23 September 2015

A new $multi-billion agreement, signed between the regional authorities and a huge Chinese corporation provides a boost to the rebuild of Christchurch.

SCIRT waterpipe renewal christchurch new zealandWastewater pipe renewal, courtesy of SCIRT

Following the two earthquakes in September 2010 and February 2011 which caused such destruction in Christchurch, the city, regional and national government have been planning how best to conduct the rebuild.

The five years since the first of the quakes have seen considerable investment pour into the city with some economists saying that, recently, over $100 million was being spent a week. The scale of the disaster can also be seen in the scale of claims made because, as at the end of March, 2015, nearly $15 billion in claims has been paid out, made up of £8.7 billion commercial claims and $6.2 billion in residential claims.

The local government has been focusing on rebuilding the infrastructure, with over 490 related projects completed worth over $630 million. In all, the most recent figures http://strongerchristchurch.govt.nz/more-progress show that, as at 10 September 2015, 79km (85%) of fresh water pipes were repaired or replaced, laid or relined 423km of waste water pipes (64% of the damage), laid over 1 million m2 of road surfaces (67%) and repaired or replaced 126 bridges or culverts.

The vast scale of the rebuild has had considerable impact on not just the regional economy but the national one as well. With high levels of construction expected toSCIRT GayhurstStBridgeReplacing Gayhurst St. Bridge, courtesy of SCIRT continue until 2020 or even 2024, Tony Sewell, head of Ngai Tahu property and previous chief executive of the Property Council said

"We are not at the peak yet, there is still a lot more to go. It's clear they (the economists) are wrong.”
"There's a raft of things including rebuilding schools, finishing housing, and the insurers aren't out of it yet."

According to Statistics New Zealand, Canterbury councils issued consents for more than $1.7 billion of non-residential construction in the past year and it is estimated that the entire rebuild is perhaps only 40% complete.

With concerns about the global slowdown and sharp falls in dairy prices hitting the economy adversely, the announcement that a huge Chinese company, Guoxin International has signed a non-binding letter of friendship and cooperation stating the intention of raising a fund to invest $3 billion in the city’s ongoing rebuild and regeneration has been welcomed as a further boost to the region.

The Chinese behemoth, the company behind the famous Bird’s Nest stadium built for the Olympics, has vast experience at tendering for and developing projects and, with the economies of scale they can bring to bear are expected to be able to compete for and win a substantial pipeline of projects.

The Mayor of Christchurch, Lianne Dalziel, a signatory to the agreement said

"This is a very generous commitment from a very large and reputable Chinese company.
"I'm excited that our community will have the chance to work alongside this company as we shift our focus from recovery to regeneration."

It remains to be seen how truly successful the rebuild will be long term. A recent report, the first from the Government looking at the effectiveness of the earthquake repairs, cited a number of examples of “poorly executed” and shoddy work that could threaten the future sales of affected properties. With construction workers is short supply and consequently high demand, and pressure from insurance companies and the government to get repairs underway quickly, it is perhaps not surprising that the rebuild has encountered problems.

The country doesn’t benefit from many of the economies of scale that other larger countries have and a rebuild of this size (Christchurch is New Zealand’s second most populous city) can both present opportunities, in allowing regional and national governments to reorient the economy into more modern sectors, but it can also distort the volume of true economic activity, making national forecasting and analysis that much more difficult.

However, New Zealand remains a wonderful country to move to. Emigration has been, and will continue to be one of the drivers of the economy and for those looking for a more laid back life it continues to be a popular choice. The involvement of Chinese companies in the repair and rebuild process is a natural conclusion to the close links that both New Zealand and Australia have built during the boom years of China’s economic transformation.

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