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Australia's Queensland Delays Budget Update on Floods (Update2)
2011-01-01 05:54:20.285 GMT
(Updates with size of affected areas in third paragraph.)
By Robert Fenner
Jan. 1 (Bloomberg) -- 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.
Rain Forecast
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.
Credit Rating
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.
For Related News and Information:
Top Stories: TOP<GO>
Top commodity stories: CTOP <GO>
Most read Australian news: MNI AUD <GO>
Most-read natural disaster stories: TNI MOSTREAD NAT <GO>
--Editors: Paul Tighe, Ian Rowley.
To contact the reporter on this story:
Robert Fenner at +61-3-9228-8705 or
rfenner@bloomberg.net
To contact the editor responsible for this story:
Paul Tighe in Sydney at +612-9777-8626 or
ptighe@bloomberg.net
