Finance Minister Bill English was asked on Radio New Zealand today whether projects such as Wellington's Transmission Gully motorway would be dropped or there would be cuts to KiwiSaver incentives, working for families and interest-free student loans.
"I wouldn't want to rule anything in or out at the moment simply because we haven't yet got a handle on the real impact of the earthquake or the impact on the economy," Mr English said.
"For instance, if the economy is flatter and tax revenue is down we would have to absorb that as well as increases in costs that are associated with Canterbury."
He was not signalling a "slash and burn" exercise, he said.
"We need to go back and look at our priorities, which will now have to change because of the earthquake.
"We're just getting started on how we can refashion the budget so we can deal with two things, really: one is the prospect that the economy was going to be flatter than expected, and the other is the direct costs of the earthquake."
Mr English yesterday said the Government would take on "a bit more debt" in the short term to pay for rebuilding.
The Government was committed to provide the financial resources necessary to rebuild Christchurch and the Canterbury economy, he said.
"Most of this spending will be on essential infrastructure such as roads, water and sewerage systems.
"We will pay for this work by prioritising spending on Canterbury above other areas of government spending, and by taking on a bit more debt in the short term."
There was limited information, but Treasury's preliminary assessment of the quake's cost and economic impact put the total figure as likely to be two or three times the $5 billion estimated cost of last September's 7.1 quake, including private insurance and government costs.
Treasury will issue a more detailed analysis this week.
Mr English said economic impacts would include a loss of output from the Canterbury region, a delay in the reconstruction effort from the previous earthquake - as well, New Zealand's economic growth in the first half of 2011 would be lower than previously forecast - leading to lower tax revenue.
The Government would bear the extra costs to support Christchurch and rebuild the city and its infrastructure and had the resources to do what was needed, Mr English said.
Financially, New Zealand was well covered for disasters by world standards - through the Earthquake Commission disaster fund, the Government's own finances and ability to borrow, and through insurance companies and their own global reinsurance arrangements, Mr English said.
"The earthquake has clearly dealt a considerable human and economic blow to Canterbury, and this will have a significant impact on the Government's finances and the wider New Zealand economy. Its effects will be felt for some years to come.
"But I'm confident that New Zealand will come through this."
