Ministerial Statement: Mid-Year Budget Update to Count Flood Costs

[ozbob]

Treasurer and Minister for Employment and Economic Development
The Honourable Andrew Fraser
01/01/2011

Mid-Year Budget Update to Count Flood Costs

Treasurer Andrew Fraser today said the Mid-Year Fiscal and Economic Review will now have to take account of the serious impacts of the devastating floods across Queensland.

Mr Fraser said the mid-year update was previously to be delivered in early January but would now be delayed to factor-in the huge costs of flood damage.

"There's no doubt we have been swamped - our economy and the State's finances will take a big hit from the devastation," Mr Fraser said.

"Our economic recovery was underway but this will undoubtedly set us back.

"The cost to the state will be huge - both in direct costs such as rebuilding roads and other damaged infrastructure and providing relief payments to families - but also in lost income, while the mining, agriculture and tourism sectors recover.

"The floods come at a time when we have already we have seen the GST allocation cut by the Commonwealth by $1 billion and the rising Aussie dollar also hitting export revenues such as royalties.

"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.

"These floods are going to hit the bottom line hard."

Mr Fraser said this year's State Budget had already factored in $680 million for natural disaster expenditure, but that figure would rise significantly.

"Last financial year saw the cost to the Budget nudge a record $800 million, and that will be eclipsed given the scale of devastation we are witnessing," he said.

Mr Fraser said the impact of the floods would be felt while the cost of recovery from last year's floods was still being felt.

"Many councils are still sending the bills for last year's floods as they undertake extensive repairs, especially to roads," Mr Fraser said

"Many families have had a double-whammy after previous flooding and are facing yet another clean-up bill."

The Bligh Government is making emergency relief payments available to assist families and communities.

Mr Fraser committed to finalising the mid-year update before Parliament resumes next month.

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[ozbob]

I am no economist, but the Aussie Dollar has performed very well over the past year.  This has protected Australian consumers from significant oil price rises.  The knife edge is now should the Aussie Dollar start to lose its lustre, we will be entering a 'perfect storm' ...  Governments and society will be wondering how they got it all so wrong (they have been warned) ..

Queensland's economy is already precarious, the flood impacts are normally manageable, coupled though with the externalities beyond Queensland or Australia's control, we could be in for a very rough ride.