Does Shakedown Have Silver Lining?

Christchurch based politician Jim Anderton will no doubt be regretting his comment last week that it would take a “seismic shift” for incumbent Christchurch mayor Bob Parker not to lose the local body election fight that they are both engaged in. At 4.35am last Saturday morning, New Zealand’s second largest city was struck by an earthquake of similar strength to that which destroyed Haiti. In fact Parker, ever the gentleman showman, has risen to the occasion and must be privately elated that he has a new public platform on which to perform. The timing is also perfect for other politicians who are ever mindful of the lessons from 9/11 and New Orleans.

When old Mr Hubbard went to the cupboard and found it bare recently, the subsequent receivership of poorly managed South Canterbury Finance (SCF) and its labyrinthine and multitudinous related entities also hit the Canterbury region like a shock wave. It was a painful reminder of why we cannot continue to prime our economic machine purely on the basis of milk exports and highly leveraged property assets. Investors in the failed firm received an immediate payment under a government guarantee scheme totalling $1.7 billion. Whilst some of this cash will no doubt be recovered, it’s appalling that SCF went unchecked for so long. Ordinary taxpayers and legitimate businesses have had to shoulder this burden.

Most of the SCF payout will likely disappear into holiday trips to Surfer’s Paradise and safe but low interest earning bank accounts of the grey brigade.Very little will actually be reinvested into the productive part of the New Zealand economy. Consequently, the earthquake is a “god-send” for central government too. Apart from the immediate distraction from existing economic problems, it will validate investing hundreds of millions of dollars on infrastructure repairs. Road builders, plasterers and brick layers from all over the country will be fully engaged for months, possibly years. That may be quite a good thing.

I don’t wish to minimise the effects on Christchurch residents as they were thrown from their beds on Saturday morning. It must have been a terrifying ordeal and the ongoing psychological trauma of aftershocks will continue to play on minds. But I partially agree with some commentators who suggest that New Zealand has a high level of preparedness and that we will come through this. Now that the dust has settled, we might even see some benefits arise from this event. If nothing else, there will be a lot of learnings that can be passed on to those of us that live in other parts of the country with a history of high seismicity.

5 thoughts on “Does Shakedown Have Silver Lining?

  1. Agree about the potential stimulus effect. Hence my (@sethop) tweet from yesterday: Some day, #eqnz will be an up-blip on the NZ GDP graph, and an ACT guy will say: “and here we see the 2010 tax cuts kicking in.”

  2. Haha…missed that one, but yes some politician will no doubt claim credit for it.

    In the meantime I hope everyone is faring well enough. Must admit to feeling a certain sense of helplessness. Not a great deal our community can do to assist apart from paying our taxes and keeping you guys in our thoughts.

  3. Bricklayers?! I hope not! Carpenters, certainly! I just couldn’t help but notice the sheer amount of shattered brick structures in the photos of the quake, versus the lack of shattered wood scattered over the roads of Canterbury.

    Having said that, although it’s a horrible way to stimulate an economy, I do agree with the points you make. As for learning from the disaster, I did read in the NZ Herald today an article in which the Christchurch City Council (Bob Parker, specifically, I believe) state that they had tried to discourage, if not prevent, real estate developments on land at risk of liquefaction. Let’s hope lessons are learned.

  4. One of the tragedies of this event is that a number of classic stone or brickwork buildings have been lost. There has been a lot of sadness about the city losing part of its heritage.

    Hopefully it will encourage greater strengthening and restoration work throughout New Zealand. I’m worried about the appalling state of contemporary architecture in New Zealand. Every historical building that is lost detracts from the character of the city.

  5. True enough, and I did read yesterday that the council is going to toughen up the requirements for strengthening when these buildings are restored. I would hope a lot more people look into the perils of liquefaction, too.

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