The Government is looking to give itself tough new powers to prohibit people from rebuilding in flood-prone areas.
However, both the Prime Minister and the new Cyclone Recovery Minister, Grant Robertson, admit it is a proposal fraught with political difficulties.
But the proposal announced yesterday to set up a Cyclone Recovery Minister, a special Cabinet Committee and a Task Force to be chaired by the ubiquitous Government fix-it man, Sir Brian Roche, points to the cumulative experience of the Canterbury and Kaikoura earthquakes and Covid.
The challenge after a major disaster for the Government is to get all its agencies working together.
Ironically this is a challenge Chris Hipkins is familiar with, having incorporated lessons learned from Canterbury into his 2020 Public Service Act when he was Minister of State Services.
That allowed for the establishment of interdepartmental executive boards, which could bring together the resources of several agencies and, if necessary, establish stand-alone entities called “interdepartmental ventures” along the lines of the Christchurch Earthquake Recovery Agency.
The embryonic form of that would appear to be in the establishment of a new cyclone recovery task force.
But in what looks like lessons learned from Christchurch, highlighted by the Auditor General in 2021, who noted tensions between the Earthquake Recovery Authority and the Christchurch City Council, Hipkins is giving local government a much more central role in the cyclone recovery.
He said a lead minister would be appointed for each of the affected regions, and they will be tasked with reporting back, working with the communities on the local recovery approach to ensure the government was guided closely by the advice and needs of those affected on the ground.
“We will be establishing a new cyclone recovery task force to ensure those local voices have direct input into decision-making,” he said.
“The task force will be headed by Sir Brian Roche and will be structured similarly to that of Australia’s Queensland task force that was established following the floods, including regional groups.
“It’s important that this recovery effort is led by the needs of those on the ground.”
In shades of the Covid response, Hipkins has also established a new Cabinet Committee to manage the cyclone response.
Robertson has previously praised the use of both a Cabinet Committee and a Cabinet Ministerial Group during Covid for their ability to be flexible and quick off the market in making decisions in response to the crisis.
Then Cabinet Secretary Michael Webster wrote in a paper in February 2021 that our system of executive decision-making had proven flexible enough to allow an agile and swift response to a crisis.
“Ministers were, at incredibly short notice, regularly provided with information, analysis and advice and, in a collective setting, after robust discussion in a virtual environment, made decisions that were accurately and clearly recorded, and quickly promulgated,” he said.
But setting up a process is one thing; getting widespread public support for decisions is another.
Potentially the most controversial area will be what is rebuilt and where.
The Prime Minister yesterday conceded this would pose its own political challenge.
“That is going to be one of the big conversations that we’re going to have in the next little while,” said Hipkins.
“We’re not going to be rebuilding in the next couple of weeks, so we do have time to work our way through that. But yes, those are going to be very live conversations in the next little while.
“I wouldn’t rule out the need for some custom legislation once we’ve got a clearer picture of exactly what we’re going to have to confront and what the pressing needs are going to be.
“We do have other tools available, though, that we didn’t necessarily have in terms of legislation. The last time we faced a significant natural disaster.
“We already have fast-tracked consenting legislation, for example, and we’ve been using that quite regularly already.
“The civil defence legislative framework has changed, and so there are more tools available there.
“But in an event of this scale, it’s quite possible that we’re going to need some custom legislation.
“We will have to shape that up in the next week or two, and if we need it, we will seek to achieve support for it so that we can get it in place quickly.”
That legislation will have climate change adaptation built into it. Hipkins said Cabinet would sign off the terms of reference for the recovery processes he outlined yesterday.
“The need for greater resilience and addiction to climate change is going to be embedded within that,” he said.
“The Minister for Climate Change will be involved in the process of helping us to shape that up.”
Nevertheless, the opposition that the Government will potentially face over trying to direct people where they might build was apparent yesterday in a blog post from the Chief Economist for the free-market, New Zealand Initiative, Eric Crampton.
He argued that people should be able to build where they want but that they should bear all of the costs associated with that should a disaster strike.
As well as questions about houses and buildings are rebuilt, there will also be questions about roads and Hipkins publicly yesterday confirmed what other Ministers are saying in private; that some roads will not be rebuilt.
“We have a large job ahead to determine which state and local roads can be rebuilt and which cannot or perhaps should not be replaced,” said Hipkins.
Grant Robertson was slightly more specific.
“It’s early days for some of those really big decisions, but people will be aware of some of the roads and other parts, not just the Hawke’s Bay that have had previous issues and have been rebuilt and are now facing issues,” he said.
“We’ve got to work our way through all of that. I’m not going to comment on specific ones. We’re going to work through all of them.”
It is becoming more clear as each day passes that the scale of this disaster is massive and that it will now dominate the political year much as Covid did in 2020.
For example, no one is yet willing to say that all the casualties have been found.
The impact on the Budget is going to be painful.
In his Budget Policy statement last December, Robertson maintained adherence to the goal of returning the government to a fiscal surplus by 2024/25 but conceded this would require a contractionary fiscal stance.
Though he has forecast that he was $4.5 billion of new expenditure for this year’s Budget, around $2 billion of that is already committed to health.
Given that inflation and finance costs are bearing down on the Government, there may not be not much room to foot the recovery bill, which could easily roll into the billions.
Robertson will have two choices at that point; either he borrows more and relaxes his fiscal targets, or he raises more revenue from taxation.
Asked if he was considering more revenue-gathering policies, such as tinkering with tax levels, he said: “No decisions have been made about that. But clearly when I come to put the Budget together, I consider revenue and I consider expenditure. “
A World Economic Forum paper in 2019 argued that raising taxes to finance disaster recovery was the equivalent of imposing fiscal austerity during a recession.
“It is unwise to burden a battered economy with higher taxes,” the paper said.
“Because natural-disaster recovery, like a recession, does not last forever, a country is better off delaying fiscal consolidation until the economy is better able to weather it – that is, after a largely debt-financed recovery is complete.’
The Key Government allowed debt to increase after the Christchurch earthquake; in 2011, as a percentage of GDP, it rose 13.33 per cent from 34.81 per cent and went up by another 3.52 per cent the following year to peak at 51.66 per cent of GDP in 2012.
The method for calculating the debt/GDP ratio has changed, so the current official figure is not strictly comparable with 2011, but the current debt is higher than it was in 2017.
Gabrielle has redefined the politics of 2023, but unlike Covid, the Government can now draw an extensive bank of local knowledge on how to manage disasters.
That looks like how it will pitch itself into the election, as the people you can trust when the going gets tough.
It is undoubtedly going to do that.
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