Australian budget surplus in doubt as bush fire funding boosted

Rural Fire Service volunteer firefighters watching as the New South Wales "megafire" approaches the outskirts of the town of Tumbarumba in New South Wales on 11 Jan, 2020.
Rural Fire Service volunteer firefighters watching as the New South Wales "megafire" approaches the outskirts of the town of Tumbarumba in New South Wales on 11 Jan, 2020.PHOTO: AFP

SYDNEY (REUTERS) - Australia on Monday (Jan 20) boosted emergency grants and loans for small businesses hit by bush fires that have ravaged the country during the peak tourist season, as the mounting costs of the disaster cast doubt on the government’s ability to deliver a promised budget surplus.

The federal government has so far committed A$2 billion (S$1.85 billion) for bush fire recovery, and has already trimmed its earlier forecast surplus for 2019-2020 by that amount. 

Budget repair after years of deficits was a key promise ahead of last year’s election but Treasurer Josh Frydenberg sidestepped a question about whether the promised A$5 billion surplus for the year to June 2020 could be delivered.  

"I’m not in a position to give a firm answer to that question because the full economic impact is still uncertain ...  Our focus is not on the surplus per se," he told reporters.

His comments come as the federal government said it would increase grants for small businesses affected by the fires to A$50,000 each, from A$15,000 announced earlier, and offer loans up to A$500,000, interest-free for two years.

"The customers come back and the businesses rebuild and the local towns and communities rebuild with their support," Prime Minister Scott Morrison told television network Nine Entertainment.

"My priority is to get the support into the communities where it's needed."

The Australian tourism industry estimates the fires which have raged throughout the December-January holiday season have cost it almost A$1 billion.

The fires have killed 29 people and millions of animals, destroyed more than 2,500 homes and razed an area roughly a third the size of Germany since September.

Several days of rain and a dip in temperature have reduced the number of active fires across the country's densely populated south-east and given the authorities an opportunity to focus on the recovery effort.

The Bureau of Meteorology on Monday issued a severe thunderstorm warning for large parts of New South Wales state, including bush fire-affected coastal towns.

"Severe thunderstorms are likely to produce damaging winds, large hailstones and heavy rainfall that may lead to flash flooding in the warning area over the next several hours," the bureau said in a statement.


Firefighters had taken advantage of the milder conditions to "slow the spread of fire and build containment lines ahead of increased fire dangers", the NSW Rural Fire Service said in a post on its Twitter account.

Hot and windy conditions would likely return to many parts of NSW later in the week, it added.

The Australian Open tennis tournament was scheduled to begin in Melbourne on Monday, with organisers saying they would monitor air quality after a player collapsed on court and quit a qualifying match due to bush fire smoke inhalation.

 The city’s air quality was rated as "good", according to the Air Quality Index, having been "hazardous" less than a week earlier.