Treasurer’s dire warning: $2bn disaster clean-up to hit economy hard

Queensland’s weather-related catastrophes will have serious consequences for the national economy Treasurer Jim Chalmers has warned, adding to the cost-of-living struggle.

Queensland’s weather-related catastrophes will have serious consequences for the national economy and budget Treasurer Jim Chalmers has warned, in a dire signal for Australia’s ongoing cost of living struggle.

And the nation’s coffers and economy were also “increasingly vulnerable” to frequent natural disasters.

Flooding brought on by ex-Tropical Cyclone Jasper and freak storms in the southeast over the Christmas-New Year period is set to cost Queensland state coffers at least $2bn under early estimates.

Federal Treasurer Jim Chalmers says the disaster bill will hurt the economy.

Mr Chalmers said the damage bill for the federal government from the catastrophes in Queensland, and unfolding flooding in New South Wales and Victoria and fires in Western Australia, will become clearer in coming months.

But he affirmed there would be a “substantial bill” to be paid by governments following the Queensland events across all three levels.

“There’s no question that these natural disasters cost a lot. They cost the economy a lot. They cost the budget a lot when it comes to rebuilding but it’s the human consequences that matter the most,” he said.

A home on Wongawallan Drive lost its roof. Picture Glenn Hampson

“Our economy and our budget is increasingly vulnerable to more frequent natural disasters. That has been made very clear in recent years and indeed in recent days.

“And our primary thoughts are for the people in these communities. But there’s no doubt that there’s an impact on the economy and the impact on the budget. There’s no shortage of economic challenges and heavy weather in local communities is one of those challenges.

“(It) has become a more frequent occurrence, billions of dollars in recent years to rebuild communities after natural disasters. Obviously, we anticipate some cost to rebuild these communities affected right now as well, that has been increasingly the case.”

Wongawallan resident Lynnette Lynch has had her little piece of paradise damaged by the Christmas Day storms and destroyed by the flooding. Pics Adam Head

Inflation levels are below the peak of more than 7 per cent at the end of 2022 though Mr Chalmers warned figures would remain volatile in the early part of this year.

Fresh consumer price index data — measuring the growth of the cost of a basket of goods — will be released by the Australian Bureau of Statistics on Wednesday.

State treasurer Cameron Dick last week revealed early estimates by Treasury put the economic loss and cost of rebuilding opposing ends of the state at about $2bn.

Residents survey the damage at Helensvale. Picture Glenn Hampson

At this stage the financial impact of the dual disasters is 0.4 per cent of Queensland’s economic output.

Comparatively the 2022 southeast Queensland floods and Cyclone Oswald were each a 0.25 per cent hit, while Cyclone Debbie was 0.75 per cent. Destructive Cyclone Yasi is top of the list, with a hit equivalent to 2.5 per cent of the state’s gross state product at the time.

“We know there’ll be at least $1bn that will need to be invested to restore essential infrastructure like roads and rail systems,” Mr Dick said.

“At least $500 million of that will go towards road reconstruction.”

He warned it was a “very early estimate”, noting roads like the Palmerston Highway that runs from Innisfail to the Atherton Tablelands had been severely damaged with the scale of the rebuild yet to be fully understood.

Melissa Trommestad stands in her flooded home at Holloways Beach, north of Cairns. Picture: Brendan Radke

Innisfail flooding, December 2023. Picture: Ceniza Annabelle

Wongawallan damaged by the Christmas Day storms and destroyed by flooding. Pics Adam Head