Australian Assistant Treasurer Bill Shorten urged companies to donate to flood-devastated Queensland state as Australia & New Zealand Banking Group Ltd. estimated rebuilding may cost as much as $A20 billion ($19.8 billion).
“We’d like business people to open up their pocketbooks a bit,” Shorten said in an interview today in Hong Kong. “The private sector generates the wealth in Australia and there’s not going to be reconstruction without business.”
Shorten’s call echoed Prime Minister Julia Gillard’s announcement today of a business task force that includes Linfox Group founder Lindsay Fox to leverage corporate donations. She also reiterated that the government intended to return Australia’s budget to surplus.
ANZ economists said today that given the federal government is “likely to foot a big proportion of this rebuild, the 2012-13 budget surplus is, as expected, under significant threat.” The bank’s A$20 billion estimate of flood reconstruction costs is equivalent to about 1.5 percent of gross domestic product.
When asked about the surplus projection, Shorten said “there’s no doubt there will be hard decisions. We’ll have to look hard at our priorities” to maintain the surplus target and fund reconstruction. He also said he expects a “V-shaped recovery” after the deluge.
The Australian newspaper today reported, without citing anyone, that one option to help pay for reconstruction is an addition to the 1.5 percent Medicare levy that helps fund public health and raises A$10 billion a year.
“The damage bill will be noteworthy,” Melbourne-based ANZ Bank said. “The Queensland premier’s statement that 28,000 homes will need to be rebuilt will alone come at a cost of around A$8 billion on our estimates, suggesting the total rebuild effort could be in the order of A$20 billion.”
Wesfarmers Ltd. today contributed A$5 million to the flood relief appeal and Xstrata Plc doubled its donation to A$2 million. Flight Centre Ltd. pledged A$2 million.