to cut the ribbon on a Government housing development.

Forty new two, three and four bedroom homes have been built at a cost of $12.5 million.

The houses will be used as temporary accommodation for families while their repairs and rebuilds are carried out, with the first tenants due to move in shortly.

Once the demand for temporary accommodation has eased, the homes will be sold as affordable housing.

The earthquakes caused huge damage to Housing New Zealand’s housing stock, with 95 per cent of its 6000 properties in the city damaged.

In April this year, Housing New Zealand settled its $320 million insurance claim for the damage and loss -- the single largest insurance payout in New Zealand’s history.

The settlement has allowed Housing New Zealand to rapidly move ahead to start the repair of damaged homes, as well as build 700 new homes by the end of 2015.

Construction began on the first site of the 700 new-builds in May.

The three, two-bedroom units on the site in St Martins are in the final stages of completion, demonstrating the pace at which the Government is moving.

The Housing New Zealand plan is the biggest house-building programme in the city’s history.

It equates to a new house being built every working day from now until the end of 2015. So you can see that a great deal is being done in this area.

Conclusion

In the weeks following the 22 February earthquake, I said Christchurch would once again be the successful, vibrant and beautiful place that it was before that disastrous day.

As I said at the start of this speech, I grew up here, went to school here, and started my working life here.

I know this place very well.

I am as determined as anybody to see my home town rebuilt into a city that we can all be proud of again -- a great place to live in, work in and raise a family in.

I am determined that we will do a good job on the rebuild.

We will do it with speed, but we will also do it properly.

The commitment I made on behalf of the Government to the rebuild in the days after the February 2011 earthquake was absolute and unwavering.

Two-and-a-half years on, despite the difficulties, complexity, expense, and scale of what we face, that commitment remains unchanged.

Thank you.

ends

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