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Australian fires fuel economic loss

By CNN's Geoff Hiscock
Asia business editor

SYDNEY, Australia (CNN) -- Insurance losses from the bushfires encircling Australia’s commercial capital of Sydney will likely top $25 million, the Insurance Council of Australia said Monday.

The council said its initial estimate of Aust $50 million ($25.5 million) will rise if an expected deterioration in weather conditions occurs over the next few days and more properties are lost.

Nor does the figure capture the full cost of the bushfire disaster, which has had a dramatic impact on the environment of Australia’s largest city and its outskirts.

Apart from property damage, the fires have devastated the bushland habitat for wildlife, and dealt a blow to the health of millions of Sydney residents who have been under a blanket of smoke haze since Christmas Day.

The smoke has sent Sydney's pollution level to the highest on record, while poor visibility has caused some international flights to be diverted and created dangerous traffic conditions for motorists.

Road closures are hindering the movement of people and goods, while thousands of homes have been without power during the fires.

170 homes and property destroyed

Insurance Council spokesman Rod Frail told CNN late Monday that the council’s projected estimate for the fires covered only insured losses -- mainly in claims for damage to houses and their contents, farms, commercial offices and motor vehicles.

So far about 170 homes and properties have been destroyed, along with about 250,000 hectares (625,000 acres) of bush and farmland in New South Wales state.

Stock losses include about 5000 sheep and some cattle. As well, farmers have lost productive capacity through the destruction of grazing land.

But in dollar terms, the bushfires have had nowhere near the cost of the 1999 hailstorm in Sydney, which caused damage of about $860 million, mainly to cars and houses.

Frail said losses from bushfires and severe storms in Australia were a “reasonably regular” occurrence for the insurance industry.

Australian Business economic adviser Jeff Schubert said while the environment had suffered severely, there was unlikely to be a large negative impact on Australia’s gross domestic product.

He told CNN that much of the lost economic production would be offset by the logistics of supplying food, petrol and other necessities to the thousands of firefighters and support crews who are battling more than 100 fires around New South Wales.

Schubert said that the timing of the fires -- during the Christmas-New Year holiday period -- would also limit the economic impact.

Many of the volunteers fighting the fires have given up their holidays, rather than productive work.




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