Good afternoon.

Cabinet today held an extensive discussion lasting nearly three hours on the Canterbury Earthquake and the Government’s response to it.

Firstly, can I express my sympathies to the people of Canterbury, both to those injured and those who have lost property or had their houses damaged.

Having visited Christchurch on Saturday after the earthquake, I can well appreciate the magnitude of loss that people have suffered. I was awestruck by the power of the earthquake and the damage that it has caused in the city I grew up in. It was miraculous that nobody was killed.

I understand that the three people who were seriously injured are now stable and are making a recovery.

Health and safety of the public is a big focus for the authorities.

I note there have been continued aftershocks today.

The biggest issue appears to be water supply and wastewater. The Civil Defence Minister is this afternoon meeting with the Mayors and officials, about taking up help that has been offered from around the country to resolve this important issue as quickly as possible.

There are just over 160,000 homes in the Selwyn, Christchurch and Waimakariri areas, and there are estimates that 100,000 of them may be damaged, some beyond repair.

We do not yet know how many people are uninsured, but officials, EQC and the insurance companies are working on that. I am advised that the national average of uninsured houses is around 5 per cent.

It is important to note that any homeowner who has a mortgage or business that has borrowings, will almost certainly have insurance as a requirement of that liability.

The above-ground damage is obvious, but it could take some time to understand just how much damage there is to underground infrastructure.

The Ministry of Education is checking all the schools in the Christchurch, Selwyn and Waimakariri areas, which have been closed until Wednesday, to ensure that they are safe for students and teachers to go back.

Power supplies have been restored in most places, with very few customers still out – about 3500 I am advised - and the bulk of them should be restored over the next few days.

I am advised all rail lines will be restored by tomorrow, but in the meantime freight is being brought into Christchurch by road. The state highway network is fine, but there has been significant damage to some local roads. Christchurch Airport and the Port of Lyttelton are open.

Today we’ve had at last count just over 4000 calls to the Government earthquake helpline (0800 779 997), but we expect that to grow.

EQC has at early this afternoon had more than 15,000 claims, and of course that is expected to keep growing.

I am advised that EQC are looking to establish three field offices in Christchurch. Each will contain about 40 staff, the first of which is due to open later this week.

The Government will be working alongside EQC and the other relevant players, to provide as streamlined a system as possible in order to process what will be a huge workload.

It is also worth repeating that anyone with home and contents insurance can claim up to $100,000 plus GST on their house, and $20,000 plus GST on their contents. EQC has advised that irrelevant of when a claim is made, GST will be calculated at 15 per cent.

I want to thank everybody involved in responding to this disaster. There has been a real community spirit shown – from private individuals, to government agencies, NGOs, and businesses, both local and national.

Some government agencies have flown extra staff down to help local staff out – for example in health, education, and Work and Income.

One example of the effort being put in by agencies is shown by Work and Income’s staff ringing all the elderly people who are known to be living alone in Christchurch. Ten thousand calls were made as of this morning, and we anticipate all 16,000 of those over 65 living on their own will have been contacted by the end of today. Where contact cannot be made, Work and Income staff are physically checking the premises.

As to the economic impact, we’ve received some preliminary advice from Treasury on the effects of the earthquake on the economy.

That advice suggests there will be considerable disruption to both the Canterbury and national economy in the short term due to a loss in activity as people and businesses deal with the immediate aftermath of the quake.

But, looking out a little further, there should be an increase in activity once reconstruction and repair work kick into full gear.

This high expected level of construction activity could put some pressure on prices, but this will be balanced by the relatively weak level of activity in the construction industry at this time. So the effect on inflation should be limited.

These events could mean some volatility for tax revenue over the next year, but due to our work to control debt the Government is well placed to absorb this.

The Minister of Finance is in the process of talking to the banks, and IRD officials, to work with them to see how they can take into account the impact on business of the earthquake.

Treasury has conveyed to ratings agencies the message that the earthquake will not fundamentally alter New Zealand's fiscal position. Those agencies have said the earthquake will have no immediate effect on NZ's sovereign credit rating.

I’ll now move to some decisions taken by Cabinet today.

As you are aware, a Mayoral fund has been established. This is consistent with practise in previous natural disasters. These funds are typically used to assist local residents facing genuine hardship in areas not covered by direct state assistance.

Overall, pledged donations so far have totalled just under $6 million, including substantial contributions from some of the major banks, and others. I want to thank those organisations who have made contributions, and we’d encourage any organisation or individual to consider also contributing to the fund.

The Government has today decided to contribute an initial $5 million to the fund. Further contributions will be considered in due course.

The decision has been taken that for coming weeks, Gerry Brownlee will be the Minister responsible for earthquake recovery.

He will be based in Christchurch and give daily media briefings, keeping in touch with all relevant ministers and government and local agencies.

There was discussion about appointing a special commissioner to work between central government and local government. No decision has yet been made but the intention is to sit down and have discussions with the relevant local authorities as soon as possible on the idea.

A Cabinet committee, called the Cabinet Committee on Canterbury Reconstruction, will be formed, chaired by Mr Brownlee. Its membership and Terms of Reference will be decided upon shortly and that information released by the end of this week.

The officials committee supporting the new Cabinet committee will be led by the Department of Prime Minister and Cabinet, which is already playing a strong co-ordination role in the Government’s response.

In terms of roading infrastructure, there is $94 million immediately available in the emergency works fund for the rest of this year (this is for use across the country). This is definitely enough to get us started.

The three affected Councils are working to ascertain what needs to be done and how much that will cost, and NZTA engineers are working alongside them. Until that work is complete, we simply don't know the size of the problem. The government stands ready to assist beyond the emergency works fund if required.

I am pleased though to hear that, for the most part, the state highway network has held up very well - including bridges. Canterbury's main arterial local roads are also ok. The main area of concern is a number of residential streets and roads across the region, and often the issues are linked to water and sewage infrastructure issues.

As for my diary this week, I intend to make a ministerial statement in the House tomorrow afternoon. I will then fly to Christchurch with a number of other Ministers.

We will meet with all the local Mayors - Bob Parker, Ron Keating and Kelvin Coe - at the Civil Defence headquarters, for a full briefing. That night I will visit the welfare centres that are open around the city.

I will stay the night, and on Wednesday morning I will visit some of the hardest-hit rural areas surrounding the city.

The final programme is still being organised, and is subject to change, but we will get a detailed advisory out as soon as we can.

We have also received a number of messages of support and sympathy from foreign governments.

I have received messages from Prime Minister Julia Gillard, Prime Minister David Cameron, the Prime Ministers of Tonga, Israel, and Singapore, and the foreign ministers or officials of the United States, Chile, Spain, the European Union, and the Netherlands.

In addition, both Prince William and Prince Charles have also given us messages of support.

A note about my official visit to the United Kingdom and France. At this stage it’s my intention to continue with this and leave on Friday night. By then I hope to be confident that all the recovery processes will be in place.

We will continue to monitor the situation and we won’t go unless we are absolutely confident that based on the best information, it is prudent to do so.

While away, I will be receiving regular briefings and updates, and talking to my Ministers.

I should also note that at this stage we see no reason to delay the impending local government elections in October.

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