8 Oct 2017

Insight: Road to recovery - the Kaikōura quake

Aerial shot of huge cliff with workers cut back debris
From Insight, 8:10 am on 8 October 2017


November's 7.8-magnitude earthquake turned the heavy flow of tourists visiting Kaikōura into a trickle. After a tough winter, not all businesses have survived.  

On Kaikōura's main thoroughfare, Beach Road, a shop window displays an A4 sign.

Printed on white card in bold black capital letters are the words "BUSINESS FOR SALE."
The sign belongs to Rachel Penny, the owner of the craft and souvenir store, A Patch of Country, who on a Thursday afternoon is found behind the shop's counter, serving customers and caring for her granddaugther.

sign in window saying business for sale

Photo: RNNZ /Maja Burry

Ms Penny has lived in Kaikōura all her life and has been running the store for more than a decade.

But since November's quake quake brought slips down onto State Highway 1 and forced the closure of part of the main tourist route between Picton and Christchurch, Ms Penny said her business had suffered.

"The sales have probably gone down 70 percent I would say, since the road has been closed," she said.

Portrait of a woman in her craft shop

Rachel Penny has decided to stop struggling and close down her business "A Patch of Country" Photo: RNZ / Maja Burry

Retail and tourism-related sales in Kaikōura are strongly seasonal, with visitors bumping summer sales by 50 percent in the cooler months.

But when the earthquake struck just before the summer period in November 2016, it choked off the normal rush of tourists.

Data from Statistics New Zealand shows that sales in Kaikōura were about 25 percent, or $7 million, lower in the December 2016 quarter compared to the same quarter the year prior - when tourism spending reached $29.4m.


Statistics New Zealand also found that some towns along SH1 in the Hurunui District, such as Greta Valley and Cheviot, had suffered a drop in spending as a result of tourists having to use the alternative inland route between Picton and Christchurch.

The inland route became the main way to get from Picton to Christchurch after November's Kaikōura earthquake.

The inland route became the main way to get from Picton to Christchurch after November's Kaikōura earthquake. Photo: Google Earth

"We rely on the tourist trade in the summer time, which we didn't have [this season] so we've had like, three winters in a row," Ms Penny said.

In May, the government rolled out a $1m Business Recovery Grant Programme intended to offer financial assistance to quake-affected businesses while SH1 north of Kaikōura was closed.

Figures provided by the Ministry for Business, Innovation and Employment (MBIE) show 18 businesses in Kaikōura have received funding from the grant - while 15 business owners, including Ms Penny, have had their applications declined.

The Adelphi - A historic pub and hotel on Kaikoura's West End has now been demolished.

The Adelphi - A historic pub and hotel on Kaikoura's West End has now been demolished. Photo: Top Google / Bottom/ RNZ / Maja Burry

Ms Penny said trying to pay the bills and keep stock up had now become too difficult and she was having to sell the business.

"I've made the decision to close after 12 years, we applied for the government subsidy but were refused, so I have had to pull the pin.

"It has just come to the crunch that it's just too quiet, and I can't keep going any longer," Ms Penny said.

MBIE satisfied with grant

MBIE said in total, 51 businesses in the Kaikōura and Hurunui Districts had applied for the $1m grant and 21 of those applications have been approved.

The ministry's manager for enterprise and policy, Karl Woodhead, said $17m had already been spent helping businesses in the Kaikōura, Hurunui and Marlborough through a different wage-subsidy package.

Mr Woodhead said the Business Recovery Grant Programme was more targeted and in order to be eligible for it businesses have to meet a range of criteria.

He said that included the businesses proving they had suffered a large drop in income as a direct result of the earthquake, that they had been viable pre-quake and that they had the ability to recover.

"This [criteria] is on the basis that public funds needed to be spent responsibly and reach the businesses that needed it most."      

Since applications opened, $399,000 of the $1m available had been paid to businesses.

Mr Woodhead said it was not concerning that more than half of the money remained unspent.

"What I am relying on is the assessment panel making a decision about whether the business should be receiving the funding based on the criteria that has been set."

Shops on the main street in Kaikoura have structural work done on them.

  The town's main street - pictured here shortly after the devastating 7.8-magnitude earthquake on 14 November. Photo: RNZ / Rebekah Parsons-King

Ms Penny said her application was declined because the government appointed assessors felt her business was not viable.

"My business didn't make money the previous year, it ran at a loss, so that was the decision [from the government assessors] not to get the money."

She said she did not think this was fair and that she would not be closing if it was not for the earthquake.

"You're supporting the locals by being here and I mean, yeah you may not have made any money that year ... but I think it should be broader than that."

Mr Woodhead said the grant programme would end once SH1 north of Kaikōura re-opened.

Owner, Dennis Burrman, Encounter Kaikoura

Photo: RNZ / Rebekah Parsons-King

One of the businesses that has benefited from the Business Recovery Grant Programme was Encounter Kaikōura.

The company runs boat tours for people to swim with dolphins and watch other wildlife. With about 50 staff during the summer season, it is one of the the largest employers in the town.

Before the quake, at least half of Encounter Kaikōura's customers came from through traffic from SH1.

Co-owner Dennis Buurman said the road closure had significantly impacted trading.

"It would be millions [of dollars lost] for us" Mr Buurman said.

Swimming with dolphins with Encounter Kaikoura

Photo: RNZ / Rebekah Parsons-King

He said support from both the government's wage subsidy package and business grant programme had helped to keep them afloat.

"We were able to get through with the subsidies, it was quite amazing that we didn't have to put off any staff at all ... that was a huge relief."

Mr Buurman said it was vital for the recovery of his business that SH1 was restored as soon as possible.

Road repairs on track

The November quake brought down one million tonnes of rubble in 85 different landslides onto SH1 and the railway network between Picton and Christchurch.

The route south of Kaikōura opened just before Christmas, but the northbound part of the highway between the town and Clarence was not expected to be completed until the end of the year.  

Transport Agency earthquake recovery manager Steve Mutton said 1300 people were involved in the repair work which was on-track and on-budget for the road north to reopen before Christmas.

Mr Mutton said good progress had also been made on the railway line between Picton and Christchurch, with freight train services resuming in September. 

No caption

Photo: RNZ

"We've got the rail open now and we are looking to have the road open by Christmas, but there is still a huge amount of work to be done and we will be working on this road for another 12 months.

"In terms of the budget we're on-track and within our range that we gave to the government, which was $1.3bn to $1.6bn."

Mr Mutton said the agency would not be able to provide an official opening date for the road north until closer to Christmas.

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