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Budget 2017 Home Page Budget Speech - Budget 2017

Resilience

Mr Speaker, one of the most important duties of government is to be able to stand behind vulnerable communities and vulnerable people when the chips are down.

People generally prefer to look after themselves, and for the most part they can.

But when disaster strikes, or a big economic shock happens, families and communities need their government to be ready to help them through.

This government's definition of ‘resilience' is the ability to provide that support.

Through the Global Financial Crisis we stood behind New Zealanders. And following the Canterbury and now the Kaikōura earthquakes, we have pledged to rebuild shattered communities.

It is that experience that has taught us the importance of having the financial capacity to respond.

The GFC and the Canterbury earthquakes involved the Government running up debts amounting to around 20 per cent of GDP. It was the right thing to do, and the right thing to do now is to run a strong economy and reduce that debt so we have the room to do the same again, if and when we need to.

That is why I announced a new medium term target of reducing net debt to between 10 and 15 per cent of GDP by 2025, following on from the current target of around 20 per cent of GDP by 2020.

We owe it to our future to take that decision.

Once we reach that target, the intention is to stabilise debt at that level, and use any extra fiscal room for further investment in public services and infrastructure, or further tax changes.

Another important part of the New Zealand resilience story is the role of the Earthquake Commission and the National Disaster Fund.

With the help of international re-insurance, the Fund has so far paid out over $9.5 billion in claims to those affected by the Canterbury earthquakes. It is currently expected to pay out another $550 million in claims for the Kaikōura earthquakes.

Those claims will completely exhaust the National Disaster Fund. We need to re-start the process of replenishing it.

I am therefore announcing that from 1 November this year the EQC premium rate will increase from 15 cents per $100 in cover to 20 cents per $100 in cover.

This will have the effect of increasing home owners' annual EQC premiums by up to $69 per year.

The change will mean that we are well on the road to restoring the National Disaster Fund to around $1.75 billion within 10 years.

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