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Connexus : Issue 36
Heritage Building Society, a wall of water hit the inland town and swept down the Lockyer Valley. Below the company's head office, the main street branch was awash. "At the peak of the floods, 40 per cent of our branches were closed because staff couldn't get to them," says CEO John Minz. Worst hit was the Bellbowrie branch in a suburban Brisbane shopping centre. It was flooded to ceiling level and will not reopen. Multiple donations Many mutuals donated to flood appeals, then dipped into their coffers again to contribute to staff fundraising. "CUA made a $150,000 donation and then matched the $25,000 that came directly from our staff," says Whitehead. "Many staff donated multiple times. Some asked us to put in a day of their leave pay and some cashed in their points from our rewards program to make a donation." Heritage is now swinging its weight behind community events. The building society supports the autumn GardenFest and agricultural shows each year, and they'll be all the more important this year. "Community is part of who we are," says Minz. "It was automatic to try to do everything we could for people affected by the floods." -- Carolyn Rance is a freelance writer. JOHN ANDERSEN connexus www.abacus.org.au 44 Economy weathers the storms The flood disaster should have only a short-term impact on Australia's gross domestic product, says economist Saul Eslake. The cost of mine shutdowns, damage to agricultural crops and cancelled tourism is already showing in national measures of income and production. However, replacement of damaged goods and repairs to property and infrastructure are likely to boost economic activity for the remainder of the year. Eslake, a program director at the Grattan Institute, attributes a drop in housing approvals over the summer partly to the Queensland floods, but also to the November rise in mortgage interest rates. "Mortgage lending volumes are likely to remain relatively subdued through 2011, given the constraints posed by poor affordability levels and increases in interest rates since October 2009," he says. Households' current cautious attitude to borrowing could bring about some unwinding of the tight lending conditions imposed by major banks in the wake of the global financial crisis and competition between lenders "may heat up a little". Reserve Bank officials have repeatedly said the bank will not raise interest rates in response to short-term inflationary pressures -- such as fruit and vegetable cost increases after the floods. However, if labour markets continue to tighten and wage pressures increase, the bank may be "more likely than not" to increase interest rates again this year, says Eslake. Householders and lending institutions may have to increase their focus on insurance, he says. "It is obviously in the interest of both groups to ensure that policies do actually cover the kinds of risks faced, and those risks are likely to increase as a result of climate change." He cautions against any calls for government to become an insurer of last resort. "If government does take on that role, it is likely to reduce the incentive for property owners to take out their own insurance and perhaps also make people less cautious about where they buy or build homes," Eslake says. "Mortgage lending volumes are likely to remain relatively subdued through 2011..."