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RUSSELL DEW FINANCIAL SERVICES

RUSSELL DEW FINANCIAL SERVICES. Lunchtime Seminar 9 th November 2018. Russell’s seminar will start soon…. Please help yourself to a drink and some lunch before we start. Economic Update November 2018. Profits are Projected to Rise through 2018/19. Source: Bloomberg, UBS, AMP Capital.

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RUSSELL DEW FINANCIAL SERVICES

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  1. RUSSELL DEW FINANCIAL SERVICES Lunchtime Seminar9th November 2018

  2. Russell’s seminar will start soon… • Please help yourself to a drink and some lunch before we start

  3. Economic UpdateNovember 2018

  4. Profits are Projected to Rise through 2018/19 Source: Bloomberg, UBS, AMP Capital

  5. Falling $A Helps Your Investment Returns Source: Bloomberg, RBA, ABS, AMP Capital

  6. House Prices are Falling in Sydney and Melbourne Source: Core Logic, Domain, AMP Capital

  7. Topic 1 Economic Impact of Climate Change in Australia

  8. Economic Impact of Climate Change in Australia • All too often, Australians witness on TV horrific scenes of devastating bushfires, cyclones and floods. • Not only are these events devastating for those in the vicinity, but the effects are felt throughout the Australian community. • Financial consequences are also felt by all taxpayers, who pay for: • Repair of infrastructure through their taxes • Higher prices at grocery stores when crops are destroyed • Higher home insurance prices

  9. Global climate change • Australian climate change should be interpreted within the context of the worldwide rising temperatures • These rising temperatures are now scientifically proven…

  10. Global climate change

  11. Global climate change

  12. Climate Change in Australia • Rainfall has reduced by around 19% since 1970 in southwest Australia • There has been a decline of around 11% since the mid-1990s in the April–October growing season rainfall in the continental southeast • Oceans around Australia have warmed and ocean acidity levels have increased • Sea levels have risen around Australia and are projected to continue Source: Bureau of Meteorology, Parliament of Australia

  13. Australia’s climate change

  14. Australia’s climate change

  15. Australia’s climate change • Because of climate change, the duration, frequency and intensity of extreme heat events have increased across large parts of Australia • The total economic cost of natural disasters in Australia over the 10 years to 2016 averaged $18.2 billion per year, equivalent to 1.2% of Gross Domestic Product (GDP). Source: IAG Australia, ‘Natural disaster costs to reach $39 billion per year by 2050’

  16. Australia’s climate change • Average yearly cost of natural disasters 2007-2016 : • Queensland $11bn per year (60% of national cost) • New South Wales $3.2bn per year (17% of the national cost) • Victoria $2.7bn per year (15% of the national cost) • Western Australia $1bn per year • South Australia $300m per year • Tasmania $200m per year • Northern Territory $50m per year • ACT $50m per year • Australian total $18.2bn (1.2% of GDP) Source: IAG Australia, ‘Natural disaster costs to reach $39 billion per year by 2050’

  17. Recent Australian Droughts • Federation drought (1895-1903) • World War II drought (1939-45) • Millennium Drought (1996-2010)

  18. Millennium Drought (1996-2010) • Impacts: • Particularly affected the agricultural region of the Murray-Darling Basin • Adelaide’s water supply was threatened • Supplies to the nearly 4,000 South Australian irrigators that get their water from the Murray River were severely restricted • Parts of the Coorong became too salty for many native plants and animals to survive, becoming five times saltier than the sea

  19. Millennium Drought (1996-2010) • Impacts: • Between 2002 and 2009 it is estimated that: • Wheat yields were 18%- 22% lower than if there had been average conditions. • Irrigated cotton production fell by 84% • Irrigated rice production fell by 99% Source: Journal Article in American Geophysical Union, 2013

  20. Millennium Drought (1996-2010) Source: Journal Article in American Geophysical Union, 2013

  21. Millennium Drought (1996-2010) • In Mildura, broad acre farmers lost around 60% of their annual income on average. • Similarly, on average during the drought dairy farmers lost up to 80% of their annual income • Water restrictions were enforced in various Australian states Source: Mildura Millennium Drought: Impacts

  22. Current Australian Drought • The 2018 drought could be the worst in 400 years • 99% of NSW is currently in drought Source: Bureau of Meteorology and news.com.au, ‘Current drought the worst in centuries as cost of feed sends farmers broke’

  23. Current Australian Drought • Some farmers are spending $1m per year on feeding livestock • One semi-trailer of hay (40-60 bales) costs $2,500 plus transport of $5,000 = $7,500 • Properties are too dry to grow their own feed • With the increased cost of growing food and fewer viable crops, consumers will ultimately pay more Source: news.com.au, ‘Current drought the worst in centuries as cost of feed sends farmers broke’

  24. Current Australian Drought • Almost 100% of NSW in drought, on ‘drought watch’ or onset of drought • 57% of Queensland is also in drought • Atkinson Dam is currently 5.4% full, Bill Gunn Dam is 3.8% full and Lake Clarendon Dam is just 0.5% full • Therefore, farmers cannot access dam water, only groundwater • Stakeholders in the Lockyer Valley and Somerset regions have secured a $1.4 million grant from the State Government for a business case to investigate water security options Source: ABC, ‘Price of Vegetables could rise due to Lockyer Valley Drought’ & ‘Farmers offered water from the public pool as national talks begin in Canberra’

  25. Current Australian Drought • ‘Fiver for a Farmer’ campaign raised $1m in less than 5 weeks • This money will help farmers pay bills and provide food for animals Source: The Australian, ‘Fiver for a Farmer campaign raises $1m for drought relief’

  26. Bushfires • There has been an increase in extreme fire weather, and a longer fire season, across large parts of Australia since the 1970s • In the years between 1967 and 2013, major Australian bushfires have resulted in over 8,000 injuries and 433 fatalities, accounting for 50% of deaths from natural disasters during this period Source: Geoscience Australia ‘Hazards: Bushfire’ & BOM ‘State of the Climate’

  27. Bushfires • Between 1967-2013 bushfires cost Australia approximately A$4.7 billion • Currently bushfires cost NSW and ACT $100m each year • This cost is predicted to double by 2050 Source: Geoscience Australia ‘Hazards: Bushfire’ & ABC. Economic impact of bushfires in NSW, ACT to double by 2050, Climate Council report finds’

  28. Bushfires • Waroona-Yarloop Bushfire burned for 17 days in January 2016 • It destroyed 181 homes and vast areas of farmland • The fire burnt more than 69,000 hectares, and its perimeter was in excess of 392km • There were also 2 fatalities

  29. Bushfires • Who suffers financially? • Homeowners • Les Liddington estimated his property and antique collection would have been worth $1m • Volunteers • Firefighter Phil Penny estimated he worked about 250 hours over 17 days. • His carting business has suffered, as he has only managed one day's work in a month Source: ABC News, ‘What we lose to the flames’

  30. Bushfires • Who suffers financially? • Small Business • Dairy farmer Malcolm Hayes estimates the damage by bushfires has cost his business more than $320,000. • $3,000 spent on diesel fuel over 11 days without power • $4,500 of milk had to be disposed of as he could not get to market to sell it • $40,000 worth of fencing destroyed (plus $240,000 for its reinstallation) • $45,000 worth of hay Source: ABC News, ‘What we lose to the flames’

  31. Bushfires • Who suffers financially? • Government Infrastructure • Electricity: $26m needed to be spent on replacing 871 distribution poles, 77 transmission poles, 44 transformers and 30-50km of overhead powerlines (Spent by Western Power, WA) • Roads: $2.7m needed to be spent on a destroyed bridge, guideposts and cleaning the road (Spent by Main Roads WA) Source: ABC News, ‘What we lose to the flames’

  32. Bushfires • Taxpayer: • In 2016, WA Gov expected to collect $320.5m for the Emergency Services Levy Source: Australian Budget Papers, ABC: What we lose to the flames

  33. Bushfires: Black Saturday Bushfires • Occurred February-March 2009 in Victoria • 98,932 hectares of Victorian parks were damaged by fire • 173 fatalities and 414 people injured • 3,500 buildings destroyed, including 2,029 houses • Over 1 million wild and domesticated animals died Source: The Age, ‘Black Saturday cost $4.4 billion’

  34. Bushfires: Black Saturday Bushfires • Insurance claims totalled $1.2 billion, but 13% homes may have been uninsured • Bushfires Royal Commission estimated the cost to be $4.4 billion, as a conservative figure

  35. Cyclones • In Australia, over the period 1967 to 1999 the total cost of tropical cyclones was about $8.8 billion, averaging $266 million per year. • Australia’s two most expensive cyclones were: • Cyclone Tracy (1974) • Cyclone Debbie (2017) Source: Geoscience Australia

  36. Cyclone Tracy (1974) • Occurred between 21-25 December • 65 deaths, 145 hospitalised with injuries • 90% of homes in Darwin were destroyed or badly damaged • 30,000 people evacuated (2/3 of the population) • Total damage bill came to around $800 million or nearly $4.5 billion in today's money • Worst cyclone in Australia’s history Source: Bureau of Meteorology

  37. Cyclone Debbie (2017) • Cyclone Debbie affected Queensland, NSW and Hamilton Island • 14 fatalities • Following the cyclone, residents and farmersexperienced severe flooding • Second most expensive Australian cyclone after Cyclone Tracy Source: Insurance Council of Australia

  38. Cyclone Debbie (2017) • Damage as at 3rd April 2017, while the cyclone was still raging

  39. Cyclone Debbie (2017) • Estimated damage to private homes $978m, and for businesses is $733m • Total domestic insurance claims: 64,951 • Total commercial claims: 10,117 • Cost $1.71 billion Source: Insurance Council of Australia

  40. Cyclone Debbie (2017): Flood • Following the initial damage caused by the Cyclone, there was then torrential rain causing flood. This led to even greater damage to houses and farms Source: ABC News

  41. Cyclone Debbie (2017) • Agricultural losses • It was estimated that the cyclone caused $150m loss for the Queensland sugar industry • Proserpine region, 35% of sugarcane damaged, worth $50m • Mackay region, 20% of sugarcane damaged, worth $81m • Queensland Farmers Federation estimated winter crop losses at 20%, or $10m • Ultimately, damage to crops leads to higher prices for all consumers Source: ABC News, Brisbane Times

  42. Australia’s weather: Future Projections • Australian temperatures are projected to continue increasing with more extremely hot days • Expected to have more days which are conducive to fire in southern and eastern Australia • Winter and spring rainfall is projected to decrease across southern continental Australia, with more time spent in drought • Past and ongoing greenhouse gas emissions mean further warming of ocean temperatures Source: Bureau of Meteorology

  43. Power of Mother Nature: Krakatoa • In 1883, the Krakatoa volcano in Indonesia erupted four times • Itproduced the loudest sound in history- its explosion could be heard over 3,000km away in the Australian desert near Perth! • Sailors who were 64km away had their eardrums ruptured • There was a 1.2°C drop in average temperature the following northern hemisphere summer due to less sunlight getting through the earth’s atmosphere • Weather patterns continued to be chaotic until 1888

  44. Power of Mother Nature: Krakatoa • The waves caused by the explosion went around the globe three and a half times over five days • The air waves caused by Krakatoa could be detected at points all over the earth • Although this event is not linked to global warming, it demonstrates the significantinfluence natural disasters have worldwide.

  45. Conclusion • Natural disasters have many costs: human life, environmental damage, and economic • Disasters do not only effect those who are in the disaster zone, but also State and Federal Governments and consumers • Even though we are not able to control natural disasters when they occur, Governments can put money aside into their management and prevention • Ultimately climate change is causing more frequent and severe natural disasters, so reducing our environmental footprint is how we can reduce increasing environmental catastrophes.

  46. Topic 2 How to Save Money by Making your Home Energy Efficient

  47. Canberra isn’t that cold! • Source: Sourceable.net

  48. Canberra isn’t that cold! Canberra’s weather is similar to that of central Italy • Source: Reddit

  49. Canberra isn’t that cold! • Source: eldoradoweather.com

  50. Canberra isn’t that cold! By international standards, Canberra’s climate is moderate and similar to Rome. However, in other parts of Australia we simply do not need the same level of insulation methods to keep our houses warm. • Source: Reddit

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