Australia says economic cost of floods to top other disasters

Tuesday, 18 January 2011 00:02 - - {{hitsCtrl.values.hits}}

CANBERRA (Reuters) - Floods that have devastated huge areas of Australia’s eastern seaboard, including the nation’s third-largest city, look set to be the costliest natural disaster ever in a country known for climatic extremes, Treasurer Wayne Swan said on Monday.

The deluge last week in the Brisbane area and overnight in Victoria state, where 46 townships have been affected, would not delay a promised return to surplus in 2012-13, Swan said, but would force the government to make some difficult spending cuts.

“It looks like this is possibly going to be, in economic terms, the largest natural disaster in our history,” he told Australian television.

“This is very big. It’s not just something which is going to occupy our time for the next few months. It will be a question of years as we go through the rebuilding.”

Flooding has hit four states since December and the death toll from the worst hit state of Queensland is expected to rise.

The scale of the disaster has exceeded a 1974 cyclone in Darwin which left 43,000 homeless, although deadly 2009 bush fires in Victoria state claimed 131 lives, but caused less damage.

The estimated cost of rebuilding in northern Queensland state alone stood at A$10 billion ($9.8 billion), The Australian newspaper said on Monday, and the damage bill was rising fast as record flooding moved south to northern and western Victoria.

Central bank board member Warwick McKibbin last week warned the floods, which have so far killed 22 people since starting their onslaught last month, could cut 1 percent off growth -- equal to almost $13 billion, when lost production and infrastructure destruction were taken into account.

JP Morgan said Australia’s inflation risk had also intensified, given that the economy was already at “full employment”, meaning the independent central bank could be forced to tighten rates more assertively in the medium term.

The Victorian town of Horsham was bracing for a “one-in-200-year flood”, Mayor Michael Ryan said, while the city of Echuca remained submerged after flooding blamed on a Pacific El Nino weather pattern, bringing heavy rains to Australia.

The influential Australian Greens party, which helps Prime

Minister Julia Gillard’s minority Labor government wield power, said on Monday that “coal barons” should pay for natural disaster damage using half of a planned mineral resources profits tax that has angered miners.

“There is very little doubt that the burning of fossil fuels is responsible for the hottest oceans that we’ve ever seen off Australia, which in turn -- the scientists are saying very clearly -- is responsible for the extraordinary and harrowing floods,” Greens Leader Bob Brown said.

“It is unfair that the cost is put on all taxpayers, not the culprits,” Brown said, noting there had also been devastating floods in Brazil and Sri Lanka, while 2010 had been the hottest year on record.

Rio Tinto , BHP Billiton and Xstrata are among the companies involved in coal mining in Queensland.

Queensland state Premier Anna Bligh was to meet with senior lawmakers on Monday to work on a flood recovery plan as a massive clean-up in flood