Floods may be our most costly disaster, says Treasurer Wayne Swan

TREASURER Wayne Swan has flagged changes to the insurance industry in the wake of Queensland's devastating floods.

TREASURER Wayne Swan has flagged changes to the insurance industry in the wake of Queensland's devastating floods.

Mr Swan says there appear to be grey areas, amid concerns over insurance companies refusing to compensate people who thought they were covered for flood damage.

“I don't think there's any doubt that there is a need for reform in this area, but at the moment we're concentrating on dealing with the practical realities of what people are facing today,” he told the ABC.

“What's very important (is) those with insurance get their claims submitted.”

Mr Swan said the flood crisis that had gripped the state may prove to be the costliest natural disaster ever to hit Australia.

“It looks like this is possibly going to be, in economic terms, the largest natural disaster in our history,” Mr Swan told the ABC.

“It will involve billions of dollars of commonwealth money, and also state government money, and there's going to be impacts on local government as well.

“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 process ...”

Mr Swan said the government was determined to return the budget to surplus in 2013 as promised, but there would be some tough decisions ahead to achieve that.

“We're on track to come back to surplus in 2013,” he said.

“We've got in place a very strict set of spending guidelines.

“There's no doubt that the costs involved in responding to this natural disaster are substantial, but we shouldn't forget that we've also got a very strong economy, a strong investment pipeline, and strong public finances.”

Mr Swan said the flood disaster would affect living costs across Australia.

“There's no doubt there will be some impact, yes, in the cost of living.

“The Lockyer Valley is a food bowl which not just supplies Queensland but the rest of the country. “There will be all sorts of impacts but ... (it's) far too early to be putting figures on those.”

Premier Anna Bligh said for many people, the reality of the Queensland floods had yet to hit home.

But after the initial clean-up was over, people would have the time to let themselves feel the true extent of the disaster, Ms Bligh told the Seven Network.

“I do think we all have to prepare ourselves, however, for the real possibility and likelihood that after all that effort, we may well all start to, I guess, feel a bit of a downer as we look around and really the reality of it hits us,” Ms Bligh said.

“I think we've been so busy with the clean-up the reality is yet to hit for a lot of people and that's just a reminder that this is a long, slow process...

“Getting the house clean is only step one in the many, many, many steps of recovery and a real journey.”

Ms Bligh said she was pleased Australians had “wrapped their arms around us as a state over the last couple of weeks”.

“There's extraordinary community spirit at the moment, you've seen the pictures, people lining up to volunteer, rolling up their sleeves.”

Every state had offered extra police and emergency services personnel and this was vital to the clean-up and search and rescue effort, she added.

“Fatigue is not something you want on the front line.”

A special Queensland cabinet meeting was being held this morning to brief government ministers on the flooding.

Ms Bligh told ABC TV the cabinet would look again at the roadmap for recovery that it examined 10 days ago.

“The events of the last eight days have exponentially increased the task of reconstruction,” she said.

She said the government needed to cut through red tape to get things done as quickly as possible.

There was a one-off opportunity now to rebuild various pieces of infrastructure higher, differently or in a less flood-prone location.

Flood mitigation and protection measures, such as levees, needed to be considered.

“So, in addition to simply rebuilding roads or bridges, we need to think about in some cases building them higher or in different places and we need to think about water storage, dams, levees ... all of those questions,” Ms Bligh said.

“I don't have all those answers right now and I don't think people expect that, but I do want to reassure them they will be on the agenda.”

AAP