Treasurer foreshadows ‘economic fallout’ from Cyclone Alfred ahead of budget

Ex-Tropical Cyclone Alfred wreaked havoc on Australians in Queensland and NSW and now its impact on Commonwealth coffers has been revealed.

Jim Chalmers will use a Queensland Media Club address to warn of the “economic fallout” from ex-Tropical Cyclone Alfred ahead of the upcoming deficit-tipped federal budget.

Alfred wreaked havoc on coastal communities in Queensland and NSW when it made landfall as a tropical low on March 8, bringing deadly flash flooding and tree-toppling winds.

It also spoiled any plans Labor had of calling the election on March 9, forcing the Albanese government to put out a budget.

In his speech on Tuesday, the Treasurer will say funding recovery efforts in southeastern Queensland and northeastern NSW “is the first key influence on the budget”.

Treasurer Jim Chalmers is warning of “economic fallout” from ex-Tropical Cyclone Alfred ahead of the federal budget. Picture: NewsWire/Tertius Pickard.

“The human impacts matter most to us here, but the economic cost will be very significant too,” Mr Chalmers will say, according to extracts of the speech seen by NewsWire.

“At one stage, around five million Australians were in harm’s way. That put almost two million homes at risk.

“Days of heavy winds and soaking rain saw major flooding and substantial damage.

“At its worst, more than 450,000 Australians were cut off from power, the most ever in this part of the country at once.

“We are still getting a handle on the economic fallout, but it will be substantial.”

He will cite initial Treasury estimates, which put an “immediate” $1.2bn dent in GDP, threatening a quarter of a percentage point of quarterly growth.

Businesses closing temporarily has cost some 12 million work hours, while fresh produce prices may jump due to damaged crops.

“By last Thursday, 44,000 insurance claims had been lodged, with early modelling suggesting losses covered by the Cyclone Reinsurance Pool are around $1.7bn,” Mr Chalmers will say.

“We don’t yet know the precise cost to our budget, but again it will be significant.”

The federal and state governments have already put up at least $30m to fund immediate recovery efforts, such as road and infrastructure repairs, while also facilitating millions in hardship payments.

Mr Chalmers last year predicted a $26.9bn deficit for the 2024-25 fiscal year. Picture: NewsWire / Martin Ollman

“This budget will reflect some of those immediate costs and we’ll make sensible provisions for more to come,” Mr Chalmers will say.

“I expect that these costs and these new provisions will be in the order of at least $1.2bn, a substantial amount of money and that means a big new pressure on the budget.

“At MYEFO, we’d already booked $11.6bn for disaster support nationally over the forward estimates.

“With all of this extra funding we expect that to rise to at least $13.5bn when accounting for our provisioning, social security costs and other disaster related support.

“This will ensure we are there for people and communities, like they’ve been there for each other in the worst-hit areas.”

Mr Chalmers forecast a $26.9bn deficit for the 2024-25 financial year in the Mid-Year Economic and Fiscal Outlook.

It would break from the back-to-back surpluses the Albanese government has delivered since its election in 2022.

The Treasury also predicted accrued deficits of $143.9bn from 2024-25 until 2027-28.

The opposition has put the blame on “reckless” and “wasteful” spending — Labor has put it down to geo-economic shake-ups.