Treasurer Jim Chalmers predicts Cyclone Alfred will affect agriculture, construction and federal budgets ahead of the election.
Australia’s Treasury estimates that Cyclone Alfred last weekend caused about $1.2 billion in economic losses to the country.
The financial set-off is expected to shave about a quarter of the country’s GDP, said treasurer Jim Chalmers as a way to prepare Australians for the looming middle-aged economic and financial outlook he is set to announce.
Chalmers detailed the expected economic impacts of cyclones, particularly on agriculture and construction.
“We expect some impact on the costs of fruits and vegetables depending on the impact of the farmland,” he told reporters in Brisbane on March 17.
He also discussed the potential upward pressure on construction costs, given that buildings and infrastructure destruction is likely to require massive reconstruction.
“We have made great strides in the construction sector inflation numbers, but we can predict some upward pressure on the resulting construction costs (of the cyclones),” he said.
Related stories
In response to the damage, the federal government will donate $1.2 billion in additional funds. This will be included in the upcoming budget.
“That new $1.2 billion will be part of the total $13.5 billion in budget to respond and rebuild after a natural disaster,” Chalmers said.
Australian treasurer Jim Chalmers will speak at a press conference within the budget lockup at the Capitol Building in Canberra, Australia on May 14, 2024. AAP Image/Lukas Coch
Nearly $27 billion deficit
The economic and fiscal outlook for March 25 is set for March 25, with Chalmers saying the country’s economy will be on the right path.
“The budget shows that the economy is rounding the corner and we are on the right path.”
The statement is expected to increase the shortfall to $46.9 billion for the 2025-26 fiscal year amid a forecast deficit of $26.9 billion for the current fiscal year.
In addition to the immediate impact of Cyclone Alfred, Chalmers pointed to global economic uncertainty as another important factor affecting the country.
Uncertainty is exacerbated by several international factors, including a weaker Chinese economy, ongoing conflicts in Eastern Europe, and geopolitical tensions in the Middle East.
“There’s something going on in DC. We’re at war in Eastern Europe. There’s a temporary ceasefire in the Middle East,” said Chalmers, who highlighted many external factors that are contributing to global economic instability.
However, when pushed, Chalmers admitted that the budget would see the deficit.
“Even this year, even when we print out the deficit this year, it’s much smaller than what we inherited from our political enemies, indicating the progress we were able to make,” he replied, referring to the past two budget surpluses.
Opponents say public influences that bear the brunt of labor policy
Shadow Treasurer Angus Taylor has accused the labor government of “raiding households” to cover their spending, particularly in light of forecasts for deficits over the coming years.
Taylor argued that the Australian public is bearing the brunt of the government’s mismanagement, noting that the average worker paid $3,500 in taxes last year than before the Albanese government took office.
“What we see here from labor is that they are raiding the household budget, raiding the average Australian $3,500 and $7,000 for a double-income family,” Taylor told Sky News.
He further criticized the government for not being able to effectively manage the budget.
“There’s an old proverb that when the left government runs out of money, they’ll come after you, and that’s exactly what you see here,” Taylor concluded.
Disaster recovery payments for affected residents
Meanwhile, the government has announced additional relief for the Cyclone hit area.
Residents of Bundaberg and Toowoomba announced that they will soon have access to disaster recovery allowances.
The one-time payment offers $1,000 per eligible adult and $400 per child, providing immediate financial relief.
Allowances are designed to provide short-term income support to individuals who have lost their income due to major disasters.
McAllister has also announced that residents from several other affected areas will be eligible, including Brisbane, Ipswich, Moreton Bay, Toowoomba, Somerset in Queensland, Clarence Valley, Richmond, Bellingen and Kaigle in New South Wales.
