Queensland will delay its mid-year budget review as damage from floods inundating Australia’s third most populous state may eclipse last year’s record A$800 million ($819 million) spending on natural disasters.
The state’s finances will be hit by the cost of rebuilding roads and infrastructure as well as the loss of income from mining, agriculture and tourism industries, Treasurer Andrew Fraser said in a statement today. The review was due in early January and no new release date has been set.
Queensland accounts for about 20 percent of Australia’s A$1.3 trillion economy, with trade contributing most to the state’s growth in the 12 months ended June 30. Towns have been evacuated and about half the state, an area the size of France and Germany combined, has been affected by flood waters.
“In many ways, it is a disaster of biblical proportions,” Fraser told reporters in flood-hit Bundaberg, about 400 kilometers north of the state capital, Brisbane. “This will be a double whammy in the cost of infrastructure and also the downturn in revenue that will come,” he said in comments broadcast on national television.
Weeks of rain destroyed cotton crops, halted coal deliveries, shut mines and prompted BHP Billiton Ltd., Xstrata Plc, Rio Tinto Group and Peabody Energy Corp. to declare force majeure, a legal clause allowing them to miss contracted deliveries.
Australia recorded its wettest September-to-November and more rain is forecast in the first week of January, forcing evacuations of flood-stricken towns across Queensland’s hinterland.
More than 200,000 people have had to leave their homes because of the flooding, with forced evacuations in towns including Rockhampton, Condamine and Emerald, the Australian Associated Press reported without saying where it got the information.
States of disaster have been declared in 41 of Queensland’s 73 municipalities covering about a million square kilometers (366,000 square miles), and flood warnings have been issued for more than 10 rivers.
State royalty forecasts are “likely to be hit with freight lines cut and reports that many mines may not reach full production again for two to three months,” Fraser said.
The higher spending may pose a threat to Fraser’s efforts to regain the AAA credit rating the state lost in 2009. Queensland has nearly completed A$15 billion of asset sales to win back the top rating from Standard & Poor’s.
“These floods are going to hit the bottom line hard,” Fraser said.
Flooding may reduce the nation’s gross domestic product by 0.25 percent in the fourth quarter, Ivan Colhoun, head of Australia economics at ANZ Banking Group Ltd. in Sydney, said earlier this week.
New South Wales and Victoria, the nation’s most populous states, have offered relief personnel to help with the flood response while Prime Minister Julia Gillard yesterday announced payments of up to A$1,000 per person for those that have lost their homes.
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