As Julia Gillard attempts to convince everyone that the flood levy is the “best thing for the country” I have to reprint the following lines.
“It is not true to say to Australians that there is a big pile of money there that somehow I could just go and use,” Ms Gillard told the Seven Network today.
“It doesn’t just sit there, this is not a magic pot of money that can be rolled out in the face of an unprecedented natural disaster.
Oh Julia. How little you seem to know about your own economic system.
I note this morning that it is being reported that this will only cost the average income earner $75 dollars. I will remind my readers however that sectoral balance tells us that a cut in government spending is the same as a tax. The overall cost from the government to the private sector could be much more than the claimed values if more money is removed from the budget than added to the recovery fund. However with a positive balance of trade it is possible for the government to run a surplus budget without having a negative wealth effect on the private sector, it is all dependent on the numbers.
The costs for the private sector are still mounting, and many of the newly indebted in Brisbane are going to struggle with the costs of repairs.
The pain is not over for Brisbane unit owners, who may be slugged with huge body corporate levies to repair flood damage.
CTS Management director Coralie Mott said some bodies corporate were facing costs close to $1 million as electrical wiring, switch boards, lift wells and garage roller doors were destroyed when basement carparks flooded.
With no power and no working fire alarm or sprinkler systems in place as a result, residents across the city were forced to leave their apartments for more than a week after the flood receded.At least five residential towers in the central business district, including Admiralty Towers One, were without power and essential services for a week.
As the last CBD residents returned home on Australia Day, bodies corporate began contemplating how funds would be raised to cover the repair costs running into the hundreds of thousands of dollars.
Ruth Sapsford, body corporate manager of an eight-unit block in Toowong, said at least two owners facing financial difficulty were concerned they would not be able to meet a special levy if needed to pay the replacement of an electrical switchboard.
On top of those costs is the obvious deflationary effect that the flood will have on their property values. So although these people will not pay the flood levy, their initial losses and property devaluation are all a drain on private sector wealth.
But worse could be yet to come. It seems that Mother Nature is not finished with Queensland yet. She is about to send in a new salvo of nature induced pain in the form of twin cyclones.
Queenslanders are being urged to prepare for the worst as two powerful cyclones threaten to batter the flood-ravaged state.
Tropical Cyclone Anthony is hovering off the Australian eastern seaboard, with authorities warning it will increase in intensity and hit landfall as early as tomorrow afternoon.
It’s feared a second cyclone, named Yasi, will develop from an intense tropical low currently near Fiji.
Last night, Queensland Premier Anna Bligh said Cyclone Yasi could be the more damaging of the two and may heap more misery on the state.
“The second event is likely to be much more serious, with significantly more rainfall and high winds attached to it,” she said.
“The events could be as serious, if not more serious, than what we have seen in the last few weeks.”
Whether this is another attack from La Nina the black swan or simply Queensland’s standard cyclone season in action, the effect is likely to be even more economic pain for Queensland.