Economic impact of Auckland floods will be ‘many millions’, business leaders say

Business leaders and economists are expecting the economic effect on businesses both in Auckland and nationwide to be in the ‘many millions’ following the ‘unprecedented’ rainfall that left most of the city underwater.

Auckland Business Chamber chief executive Simon Bridges was at work on Saturday assessing the economic impact the floods would have after a deluge of rain and severe thunderstorms hit the region on Friday night.

The flooding cancelled concerts, grounded flights, and left thousands of homes, vehicles, and businesses such as supermarkets and Auckland Airport deluged with water.

Bridges said it was hard to get an accurate picture of what is going on both commercially and economically as it was still early days.

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“But the business impacts will be very real,” he said.

“Anecdotally there is major business damage just as there is to households. We also know there will be real supply chain and infrastructural impacts.”

Later on Saturday he expected to speak with Mayor Wayne Brown, to discuss the Mayoral Relief Fund and how the Chamber and Auckland Council could work together to provide any necessary relief.

Bridges sent a letter to business chamber members last night encouraging to them to get in touch if they needed assistance.

“Understandably, businesses will remain anxious until the flooding subsides,” the letter said.

“The cost of the deluge – both insured and uninsured – we’re yet to fully grasp, but it will be enormous. Hard times will be ahead, and we would like to hear how the Chamber can be of assistance.”

Business New Zealand chief executive Kirk Hope said there would “undoubtedly be millions of dollars worth of damage”.

“The damage will certainly be in the millions.”

There will be a short term impact on the supply chain, as some arterial routes were currently blocked, but as the floods dissipate, and if the roads were in good condition, the supply chain would pick back up again.

“We know that businesses are resilient, and we saw how the economy bounces back really, really quickly during Covid.”

Economist ​Shamubeel Eaqub said the immediate impact of the floods was through the loss of property, life and livelihoods.

“Much of this will be insured,” he said.

But those who are uninsured, may face severe consequences. This mainly affected poorer households, who were less likely to be insured than the rich.

“The longer-term impact will be mainly through insurance – premiums may rise, and we may see reduced ability to get insurance, particularly flood insurance.”

He expected there to be added disruption and pressure on businesses working with severe labour shortages, but said flood effects were generally short term, unless logistics infrastructure is lost.

People had been likening the damage and economic impact to the 2011 Christchurch earthquake. Eaqub said that was irresponsible.

“This is nothing like it. It is irresponsible to compare them this way.”

For context the Brisbane 2011 floods cost AU$2.3 billion (NZ$2.5b) and Auckland is roughly two thirds the size of Brisbane.

The floods ultimately led to insurance becoming more expensive.

“This really highlights the importance of climate adaptation policies,” Eaqub said.

“So much of our climate change conversation is focused on mitigation, but the climate is already changed and where we live and work is no longer fit for purpose.”