Cyclone Gabrielle 'could cost economy tens of billions'

Tuesday, 14 February 2023

Owner Andrew Schouten said multiple truck and trailer units have been lost in Drury.

The economic impact of Cyclone Gabrielle could run into tens of billions of dollars, one economist says.

The country is reeling from the impact of the storm, which hit Northland on Sunday and has moved down the North Island, causing significant damage to eastern regions including Hawkes Bay and Gisborne.

Many houses have been damaged and countless households are without power, phone and internet connections. Hawkes Bay has been warned it could be weeks before electricity is reconnected.

Massey University professor in innovation and economics Christophe Schumacher said judging by the cost of similar events overseas, he would not be surprised it the storm ended up costing the country tens of billions of dollars. But he said it would still be some time before the figure was known for sure.

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“The difficult part to quantify is the flow-on effect. There is the damage – purely the cost of fixing what has been destroyed. But the economic impact would include the loss of productivity for the country, the shops that aren’t open and can’t sell their product, the people who are stuck at home and can’t get to work. This will slow down GDP (gross domestic product) and our output will be severely impaired. Not just right now but it will go on for months and months.”

He said the only event that had been on a similar scale was the Christchurch earthquakes, but even that was more localised.

Another economist, Brad Olsen, at Infometrics, agreed there would be huge cost associated with the event. “This gets worse almost hour by hour,” he said.

“Gisborne we can’t even talk to at the moment let alone get an idea of how they’re going.”

Flooding on farmland in Ongaonga, Hawke's Bay.

He said the difference between Cyclone Gabrielle and the January Auckland floods was that the flooding had been in a limited area and resources could be directed there.

“Now we have to direct resources across the entirety of the North Island. Millions of people are under emergency restrictions. For the economy, what we continue to see and hear at the moment is everyone is quite rightly hunkering down at the moment.”

Insurers said it was too early to predict the scale of claims.

Olsen said there would be challenges for food production and the logistics of moving things around the country. Industries such as wine in Hawke’s Bay would be hard hit.

Primary sector

Fonterra national transport and logistics general manager Paul Phipps said tanker access was severely limited to farms north of Whangarei and those on the Coromandel Peninsula.

There has been major disruption at airports.

“With many roads significantly disrupted, ensuring the safety of our tanker operators and other teams is paramount, and so today we expect to be unable to safely access a number of farms in other regions impacted by the cyclone,” Phipps said.

“Supporting farmers is a top priority, and we are getting in touch with those directly affected. We are doing everything we can to minimise the impact and are working through the logistics.

“Aside from collections, one of the biggest challenges we are facing is pressure on the supply chain as the knock on effects of closed ports and rail put a squeeze on what is already a highly strained national network,” he said.

Farmers turned to social media for help with things like generators for cow sheds to enable them to keep milking cows.

At Silver Fern Farms, some staff had not been able to get to work, and there had been days when meat had not been able to be processed, which was expected to cause delays.

Air travel and tourism

Many flights were grounded as the cyclone bore down on the country, as well as inter-island ferry sailings.

Air New Zealand said it was adding extra flights as services resumed on Tuesday across the North Island, but strong winds were delaying domestic and international jet flights out of Auckland.

Air New Zealand chief customer and sales officer Leanne Geraghty said turboprop flights from Auckland would resume mid-afternoon on Tuesday if winds subsided.

Flights in and out of New Plymouth, Napier and Gisborne remained suspended due to airport closures and poor weather conditions.

She said 11 flights had been added to the domestic schedule to help with recovery efforts, with more to come.

Kiwirail staff moving mattresses and pillows into the terminal as ferry sailings were cancelled due to Cyclone Gabrielle, Picton.

“Conditions at New Plymouth, Napier and Gisborne airports mean flying isn’t possible until tomorrow at the earliest,” Geraghty said.

A total of 592 flights had been impacted by the cyclone, with about 35,000 customers disrupted across Air New Zealand’s network.

“Flights are very full, but we’re working as fast as we can to rebook these remaining customers into the next available seats, and we’ve been in touch with them to let them know we’re pulling out all the stops to get people flying again. This includes getting all our customer teams to support the rebooking effort.”

Extra flights were being added where possible to get passengers where they need to be as soon as possible, she said.

“We’re looking at all available options, including adding larger planes, working with Star Alliance partners, converting cargo flights and adding additional services where possible.”

There may be challenges moving things around the country for some time.

Extra international flights and bigger aircraft to Fiji, Samoa and Tahiti would speed up recovery from the Pacific, she said.

Auckland International Airport warned travellers to expect a “bumpy restart” to services.

Chief customer officer Scott Tasker said at times there might be delays and queueing, particularly if high winds made it unsafe for airline ground handling staff to load and unload baggage from the aircraft. About 104 international flights and 96 domestic flights were set to arrive and depart on Tuesday

Air New Zealand has also extended flexibility for passengers affected by cyclone disruptions up to February 17.

International passengers will be able to change travel up to March 8 without a change fee, service fee or fare difference applying.

Domestic tickets would have flexibility until February 22.

The storm had forced cruise ships to scuttle for ports or stay put for longer. IDNZ handles shore excursions for 12 vessels and executive director Debbie Summers said the cyclone could not have struck at a worse time.

“This is our peak of the season, it was our restart season, and everyone needs this. It’s just grotesque, it’s a real kick for the tourism industry.”

Ports, such as the Bay of Islands, which required tenders to get ashore were likely to be bypassed by vessels until the swells subsided sufficiently, and that might take until next week.

Summers said all shore excursions were cancelled in Auckland, but central city hospitality businesses and retailers were the winners when the 2100-passenger Arcadia spent an extra day in port, but it was in for an uncomfortable overnight trip to Tauranga.

The bad weather has disrupted the travel plans of hundreds of cricket fans flying in for the Black Caps v England test match in Tauranga on Thursday.

Leisure Time Tours managing director Scott Mehrtens said his staff had been working frantically to rejig itineraries for those stuck in Australia, Dubai, Hong Kong and Singapore by airport closures.

“It’s been a very, very long week and we are only at day two.”

Mehrtens said between 400 and 500 overseas fans had arrived in recent days, and those originally going to the Bay of Islands were now going to Taupo and Rotorua. He did not believe the run of bad weather would dent New Zealand’s reputation as a summer destination, provided visitors were looked after. “As long as we pull out all the stops to make sure their holiday is memorable for the right reasons.”