Economic estimates don't account for tragic bushfire toll

AS THE DEATH and destruction caused by the bushfire catastrophe continue to mount, Westpac has issued estimates suggesting that the associated reduction in gross domestic product (GDP) will be very modest, between 0.2 and 0.5%. There is plenty to argue within the way this estimate has been derived, but the biggest problem is with the use of the GDP concept.

Scott Morrison's Government has prioritised money over the environment.

I’ve pointed out many times that considered as a measure of economic wellbeing, GDP has three major deficiencies: it’s gross, meaning that depreciation (including the destruction caused by natural disasters) is not taken into account; it’s domestic, meaning that it includes output generated in Australia by foreign capital; and it’s a product, when the real interest is in income. 

In the case of the bushfires, the big problem is that GDP is gross. The destruction of houses, businesses and infrastructure by disasters is, in economic terms, a particularly drastic form of depreciation. But, since GDP takes no account of depreciation, it is unchanged.

Read the story from the Independent Australia by John Quiggin - “Economic estimates don't account for tragic bushfire toll.”