You’ve got to love economists. They can put a price on anything.
You may have read about Deloitte Access Economics’ latest report. At 92 pages, it’s not exactly light reading. But the company manages to make a good case for its valuation of Australia’s Great Barrier Reef.
The value? $56 billion.
According to the report:
‘The Great Barrier Reef has an economic, social and icon asset value of $56 billion. It supports 64,000 jobs and contributes $6.4 billion to the Australian economy.’
To be fair, the writers give a nod to the fact that the reef is more than just dollars and cents.
‘The Great Barrier Reef is in Australia’s cultural DNA. It is integral to the identity of Australia’s Traditional Owners. What’s more, its status as one of the seven natural wonders of the world makes it an international asset. In many ways, it hardly seems necessary to quantify its value. The value of the Great Barrier Reef is priceless and we know that there is no replacement.
‘However, identifying, measuring and reporting on the economic and social value of the environment elevates its significance in decision making. Valuing nature in monetary terms can effectively inform policy settings and help industry, government, the scientific community and the wider public understand the contribution of the environment, or in this case the Great Barrier Reef, to the economy and society.’
It also offers this handy schematic to put things in perspective:
[Click to enlarge]
As you can see, the reef supports more than twice as many direct jobs as the Aussie oil and gas extraction industry. And more jobs than telco behemoth Telstra. It’s a fair bit more appealing to the eye, as well.
I had a chance to visit the reef last October. That was after Port Phillip Publishing’s two-day Great Repression Conference at the Sheraton Mirage in Port Douglas. If you were lucky enough to get a ticket before we sold out, I’m sure you walked away with a head full of new investment ideas. Not to mention which sectors to avoid.
The insights from legendary investor Jim Rogers and Wall Street insider Jim Rickards alone kept my brain occupied for days. If you didn’t make it to the conference in person, don’t worry. We recorded the entire event — including every breakout session and interview with all 12 presenters. Go here to find out more.
After the conference, fellow Markets & Money Editor Jason Stevenson and I spent some time diving on the Great Barrier Reef. Truly a spectacular location. One that’s easily worth $56 billion.
And that’s got me thinking…
As you know, Australia has a bit of a debt problem.
So what if someone offered to buy the reef from Australia? The Chinese maybe. Or Bill Gates, perhaps, whose estimated wealth is around US$79 billion (AU$103 billion).
We haven’t hesitated to sell off plenty of other assets to foreign owners — ports, farmland, apartments, infrastructure… Why not put a big ‘For Sale’ sign out in the water off the coast of north Queensland?
It would be a great way to finally get the government out of debt and back on even footing…if only we had nine of them.
We would need to sell nine Great Barrier Reefs to pay off the federal government’s half a trillion dollar debt binge. And that’s not even touching on household debt, which has reached a staggering 123% of GDP.
I’m sure you understand that I make this suggestion with tongue firmly planted in cheek. After all, at the rate coral grows, our ballooning debts would surely outpace any effort to produce eight more Great Barrier Reefs.
But I bring this to your attention on a Saturday morning for a reason. When you read about figures like a half trillion dollars, it’s hard to picture how much that really represents.
Now you have that picture. And the next time the government quietly raises the debt level, you’ll know that nine Great Barrier Reefs will no longer quite cover what we owe.
With that in mind, let’s have a look at the week gone by in Markets & Money.
This week in Markets & Money
How many years do you have left before retirement? Not so fast! Vern reminded us on Monday that, as of today, you need to be 65 years and six months to qualify for the age pension. The eligibility age rises to 67 over the next six years. And that’s only the beginning. An ageing populace, fewer children, and a crushing debt burden that eventually needs to be paid down, will only see the retirement age pushed out further. Will that mean most Aussies can look forward to a ‘comfortable’ retirement? According to the Australian government’s Super Guide, perhaps. But the guide makes some bold assumptions about your future returns. You can read Vern’s take on those assumptions in the full article here.
On Tuesday, Jason introduced you to a little-known metal. One he reckons could replace lithium to be the next battery superstar. Few investors have even heard of vanadium. Fewer still are prepared to put their money into the sector. According to Jason, that’s their loss…and your potential gain. Vanadium pentoxide (fuel for batteries) prices remain near two-year highs. And that’s good news for certain miners. To find out Jason’s take on the best way to play the next phase of the battery boom, you can read Tuesday’s Market’s & Money here.
Jason continued with the vanadium story on Wednesday. The little-known metal could offer investors explosive gains — similar to what the best cobalt miners returned last year. Vanadium’s use in battery technology has sparked the interest of billionaire mining guru Robert Friedland. Friedland states, ‘The beauty of the vanadium redox battery is that you can charge and discharge it at the same time, something that can’t be done with a lithium battery.’ Yet the mainstream has yet to catch on to the potential here. That’s why Jason says now is a great time to invest in the best vanadium stocks — before they take off. For all his analysis, click here for the full article.
This week marked the end of another financial year, which led me to take a look at taxes in Thursday’s Markets & Money. Of course, it’s not just income tax the government takes from you. Most every purchase you make is slugged with another 10% GST charge. That goes up to 30% for petrol. And 38% or more for alcohol. That all comes out of your ‘after tax’ income. But the government’s not satisfied yet. With insatiable spending programs firmly entrenched, the cash grab is on. From the bank tax to a new sugar tax, you can find out why the government is ‘robbing Peter to pay Peter’ here.
The IMF’s insanity, Vern wrote on Friday, is driving him insane. The organisation’s growth projections are perpetually optimistic, meaning these projections need to be revised downwards almost like clockwork. The IMF’s rose-coloured financial glasses make it impossible for people to formulate educated decisions about their future. After all, we’re always told to expect higher growth than we really get. The only real growth we’re seeing, Vern explains, is in our levels of debt. That creates a phony sense of wealth. One that’s destined to come crashing down. You can read Vern’s full analysis here.
That’s all for this week.