Drought bill could reach $2b – English
Finance Minister Bill English (file)
The ongoing drought across the country may slash $2 billion off the national economy, Finance Minister Bill English says.
The figure is a leap from the $1b estimated last week, before the entire North Island was declared a drought zone, but still less than the $2.8b cost of drought in 2007/8.
Mr English told Q+A he will get updated advice on the cost during the next few weeks, ahead of the budget on May 16.
"The latest advice is that somewhere between $1-2 billion will be knocked off our national income and as every week goes by, the prospect of it being $2b instead of $1b grows," he said.
He said the cost of the drought underlines the economic importance of the primary production sector.
"There's really nothing else that can knock 30 per cent off New Zealand's growth rate in a year."
Mr English conceded that it was evidence the economy needs to diversify.
"We are a fairly weather-dependent economy, whether it's our electricity or primary production or the cash flowing through our provincial cities."