Our summer of natural disasters

Our Summer of Natural Disasters

The Australian summer 2010 / 2011 has been a particularly tough one for many Australians, emotionally, personally and financially.  New South Wales experienced significant flooding in November and December 2010, which was quickly followed by some of the worst floods on record in Queensland, and parts of Victoria.  Just as the waters started to recede and the massive clean-up operation could begin, North Queensland was hit by Cyclone Yasi, the strongest cyclone to ever cross our shores. The effects of Yasi were felt as far away as Alice Springs and Uluru in the Northern Territory. Quite a tempest!

Whilst still significant, at about $15 billion, the overall impact of the floods will be less than first forecast. Analysts initially considered a likely decline in economic activity by as much as 1%, but this has since been revised as it has been acknowledged that whilst the floods have caused unbelievable individual heartache and devastation, the expenditure on infrastructure and housing reconstruction will actually be a boost to the Australian economy over the medium term. The most significant (negative) impact on the economy will be lower mining exports, specifically coking coal which accounts for up to 10% of Australia’s export income.

The impacts of Cyclone Yasi were also more localised than initially forecast. The storm missed the main Queensland population centres of Cairns and Townsville as the path of destruction ripped through smaller communities such as Mission Beach, Tully and Innisfail.

Tourism is a key industry for Queensland and also Australia’s economy.  Whilst many tourist resorts and activities were damaged by Yasi, most are not beyond repair.  However, this is not so for one of Queensland’s most famous island resorts, Dunk Island, which was literally torn apart by the storm.

Over 75% of Australia’s banana plantations located in North Queensland were devastated by Yasi.  As a result, over the next few months (at least), we can expect Bananas to be expensive and in very short supply.  Many may remember the impact of Cyclone Larry in 2006, when bananas were selling for as much as $15 a kilo.  Unfortunately, bananas were not the only commodity affected and we can expect poor quality, shortages and price spikes for other agricultural products in the short term. Higher food prices, notably for fruit and vegetables, could increase inflation in the March 2011 quarter.

Much of the repair bill from the recent floods and cyclone will be funded by the federal and state governments. The Federal Government is also proposing to charge a levy for a year to higher income Australians not directly impacted by the series of natural disasters. The details of the levy are still to be finalised but it may be up to approximately $5 per week for most working Australians.

We live at times in an unforgiving climate, but by our very nature Australians are resilient and dependable.  It will however, take a great deal of time and money, for our nation to recover from this series of natural disasters and become better and stronger.  If you are interested in donating to the flood appeal effort you can make a donation at any bank branch or visit http://www.qld.gov.au/floods/donate.html