US-sized Cyclone Yasi could cost Australia more than $2 billion - Christian Science Monitor

Melbourne, Australia

As the disaster-ravaged state of Queensland dusts itself off from Cyclone Yasi, economists are warning that Australia’s latest tussle with nature could wipe more than $2 billion off the country’s gross domestic product. Food prices and insurance premiums are expected to rise, while a vital tourism and agricultural area has been decimated.

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Still, considering Yasi was a category five cyclone only a little smaller than the United States, analysts are saying Australia should consider itself lucky.

“It certainly could have been a lot worse,” says Luke Mathews, a commodity analyst with the Commonwealth Bank of Australia.

Yasi flattened properties, overturned luxury yachts, and ripped up plantations along a 125-mile-stretch of Queensland’s picturesque coast when it came ashore with winds of more than 125 mph late Wednesday night. On Thursday some 130,000 properties remained without electricity as Australia deployed 4,000 soldiers to help with the recovery effort. At least one person is known to have died in the cyclone, asphyxiated by fumes from a generator operating in a small room.

“We were extremely lucky from an economic perspective," continues Mr. Mathews. "We were lucky because of where Yasi crossed the Australian coast, which avoided major population centers, and we were lucky because it avoided key mining infrastructure and assets. But certainly the agricultural industry will be impacted.”

Agricultural losses from Yasi are already being put at $1 billion, while $300 million in coal exports have been lost because of suspended business operations and port closures. Queensland’s latest natural disaster bill comes as the state recovers from January floods that covered an area larger than Texas and California combined and caused $5.6 billion in damage.

Damage to Queensland’s sugarcane crop is expected to weigh in at $500 million, representing about 30 percent of Australia’s harvest. Australia is the world’s third-largest sugar exporter. World sugar prices rose to a 37-year-high after news of Yasi broke. They dropped significantly Thursday, but were still trading some three times above the long-term average.

Likewise, the price of bananas is expected to soar by up to 500 per cent after three quarters of the nation’s crop was wiped out. Queensland’s banana industry, worth some $400 million, was only just getting back on its feet following Cyclone Larry in 2006 which decimated 90 percent of the nation’s crop.

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Budget cuts to pay for cyclone damage - ABC Online

MARK COLVIN: The Federal Government is preparing to make further budget cuts to pay for the destruction caused by Cyclone Yasi. The exact cost of the repair bill in north Queensland isn't known yet. But Julia Gillard points to the half a billion dollars the Federal Government footed after Cyclone Larry to give an indication of what taxpayers are facing.

The repair bill from the cyclone and the floods will take centre stage when Parliament resumes next week.

From Canberra, Samantha Hawley reports.

SAMANTHA HAWLEY: As she did after the floods that ravaged Queensland, the Prime Minister moved quickly to show her face in the towns hit by Cyclone Yasi. She spent last night in Townsville.

JOURNALIST: The Prime Minister, Julia Gillard who we welcome to the studio.

JULIA GILLARD: Thank you very much.

JOURNALIST: Did you find yourself a warm shower this morning? (Laughs) How are the conditions?

JULIA GILLARD: No, I didn't find myself a warm shower but cold shower was fine.

SAMANTHA HAWLEY: The Prime Minister spent the day touring Townsville and Innisfail talking to locals, thanking emergency service workers and ensuring the community knew that a 4,000 strong army contingent was at their disposal to help with the clean up.

It's that clean up that will largely dominate Federal Parliament's return next week. Julia Gillard's made clear the $5.6 billion flood recovery package she announced just last week will remain unchanged and she's hoping for cross bench support to get that passed. But she says more money will now have to be found and it won't come through an increase to the proposed flood levy.

JULIA GILLARD: We will need to find additional resources in the Federal Government's budget to meet the needs of recovering from this cyclone and so we will have to make some very tough decisions to make money available.

There will inevitably be some budget cuts that people, you know, won't necessarily like the look of but we will do that in order to make sure that we've got the resources available to rebuild in north and far north Queensland. We will rebuild from the floods. We have to rebuild here too. We'll do both.

SAMANTHA HAWLEY: The exact damage bill from Cyclone Yasi isn't known yet but Julia Gillard points to the half a billion dollars footed by the Federal Government after Cyclone Larry hit in 2006.

TONY ABBOTT: The Prime Minister has indicated that should the Government's costs mount she will be looking for additional savings. Now the fact that the Prime Minister has said that she'll be looking for additional savings suggests to me that there is fat in the budget and I've made a very genuine offer to the Prime Minister to sit down in the national interest, in a spirit of national unity to look at what's in the budget and to try to find the savings that would save Australia from an unnecessary new tax.

SAMANTHA HAWLEY: The Tony Abbott-led Coalition will oppose the flood levy when it hits the Parliament next week. And his kind offer to help with budget cuts won't be accepted by the Government. He calls for bipartisanship but it's not on display from either side.

Government Minister and Leader of the House, Anthony Albanese.

ANTHONY ALBANESE: Eight days ago Tony Abbott, in justifying his opposition to the flood levy, said that he would outline cuts he would make to the budget within days. It is now eight days later and we've heard nothing from Tony Abbott about what cuts he would make rather than have support for the flood levy.

SAMANTHA HAWLEY: Mr Abbott and members of his shadow cabinet agreed on a list of budget cuts at a meeting in Sydney today. A spokesman says it'll be made public in the next few days.

MARK COLVIN: Samantha Hawley.

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