Investment implications of Climate Change

[Garpal Gumnut]

I do not believe that climate will make any difference to investment patterns in Australia.

Anyone who moves $ out of Australia because of this is not just simple, but a simpleton.

The world has been through more than these weather variations, and it will be again.

I myself see population growth as the biggest danger, and would suggest that only people with Gumnut genes be allowed to reproduce.

I am a member of a seance group and have consulted The Great Khan on this and he says it's not a bad idea until your descendants take up some mad religion. He was a Tengrist btw. and wasn't referring to Tengrism.

Kids, eh.

gg

 

[Struzball]

Interesting thread. I was thinking that the extreme Aussie drought must break sooner or later. Nothing lasts forever, so a good bet could be pastoral companies or companies that have significant drought affected land holdings. 2020 could be the year.

I agree, if climate change means more droughts and floods, I would be investing in the suppliers to agricultural companies. Fence replacements, irrigation supplies.
Means to maximise yields in a harsher climate via technology etc.
For that reason I own shares in Elders.

I don't see insurance companies ever getting the raw end of the deal, so I consider their profits pretty safe. And if there's catastrophic consequences you'd be mad to not be insured.. bushfire etc.

Droughts may increase property sales of farmers getting off the land.

Elders is exposed to it all, retail, insurance, real estate. It's worth the risk in my opinion, particularly if the share price is discounted due to people avoiding the industry due to climate risk. And when the drought does break it can only benefit their bottom line.

 

[qldfrog]

Interesting reasoning and no big flaw i can detect
Makes sense

 

[Jack Aubrey]

I agree that drought generally involves people leaving the land - especially family farms. There are also demographic changes going on and drought often tips the balance. The larger and more viable farms increasingly end up in corporate hands. One interesting trend I saw during the "Millennium Drought" in Queensland was big corporates buying up grazing properties in several climate zones with a view to moving production around (eg. bringing cattle to coastal and more southern properties for fattening). The current drought has decimated breeding stock too, so rebuilding the herd will be a big task. I do agree that companies like Elders, provided they are "agile", are well placed to be big players.

 

[sptrawler]

Elders has had issues from memory, but as they are one of the only independent rural companies left since ruralco were bought out, they should do o.k. Even if they don't, they would no doubt be bought out, to keep competition and diversity alive in the industry.
Just my opinion, based on years of being wrong.

 

[Jack Aubrey]

Interesting launch of a startup in the "new foods" space yesterday - https://www.businessinsider.com.au/v2food-australia-launch-2019-10

I'll be watching this one with interest.

 

[basilio]

On the big picture about the effects of CC on our financial/economic system. The warning notes issues around the impact of CC waether events on insurers, damage to coastal properties impairing property values, losses to agriculture undermining loans to farmers.

And more. Worth a read and a think when considering where to invest.

Australia
Reserve Bank warns climate change posing increasing risk to financial stability
RBA says it is becoming increasingly important for investors and institutions to actively manage carbon risk
https://www.theguardian.com/austral...posing-increasing-risk-to-financial-stability

 

[sptrawler]

On the big picture about the effects of CC on our financial/economic system. The warning notes issues around the impact of CC waether events on insurers, damage to coastal properties impairing property values, losses to agriculture undermining loans to farmers.

And more. Worth a read and a think when considering where to invest.

Australia
Reserve Bank warns climate change posing increasing risk to financial stability
RBA says it is becoming increasingly important for investors and institutions to actively manage carbon risk
https://www.theguardian.com/austral...posing-increasing-risk-to-financial-stability

I suppose the really big issue with this, is will the State and Commonwealth Governments be able to fund their superannuation obligations into the future, as the statutory obligation on consolidated revenue is eaten up funding CC mitigation?
The Commonwealth Government has foreseen this issue to some degree, with the 'future fund', I'm not so sure the State Governments have put in place anything to mitigate their obligations.

 

[basilio]

I suppose the really big issue with this, is will the State and Commonwealth Governments be able to fund their superannuation obligations into the future, as the statutory obligation on consolidated revenue is eaten up funding CC mitigation?
The Commonwealth Government has foreseen this issue to some degree, with the 'future fund', I'm not so sure the State Governments have put in place anything to mitigate their obligations.

Perhaps.. Why not consider some other possibilities?
1) Recognise that the fossil fuel industry has been highly responsible for the extent of CC insofar as they funded the denial industry when their own scientists told them the truth about global warming.
Have to be a few trillion dollars in those pockets

2) Search out the super rich who have made the most money promoting mindless consumerism and separate them from a few trillion dollars. Serve them right.

3) Swing their gaze to the Big Banks and Huge developers who likewise have made out like bandits.

4) Recognise that the real, overwhelming problem of balancing the budget when CC hits lies with the feckless single mothers/ New Start welfare /DSP recipients and squeeze them till their is nothing but a husk left.

Anyway I wouldn't be counting too much on superannuation pensions, public or private, if/when the chickens come home to roost. Crisis Capitalism (see 1-3) will ensure who gets it in the neck.

 

[basilio]

One option for dealing constructively with Climate Change is a fast developing clean economy.
If anyone is interested in hearing what that looks like and you live in Melbourne check out this event.

Event held on Thursday 31st October 7-9pm
https://lighterfootprints.org/event/living-in-the-clean-economy/

 

[Jack Aubrey]

You had me until

4) Recognise that the real, overwhelming problem of balancing the budget when CC hits lies with the feckless single mothers/ New Start welfare /DSP recipients and squeeze them till their is nothing but a husk left.

Here's how the Commonwealth Government actually spends money.

When you also consider that making people destitute, whether by poor economic management accident or by deliberate design, simply transfers the cost to the "Public Order and Safety" line item (Do you know how much it costs to keep a person in jail?) then any "savings by deliberate cruelty" are illusory. When you also add the administrative costs of measures such as welfare "debt" collection, the Indue card and ensuring the unemployed apply for a quota of non-existent jobs, we end up paying a "cruelty premium" just to ensure that us "good", middle-class people don't feel we are being taken advantage of by the grubby poor. The only people who really benefit from this system are the corporations who come in and deliver these "services" for Government. Not one extra real job is created and no money is "saved".

 

[SirRumpole]

I'm sure bas was being sarcastic, but the figures you provided are interesting.

I didn't realise that either welfare or defence was so big. There is probably some fat that can be cut from family tax breaks, I think paying people to have children can lead to unintended consequences when the money goes elsewhere but on the kids.

 

[Jack Aubrey]

Sorry if I over-reacted to bas. I have that "don't punch down" gene

Welfare is dominated by aged pension, NDIS and family payments - I was never a fan of the latter as I don't think having children is an automatic disadvantage.

Defence is difficult as the current Government is committed to increasing the % we spend. The best we can hope for in the short term is greater efficiency and better tendering.

 

[sptrawler]

Sorry if I over-reacted to bas. I have that "don't punch down" gene

Welfare is dominated by aged pension, NDIS and family payments - I was never a fan of the latter as I don't think having children is an automatic disadvantage.

Defence is difficult as the current Government is committed to increasing the % we spend. The best we can hope for in the short term is greater efficiency and better tendering.

Yes you have to accept anyone on welfare is worthy, anyone not on welfare isn't paying enough and all issue will be adjudicated by those eligible for a public service pension.

 

[basilio]

Sorry if I over-reacted to bas. I have that "don't punch down" gene

Welfare is dominated by aged pension, NDIS and family payments - I was never a fan of the latter as I don't think having children is an automatic disadvantage.

Defence is difficult as the current Government is committed to increasing the % we spend. The best we can hope for in the short term is greater efficiency and better tendering.

Your analysis of the totally BS "Option 4" thought bubble was spot on.
Doesn't take away the fact that some of the most vocal and vicious members of Parliament will defend it to the death - particularly if the aforementioned targets do it themselves.

We are facing difficult times. The Government has legislated for around 70 billion dollars of tax cuts to the those earning top income tier to come into effect from 2022 . When that happens the conversation about balancing the budget will return with a vengance. We can expect all pensions and public health care expenditure to be under threat.
https://www.theguardian.com/austral...d-receive-77bn-in-tax-cuts-under-liberal-plan

 

[Jack Aubrey]

Yes you have to accept anyone on welfare is worthy, anyone not on welfare isn't paying enough and all issue will be adjudicated by those eligible for a public service pension.

I must have been away the day "judging the worthiness of others" was covered in my public service training and I had no idea that I was in a position to decide tax rates. Maybe when we all go full "Prosperity Pentacostal" we can do away with welfare altogether and just let the "unworthy" starve until they conform and seek forgiveness for being born into the wrong family or without the intelligence and education to know how "we" want them to behave. Maybe a good climate emergency will allow us to finally have an excuse to criminalise the behaviours of everyone whose lifestyles and beliefs we don't like and ship them off to our offshore gulags. I'm sure that will work out just fine.

 

[SirRumpole]

I must have been away the day "judging the worthiness of others" was covered in my public service training and I had no idea that I was in a position to decide tax rates. Maybe when we all go full "Prosperity Pentacostal" we can do away with welfare altogether and just let the "unworthy" starve until they conform and seek forgiveness for being born into the wrong family or without the intelligence and education to know how "we" want them to behave. Maybe a good climate emergency will allow us to finally have an excuse to criminalise the behaviours of everyone whose lifestyles and beliefs we don't like and ship them off to our offshore gulags. I'm sure that will work out just fine.

Yes indeed, the politicians decide who is "worthy", the public servants just enforce the laws.

 

[sptrawler]

Hey Bas, even Paul Keating, agrees that the top tax rates are too high, so it isn't just one side of politics pushing for a reduction.
I'm sure public service pensions will come under scrutiny, as they are largely unfunded, other than Commonwealth ones I'm not sure if the future fund covers them yet.

 

[SirRumpole]

Hey Bas, even Paul Keating, agrees that the top tax rates are too high, so it isn't just one side of politics pushing for a reduction.
I'm sure public service pensions will come under scrutiny, as they are largely unfunded, other than Commonwealth ones I'm not sure if the future fund covers them yet.

All very well reducing the middle/upper tax levels, but those cuts have to be paid for.

There doesn't seem much interest from the government in doing away with middle class welfare like negative gearing, family trusts and super ripoffs (sorry concessions), which means that there will really be a bonanza for those most well off at the expense of what ? Health and education most likely.

 

[sptrawler]

I agree with you Rumpy,, but the problem is the whole tax system needs to be looked at, currently it only gets looked at in a party specific way, therefore it all stays clunky and unmanageable.
There is no point saying this or that needs changing, it needs to be looked at non politically and holistically tax should be structured to encourage productive investment, research and development, and reinvigorate modern manufacturing. If that means people and miners paying more tax, so be it, but if all you are going to do with tax is increase welfare, it will end up with us becoming another Greece IMO.