June 6 (Bloomberg) -- Australia’s bill from floods that devastated the nation’s northeast earlier this year climbed 33 percent to A$12 billion ($13 billion), with resources and agriculture the hardest hit, the government said.
“Lost commodity production is likely to be around A$9 billion and damage to crops more than A$2 billion,” Treasurer Wayne Swan said in an e-mailed statement yesterday. “We’ve seen economic data that clearly reflects the destruction.”
Prime Minister Julia Gillard called the January floods, triggered by a La Nina weather event, the nation’s most expensive natural disaster. She’s attempting to introduce a carbon tax on polluters to curb greenhouse gas emissions, believed by some scientists to be responsible for exacerbating weather events.
Queensland is feeling the brunt of the economic impact of the floods, with state treasurer Andrew Fraser yesterday saying its coffers will be reduced by A$6.8 billion, up from a previous estimate of A$5.8 billion. Australia’s economy shrank in the first quarter by the most in 20 years after flooded coal mines, railways and farmland hurt exports.
“The increase was largely due to new estimates from councils who now estimate that they will require more than A$2.7 billion in funds to undertake repairs -- A$900 million more than their initial forecast,” Fraser said in a statement.
Reserve Bank of Australia Governor Glenn Stevens has held interest rates at 4.75 percent for the past five meetings to help Queensland recover.
“There are of course other soft spots in our economy,” Swan said. “We’re still seeing lingering effects from the global financial crisis and the impact of a high dollar on sectors like manufacturing, tourism and education.”
Australia’s dollar reached $1.1012 on May 2, the highest since it was freely floated in 1983. The nation’s services industry contracted in May as a record-high currency and consumer caution hurt companies excluded from the resources boom, a June 3 Commonwealth Bank of Australia and the Australian Industry Group survey showed.
Queensland produces 80 percent of steel-making coal exports from Australia, the world’s biggest supplier, and grows more than 30 percent of the country’s fruit and vegetables.
“The January floods and Cyclone Yasi led to 37 lives lost, and thousands more Queenslanders with shattered homes and livelihoods,” Fraser said. “There has also been enormous damage to infrastructure and significant costs incurred in managing the response and recovery process.”
While the weather impact of the La Nina event has dissipated, its effect on the climate change debate continues. The government, which steered Australia through the global financial crisis, is losing popularity over plans to impose a tax on mining companies’ profits and charge polluters in order to reduce greenhouse-gas emissions.
Rallies supporting the carbon tax took place in cities around Australia yesterday, according to the World Wildlife Fund. The gatherings attracted about 45,000 people nationwide, the fund’s Perth-based spokesman, Cortlan Bennett, said in a phone interview.
More than A$266 billion of assets in coastal areas are at risk from rising sea levels expected from climate change, Australia’s Minister for Climate Change and Energy Efficiency Greg Combet said in a separate statement yesterday.
Coastal assets at risk from inundation and erosion include between 5,800 and 8,600 commercial buildings, between 3,700 and 6,200 light industrial buildings and between 27,000 kilometers (16,780 miles) and 35,000 kilometers of roads and rail, Combet said.
“Putting a price on carbon will allow the market to find the cheapest and most efficient ways to cut pollution, rather than having the government tell individual companies or sectors what to do,” Swan said yesterday. “Dirty energy will become more expensive and clean energy cheaper under a carbon price, creating the jobs of the future and helping to protect our environment and our economy.”
--Editors: Paul Tighe, Jim McDonald
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