Queensland floods may end up costing the economy $13 billion through lost
productivity and damage to key infrastructure.
And the rebuilding process is
likely to put growing pressure on inflation.
Large parts of Queensland and its
capital Brisbane remain inundated, and there are grim forecasts that the worst
floods in more than three decades could wipe at least 1 per cent off the
nation’s economic growth projections.
Despite the inflation concerns —
from higher food costs and the rebuilding of Brisbane — the short-term futures
market now predicts the Reserve Bank will keep interest rates on hold until
early next year.
The Port of Brisbane, the
third-busiest port in Australia, is expected to remain closed for the next few
Work has also stopped on at least
$5 billion worth of commercial projects
Business in the state’s southeast
has stalled, and other Australian companies warned the floods were affecting
their Queensland operations.
Citigroup estimated it could cost
up to $20 billion to rebuild houses and infrastructure, including key rail
networks, destroyed in the floods.
The federal government is expected
to cover between 50 per cent and 75 per cent of the flood costs, and economists
warn that the disaster may make it difficult for Labour to meet its commitment
to return the budget to surplus by 2013.
Julia Gillard has said she believes
the budget will still return to the black on schedule, prompting speculation
that the government may cut spending in other areas.
The cost to the state government
will be at least $2.5 billion and the Queensland Treasury Corporation may be
forced to issue more bonds to help pay for repairs.