4.19 Obtain the annual reports of two companies in different industries. Assess the decision usefulness of the accounting information contained within these reports from the perspective of the following stakeholders. In your response include an explanation of how the measurement approaches adopted have affected the usefulness of the information. (a) Shareholders (b) Managers (c) Government

4.1 CASE STUDY

WHAT PRICE FOR JAMES PRICE POINT?

James Price Point, site of a proposed gas refinery, is an undeniably beautiful part of the world. If we are to sell it to private interests for development, what price should we place on its beauty?

I recently went on holidays with my sister to the Kimberley region of Australia. It is a stunning part of the world. The red earth and nuggety shrubs (pindan country, they call it up there) give way unexpectedly to gorges of emerald green water and soaring black cliffs. I persuaded my sister that we should drop in to James Price Point. You've probably heard of it: it's been in the news recently. Australian energy company Woodside and partners are keen to unlock the natural gas of the Browse Basin 400 km off the coast, north of Broome. They see $1 billion worth of possibility in the gas fields. In order to refine the gas, the company has received approval from the WA government to build an industrial plant at James Price Point. Environmentalists have got wind of the proposal and are opposing it. News items featuring protesters grimly chaining themselves to bulldozers in the hot red dust have made it all around the world. I wanted to see the area for myself. My sister, with a shrug, agreed to stop in. We pulled up in our hired fourwheeldrive at about two in the afternoon. We drove right to the edge of the cliff and disembarking from the car, we took in the view. 'Wow,' said my sister. At that hour of the afternoon, the sun is a bright white ball high in the sky. The sea, stretching to the horizon sparkled with a million diamonds. From our vantage point on the cliff, we could see the white beach stretching at least 80 km to the next point. We couldn't see a single soul walking on the sand. And the cliffs. When you see photos of the Kimberley, you assume that the tourism council has souped up the colours in Photoshop a bit. But the cliffs really are that red. Where they reach the beach, the red dirt sprinkles like chocolate on a cappuccino onto the white sand. 'Wow,' I agreed. We decided to stay the night. We spent the afternoon and the next day strolling along a peopleless beach, tracing crab tracks and following marine snail trails. We sat in rockpools turned into a natural spa by the force of the incredible Kimberley tide. We marvelled at the starry northern sky, dimmed slightly by the light pollution coming from the proposed gas site. Environmentalists have found a laundry list of reasons to oppose the gas hub. Flora, fauna, Indigenous culture, marine life, even, as showcased on Catalyst last week, dinosaurs. Any or all of these reasons may be valid. Equally, Woodside may be able to build the plant with little or no disturbance to these features. But there is one aspect of the proposal that Woodside can't mitigate: the view. James Price Point is undeniably beautiful. WA Premier Colin Barnett famously called Price's Point an 'unremarkable' piece of coastline. 'I'm making the point that this is not the spectacular Kimberley coast that you see in picture postcards,' he said to Four Corners. Really? Have you had your eyes checked recently, Mr Barnett? Woodside has alternative options for a gas hub location. Existing ports and gas plants are a little further away, and there have even been suggestions to build a big floating plant out to sea, nearer the gas field. But developing a port for the gas was one of the conditions of the government approval to extract it. Besides the gas off the coast, under the pindan lies gold, diamonds, iron, bauxite and a wealth of other minerals. Barnett has been keen to exploit the potential of the Kimberley for as far back as 1998, when he was WA Resources Development Minister. But to process all these minerals, energy is needed, notes a 2005 report. A gas facility to provide the energy for minerals processing convenient to Broome, the biggest town in the area, would be handy. And proximity to the gas fields is obviously key. Siting a gas plant 'somewhere in the region of Dampier Peninsula' was one of the suggestions. Any wonder Mr Barnett has expressed such enthusiastic support for Woodside's proposal: the plant is the first step to unlocking the mineral potential of the area. But building an industrial facility of the size proposed by Woodside would, without putting too fine a point on it, ruin the spectacular beauty of James Price Point. There's no way a large industrial complex would blend seamlessly into that landscape. A pier stretching out thousands of metres to waiting tankers is not something that some strategically planted bushes will hide. The beauty of the area, described dryly as 'visual amenity' in the EPA report that recommended the proposal proceed, was 'not considered to be a key environmental factor'. It's true, the Kimberley coastline has an abundance of beauty. For hundreds of kilometres in both directions, the turquoise sea meets the red earth. James Price Point is as beautiful as many locations along this stretch of Australia. Any development anywhere in Australia of a previously untouched landscape irrevocably ruins the 'visual amenity'. James Price Point is no different. But the question for Woodside, the protesters opposing it, and the prodevelopment premier, is what price to place on that beauty. This is not a disturbed environment, like building a new industrial complex in Port Botany or Altona. If the Point is to be developed, should the proponent, as with endangered flora and fauna, be required to compensate the State and her people in some way for the destruction of this natural place? This is a pristine piece of Australia. Ancient and unchanged. Do we have a right to be adequately compensated for its loss? Should all developments that compromise our natural heritage be asked for compensation? What form should that compensation be in? How would its value be determined? If we are to relinquish our natural assets to private companies for a use that will fundamentally change the value of those assets, should we, as a nation, ask a little more in return? Source: Sara Philips 'What price for James Price Point?', ABC Environment.

18 QUESTIONS

1 What is a heritage asset? Should James Price Point be considered a heritage asset? Does it meet the criteria for recognition as an asset?

2 Explain how we could measure James Price Point to determine its value. Is it appropriate to place a monetary value on natural beauty? Is it really necessary?

3 What are the practical difficulties in measuring an asset of this kind?

4 Which is most important: economic growth and development, or preservation of the natural environment? Can we achieve both? Use evidence from the article to support your response.