Devastating floods could cost Australia up to $8.3 billion in lost coal production, new estimates show -- a sharp increase on earlier projected losses.
The huge deluge that swamped coal-producing Queensland state in January caused significant damage, halting mine production and cutting key transport infrastructure, the Treasury said in its latest economic round-up released on Saturday.
"Contacts suggested that the loss of coal production is estimated to be between 20 million and 30 million tonnes," it said.
The government has estimated the floods, which covered an area the size of France and Germany combined and were followed by destructive Cyclone Yasi, will cut coal production by about 15 million tonnes in the March quarter alone.
But businesses expect total coal production losses to be much higher, worth roughly between Aus$5.5 and Aus$8 billion ($8.3 billion), well beyond the Treasury\'s earlier estimate of Aus$5 billion in 2010/11, the report said.
It said that although weather conditions had returned to normal, some mines were still clogged with water, adding that the economic impact of the deluge was likely to extend into the June quarter.
But it added: "Lower coal exports have been partly offset through higher prices, which have increased sharply in response to the temporary supply constraints."
Treasury officials met with more than 50 leading businesses and organisations across the nation in February and March and reported the responses in its quarterly Economic Roundup.
It report noted that while the key economic impact of the natural disasters had been on coal production and exports, there had also been significant effects on agriculture in some states, with both volume and quality of output suffering.
"That said, contacts noted that, floods aside, the rains have been good for the sector overall, and are encouraging a positive outlook," it said.
"Rising prices for crops and livestock are restoring optimism, and are leading some farmers to increase their overall expenditure and rebuild their stocks."
The floods, which left more than 30 people dead, also had an adverse effect on the tourism industry, reducing numbers during the crisis and impacting near-term prospects, it said.
Australian tourism is facing a range of problems, including ageing infrastructure, increasing competition from Asia and the high Australian dollar.
Treasurer Wayne Swan has described the floods as the nation\'s costliest natural disaster and said they would inevitably impact growth for early 2011.
"These events will also have big implications for the budget, with the early years bearing the brunt of the rebuilding and recovery costs, and slower growth reducing government revenue in the short term," Swan said.
The floods are expected to weigh heavily on the national budget due to be announced on May 10, which will seek to balance the costly natural disasters against inflationary risks caused by an unprecedented Asia-driven mining boom.
Parliament last month approved a one-off, Aus$1.8 billion tax to help pay for the floods damage, and keep the government on track to balance the budget by 2012/13 as promised.
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