Cyclone Gabrielle: National's Christopher Luxon, economist Cameron Bagrie not keen for flood tax to pay for damage

Christopher Luxon says a flood tax is a bad idea but thinks the Government should borrow money for rebuilding regions severely damaged by Cyclone Gabrielle.

The National Party leader told AM the Government has wasted too much money and inflation - running at 7.2 percent - was too high for another tax. 

It comes after Finance Minister Grant Robertson on Tuesday wouldn't rule out a flood tax to pay for the cleanup. 

The Government had to "work through both how we're going to pay for things and what we have to pay for", Robertson said.

He said no decision had been made about a flood tax.

Luxon was asked on AM if National would support a flood tax to pay for the expected bills from the cyclone damage.

"It's a bad idea," he responded.

"This Government has wasted a huge amount of money… because inflation's so high, it's raising a huge amount of extra tax already.

"You just know [the Government] will raise the tax and it will carry on doing dumb, pet ideological projects."

Luxon said borrowing money for the rebuild made more sense.

"I think we should borrow for it because we're actually making an investment in that region and, when you borrow money to upgrade the roof on your house versus borrowing to pay for your groceries, there's a difference there in terms of making an investment in a region."

Christopher Luxon.
Christopher Luxon. Photo credit: Newshub.

Independent economist Cameron Bagrie told AM on Wednesday there was no need for a flood tax.

"To me, it misses the big picture… what is highlighted is the failings across the infrastructure across New Zealand - so let's start to think about the 10, the 20, the 30-year picture on top of what we need to do in the near-term in regard to Gisborne, Hawke's Bay, etc," he said.

"There are three basic funding mechanisms the Government's got; one is tax rates… the second thing is the allocation of spending… and the third thing is, of course, debt. What's a comfortable level of debt going forward should we be debt-funding this?"

Cameron Bagrie.
Cameron Bagrie. Photo credit: AM

Prime Minister Chris Hipkins said in Parliament on Tuesday Cyclone Gabrielle had "wreaked havoc on millions of Kiwis' lives". 

"Tairāwhiti and… Hawke's Bay has seen the devastating impact in particular: 11 lives have been lost and others are still unaccounted for. To those who have lost loved ones in these tragic events, New Zealand is grieving with you."

Hipkins said the Government knows more financial support would be required but pointed out it was "in a very strong position to contribute to that. We have some of the lowest debt levels on a per capita basis in the world".

"We have options and choices ahead of us because of that. Even if we borrow more money in order to contribute to this response, we would still have lower debt than our neighbours and mates over in Australia, and considerably lower than countries like Canada, the US and the UK."