PM Key says significantly more land damage to Christchurch's eastern suburbs; Govt close to getting an idea on where rebuilding can't be done

Prime Minister John Key says initial reports suggest there has been significantly more land damage in the eastern parts of Christchurch due to the combination yesterday’s two large aftershocks.

“The 5.5 loosening up the land and the 6 causing further subsidence. We’ll need to get better information there, but that was the initial reports from Tonkin and Taylor that we think in certain parts of Christchurch there has been a substantial drop in those land levels, adding on from the first two major earthquakes," Key told journalists in Wellington after speaking at a breakfast function.

Outside the eastern suburbs there had clearly been some damage to buildings, and a number of homes were still without power, with the biggest shock being to confidence of those living in Christchurch.

The government was getting “very close” to being in a position where it could identify what areas could not be rebuilt upon, Key said.

“Clearly the ones we’d already identified, effectively no more damage could be done to them anyway – they’re ultimately at that point now,” he said.

“It’s a question of the pieces that neighbour that land, and whether there’s any further impact as a result of that work [reports]."

The situation was complex because of the number of different component parts that were being worked with.

"Obviously it's critically important we get that right, but we are in a position where we're feeling we've got much better information, we want to communicate that as quickly as we can," Key said.

There would be further looks at the damage sustained in the eastern suburbs, Key said. The Lyttelton and Sumner areas had also sustained more damage.

Could mean more homes not being rebuilt

It was hard to absolutely tell how the latest aftershocks would affect rebuilding plans for the city.

"The areas where we've identified that can't be rebuilt, there's effectively no change there because that position for the most part has been determined. We're just trying to work our way through how all of that might work for those residents and communicating all of that," Key said.

"But what it may do is it may potentially widen the number of homes that can't be rebuilt, but it's very early days yet. The issue here is if the land continues to sink then it becomes harder to remediate simply because it's more prone to flooding, and that's where you start getting more risk," he said.

In terms of extending business support packages due to the aftershocks, Key said the government had "not really considered that fact".

"I'm not sure that it will add a lot more [businesses to the list of those needing assistance]. I think those businesses that have actually ultimately moved are in premises that they can probably continue, for the most part, to operate from," Key said.

"I think arguably it vindicates the decision to be very cautious in the CBD. I know that's been deeply frustrating for people, and I understand that completely, but our fear has always been if there was a large aftershock that we may lose a lot of lives as a result of that. So it's been a difficult time for Cantabrians and again, we appreciate that. But I think it has indicated that the authorities have made the right decisions," he said.

Meanwhile, Key said he had not received any updates from the Earthquake Commission since last night.

"They'll go away and look at that, but last I'd heard they were confident they were position was ok."

AMI can withstand pressure - has govt support

Asked later on Tuesday morning whether the government had heard anything from troubled insurer AMI following yesterday's aftershocks, AMI would be able to withstand any pressure because the government stood behind the company and was prepared to make a capital injection.

“That’s probably largely the reason why [its credit rating agency] upgraded them about two weeks ago. But we haven’t had any further advice that the insurance companies are under any more pressure – it is, as I say, very early days,” Key told journalists in Parliament.

AMI approached the government in the weeks following the February 22 quake, requesting government support as the Christchurch-based company was unsure whether it could cover all potential claims arising from the quake. Early estimates at potential losses were wide, with Treasury saying government may need to pay between zero and one billion dollars to cover the shortfall if required.

AMI's management has been tasked with finding a commercial solution to its problems, with the government the last call if the company cannot meet its payments.

Key said he had not had any direct discussions with AMI CEO John Balmforth about the company, although Earthquake Recovery Minister Gerry Brownlee had about a week ago.

“He seemed to be confident that things were progressing quite well, but as I say, it’s very early days," Key said about Brownlee.

(Updates with further comments from Key, comments on AMI)