By David Uren and Andrew Fraser
THE devastating floods across the eastern states will strip up to $6 billion from the national economy.
Growth was now likely to fall well short of the Treasury’s latest forecasts.
As about 1000 Queenslanders in a dozen towns were forced from their homes by the worst floods in 50 years, ruined crops and water-logged mines are expected to depress export volumes over the next three months.
Although a recovery in exports is expected later next year, economists warned that the flooding was likely to push up food prices, increasing inflation.
Wayne Swan said yesterday the extreme weather would affect the economy, although the outlook remained solid on the back of strong private investment, employment growth and good government finances.
“As the past few weeks have reminded us, this is a country often buffeted by the worst nature can throw at us,” the Treasurer said.
“There’s no doubt the flooding we’ve seen in parts of eastern Australia is hurting our farming sector, and parts of other industries such as mining are also being affected.”
AMP chief economist Shane Oliver said the floods were pushing up prices of some rural commodities such as wheat and sugar, as well as coal, and this would offset the effect on national income.
And he said there would be a noticeable effect on export volumes that could pass 0.5 per cent of GDP, or $6 billion.
He said the December quarter was unlikely to produce growth much higher than the 0.2 per cent recorded in the September quarter, while the floods meant the March quarter was likely to be disappointing.
Treasury had forecast overall growth of 3.25 per cent for the financial year.
The estimated $6bn hit to the economy does not include the likely clean-up costs, damage to infrastructure, insurance payouts and government assistance.
The flooding has sparked mass evacuations and disaster declarations in parts of central and southern Queensland, including the communities of Theodore, Chinchilla and Dalby.
The entire population of Theodore, inland from Bundaberg, was being evacuated last night after the worst floods in living memory swamped everything except the police station.
The Defence Department had been asked to send in Black Hawk helicopters from Townsville, with nine choppers evacuating Theodore’s 300 residents.
Forecasters said the heavy rains in the region were easing, but the situation was likely to get worse before it got better as swollen rivers followed the deluge.
The central Queensland city of Rockhampton is preparing for major floods later in the week, with Bundaberg also on alert for flooding early next week.
Northern NSW communities such as Kyogle also experienced flooding yesterday, with the towns of Lismore, Coraki and Casino on alert. Flooding in other parts of the state eased, with the exception of Hay on the Murrumbidgee River in the south.
Queensland Resources Council chief Michael Roche said yesterday the floods were a “severe disruption” to the state’s mining industry and some open-cut mines were not operating because it was not safe to do so.
The main railway line from the central Queensland coalfields to port, the Goonyella line that runs to the coal port of Dalrymple Bay, has been closed since Friday after a derailment and is likely to remain closed until the end of the week. About 40 trains a day go down the Goonyella line to Dalrymple Bay and its neighbour, Hay Point, with exports worth about $100 million a day.
The stockmarket-listed Whitehaven Coal said yesterday its production in the December half-year would be 24 per cent below budget, with the company having lost a total of 3200 hours of operation to wet weather at its four mines in the Gunnedah basin in northern NSW.
AgForce grains president Wayne Newton predicted the floods in Queensland in the past week had knocked $400m from the value of winter crops yet to be harvested.
He said the effects of the deluge would continue into next year.
The heavy rains and flash flooding were also causing recently planted cotton and sorghum crops to become waterlogged.
“The cotton losses could be high because the value of cotton is much higher, so it could run into many hundreds of millions of dollars,” he said.
National Farmers Federation chief executive Ben Fargher said the situation was evolving at a “farm by farm basis”.
“Producers might be able to harvest one paddock while another is under water,” he said. “It is still a very serious situation for us . . . people are under extreme duress and have lost crops – there is a lot of disappointment around that – but where people can get back out on to the crops, they are making the best of the situation.”
The ANZ’s head of Australian economics, Ivan Colhoun, said although agricultural production would be hurt, it would be much better than last year when the eastern states remained in the grip of a 10-year drought. “We were expecting farm production to grow 20 to 25 per cent,” he said. “The floods will knock the edge off it, but it will still be growth of 15 to 20 per cent.”
He said the unseasonal weather would affect other industries, such as retailers of summer clothing. The building industry will also suffer in flood affected areas, although rehabilitation work is likely to provide additional growth for some contractors.
Mr Oliver said it was not uncommon for droughts to be broken by a year of flood, but this set the farm sector up for good results over the next few years. The higher prices for rural and mineral commodities means there should be little damage to the commonwealth budget.
Additional reporting: Lauren Wilson, AAP
Source: www.theaustralian.com.au
