Presented by MCG Quantity Surveyors
Geared for Growth

Podcast Transcript - Episode 19 Interview with Heather Stevens

Heather Stevens

Heather Stevens

 

Heather Stevens is a climate change expert and accomplished investor. She bought her first property at 24 and continues to expand her portfolio. We discuss the impacts of climate change on the property market and the implications for investors. A fascinating listen.

 

Mike Mortlock:                 Welcome to Geared for Growth. This week we're chatting with Heather Stevens who's a climate change expert. She's also a very successful property investor in her own right, getting started from a young age and amassing an impressive diversified portfolio. But the real focus of this interview today is about climate change and the impacts on the property market and the implications for property investors. We talk about the problems, the cost of climate change, the mitigation strategies and what's happening with property when we're looking at it in terms of bushfire zones, flood zones and where the employment nodes are heading to based on the impacts of climate change. I think it's a fascinating interview and I really hope you enjoy it. Here's Heather. Heather Stevens, thanks for joining us on Geared For Growth.


Heather Stevens:                 Good morning, nice to be here.


Mike Mortlock:                 Let's kick things off. Who are you and what do you do?


Heather Stevens:                 My name's Heather as you just said and I'm a 36-year-old mother of two beautiful boys. But I also have a bit of a passion in property and also a lifelong career and passion in climate change and environmental science. In terms of property I bought my first property at 24 so I think that's pretty young to-


Mike Mortlock:                 That's pretty young.


Heather Stevens:                 Be playing with property. Fortunately for me I just bought a property that ... It was a block of land in Tasmania actually and it doubled in a year. So that just gave me a really great boost to starting off doing other properties so then I went on.


Mike Mortlock:                 The boom before the current one because it's been going gangbusters recently.


Heather Stevens:                 And a big lull in the middle so yeah. I think they had a boom and then a lull and then another boom. That just gave me a lot of confidence to keep trying and I think I've gone through ... I've had five or six properties including a few extra block of lands. I've just sold my first property over that time period so that's been a really positive experience as well.


Mike Mortlock:                 Awesome. What sort of properties are you focusing on? Are you location-based or is it demographics or what was it?


Heather Stevens:                 I always go for standalone house so I've not yet gone into apartments or any commercial property. I just think standalone gives me a lot of flexibility to do things like if I want to do extensions or granny flats or developments, and also I find it's easier to get tenants when you have a standalone property than an apartment in experience.
I have mainly focused in Newcastle which is where I live and that's because I do self-manage the property. So it means that I can go there and be much more responsive to fixing a washer, I'd rather do it myself than pay a plumber $150 for the pleasure. But I have just recently started investing back in Tasmania because of my passion in thinking about climate-friendly locations. That one now, it's a little bit harder to get to do the maintenance but it gives me a nice tax-free excuse for a couple of good holidays a couple of times a year.


Mike Mortlock:                 Yeah, although there's been some changes to that lately. I was chatting to an accountant, hopefully you've pre-paid some of those expenses.


Heather Stevens:                 I'll have to find out more about that.


Mike Mortlock:                 That's a whole other podcast. Let's get on to climate change. Can we just agree that it's a thing? There's a bit of conjecture but it's not scientific conjecture is it?


Heather Stevens:                 Well look, 97% of scientists think that climate change is real, is human-induced and is a danger. I would say that as a property investor if 97% of economists said that your suburb you're investing was going to tank you'd probably take that really seriously. I think that there's a high confidence in the implications of climate change and I certainly ... In my experience of working in this space for 15 years haven't seen the conspiracies. I wish I was paying bucket loads to tell Furphy's but that's just not the case.
It's pretty basic physics really. The atmosphere is, if you wanted to make a nice analogy, imagine the Earth's the size of an apple. Our atmosphere is the thickness of the apple's skin, it's not a lot of space. Over the last nearly million years the concentration of carbon dioxide, which is the most common greenhouse gas that gets talked about, has never gone above more than about 300 parts per million. It's sort of sat in a band of around 170 to 300 parts per million.
It's not a very long band. We're currently sitting at 401 parts per million. Over the last million years that fluctuation of a hundred parts has been the differences in ice ages. At the end of the last ice age there was a two kilometre sheet of ice over Manhattan. So it's a huge difference in temperature for a fairly small, modest amount of carbon change. We're currently sitting at 403 which is pretty scary. What really scares me too is that before I retire we're likely to hit, if we continue on this trajectory, 600 parts per million. You don't have to be a climatologist to go, "Well, that's going to probably have a bit of a big impact on temperatures."


Mike Mortlock:                 I guess the thing that people struggle to get their head around is that we might say, "The globe has gone up by .8 of a degree in the last hundred years," or whatever. I think that's technically almost close, correct me if I'm wrong. And people just think, "Oh, I could live with that. If it's 30, it's almost 31," sort of thing. But there's also the pace of economic change in the developing areas like every country that industrialises and goes through a big growth phase like we've seen with China. They really ramp up their pollution and their contribution to greenhouse gases, we're really seeing that with India and China.


Heather Stevens:                 I like your first point about that, .8. We have only experience, but we have experienced .8 and people think, "Oh, if I lived in Melbourne .8 might make my winters a bit nicer." But another nice analogy is to think about your core body temperature. Sure, we can handle fluctuations of 20 degrees, 30 degrees in our day-to-day life.
But if your core body temperature changes by even a few degrees ... So, 37 degrees, you're feeling pretty healthy. 38 degrees you might call in sick. 39, 40 degrees, you're dead. A small fluctuation in our internal body temperature has a huge impact on our health and well-being and that's the same for the globe. Yes, we can handle large fluctuations day-to-day, so much in winter. But it's that core temperature change over globe scale that's much more concerning.


Mike Mortlock:                 People talk about the history of the planet, there's been extreme weather events, there's been ice ages. Sure, we've had species wiped out and all that sort of thing. But these were things that were happening because of the natural equilibrium and the changes were happening over a very, very long scale.


Heather Stevens:                 That's right.


Mike Mortlock:                 Is that the big difference with climate change?


Heather Stevens:                 Absolutely. There was time for adaptations. Adaptation is to prepare for the change and if change is happening over several thousands of years, well there's a lot of chance for species to migrate. Whether it's a plant species or an animal species then they could have time to move to a place where it is more favourable for that climate. Our change is happening over decades if not just a century. It's happening much, much faster and I don't think we have the ability to ... It's also happening at a global scale whereas in the past things might have been more localised.


Mike Mortlock:                 And getting back to those 3% of scientists, there were scientists that said that smoking tobacco was good for you. Really the incentive, I guess the money is not on the side of the people saying, "Hey, we should slow down and look after the environment." I think it's a pretty silly argument. You're working on PHD around climate change and extreme weather events. Can you tell us more about that?


Heather Stevens:                 Yeah sure, I'm pretty passionate about it. It's a pretty interesting topic. It's not just with property but perhaps it will collide at some point. I'm interested in heat waves and obviously temperature getting hotter is something that is one of the biggest impacts of climate change. There was a study that came out recently, they're expecting 50 degree days in Sydney in the future. Imagine coming home from work on a 50 degree day. My interest with research is looking at data around crime. Does hot weather create more crime? Really, essentially, does the hot weather send you a bit batshit crazy?


Mike Mortlock:                 Wow. Well I've heard the story in Darwin, they're going troppo.


Heather Stevens:                 Mango madness, that's right. And I feel like everyone has a story about, "Oh, that really hot day, I just cracked it and yelled," or did something crazy, road rage. My study has been looking at crime, particularly aggressive crimes and looking at, "Is it impacted by temperature and if so where, why, and most importantly what are we going to do about it?" Trying to engage with police and health services to try and start thinking about if there's a heat wave warning coming up maybe putting more resources into domestic violence support or patrolling areas at risk.


Mike Mortlock:                 Wow, it's interesting. It's not something that I would think about.


Heather Stevens:                 Well you will now on a hot day. I think, "Do I want to try and stab someone? Maybe."


Mike Mortlock:                 Do I leave the keys on a beach towel if it's a really hot day? Obviously there's a lot of implications for property investors who are the main beneficiaries is maybe too strong of a word on the podcast, so let's call them listeners. The climates that change and climate sciences is not really a left-field thing that only a couple of environmentalists are talking about. We're talking serious institutional investment funds and super funds are across climate change and if you dig for five seconds you'll find there's plenty of studies. Why is it something that we're not really hearing about how climate change and extreme weather events are factored into investing?


Heather Stevens:                 That's a good question. First of all you're absolutely right, the very first shakers and movers around climate change has been insurance property businesses. And insurance, of course they care because they are the ones that are paying for natural disasters when they come through and they don't want to be losing their bottom line.
Insurance companies have always been the ones that have ... Back 30, 40 years ago they've been starting to talk about this and act on this. As to why it doesn't get talked about at a more public scale, it could be political. People have a tendency to not use the word climate change but things like natural disasters or resilience or other words because I guess climate change has got a bit of a stigma about being something that's almost religious or political rather than actually about basic science and numbers and figures.


Mike Mortlock:                 Yeah, it's almost like a football team. Which side are you on? It just seems a bit absurd.


Heather Stevens:                 If you take away the word and just say, "I want to start talking about resilience and future preparedness," suddenly it becomes a lot easier to have those conversations.


Mike Mortlock:                 Right. In a study by the ANU they outline seven construction sector risks and I think with property investors obviously there are construction sector risks that have implications for investors including the actual cost of building an asset which flows on. The first one that they touched on was hail storms and the evidence said that the 99 Sydney storm damage in today's dollars was 3.3 billion worth of damage. That's an important number for insurance companies but for property investors as well.


Heather Stevens:                 Absolutely. Insurance is one of the biggest drivers that I would say any property investor should think about when buying a place or keeping a place that they have. Insurance don't want to lose their bottom line as I said. They'll pass that cost onto you. So first of all they're going to pass it on to everyone, so globally insurance prices premiums are rising. But they will target areas that are more at risk so if you are in a risk, so hail storms is what you mentioned but also say flooding, cyclones, bushfire, flood risk, they'll either increase your premiums astronomically and I'm sure everyone's heard that story of someone who had a $10,000 insurance bill, or they might just pull out entirely.
There are insurance companies that just will not touch certain suburbs. What that means is if in the future you find that you have a property that's uninsurable what does that mean for having a loan? If you go to buy a property that is uninsurable the banks are not going to be lending you money on a house that they know is at risk. Certainly, insurance premiums, not just finding out what they are for this year but thinking about what they might be next year the year after and the year after that. Certainly that's where big dollars are going to have to be allocated.


Mike Mortlock:                 I had a letter recently from a finance company that I have a loan with, I won't mention who. They said as a condition of this loan for an investment property you have to furnish us with your updates insurance documentation because they want to know that it's covered. Because if anything was to happen to it they want to make sure that their asset's being protected.


Heather Stevens:                 That sounds really obvious. No-one has ever come back to me and said, "Can you please continue to provide your insurance policies year to year," for my mortgages. And I'm really surprised.


Mike Mortlock:                 My reputation precedes me. I don't know what's going on.


Heather Stevens:                 Maybe you have a house in a bushfire zone.


Mike Mortlock:                 Rainfall and flooding was the next one. Brisbane, Victoria and Tassie floods in 10 and 11, they were saying $5.6 billion's worth of damage to property, infrastructure and economic activity. Economic activity is a funny one because people think if there's a natural disaster we just have a rebuild and stuff. People aren't working, businesses aren't trading, there's far-reaching consequences with that. What can we expect with rainfall and flooding?


Heather Stevens:                 The projections for much of Australia, rainfall is a bit of a harder one to actually project. Heat waves we're pretty confident with our projections into the future of how much increasing temperature we're going to have. There are some great websites out there where you can go and look at your particular suburb and find out in your particular suburb what those projections are. Rainfall's a bit more difficult because it's seasonal. You might have higher rainfall in winter, lower rainfall in summer.
Over the year the average is the same but it's seasonal. We are expecting to have more intense storms and more intense flooding but maybe not. The frequency is a little bit uncertain. So same for cyclones. For flooding I'd certainly say that again, insurance may very well cover you to rebuild, but the standards may have changed. We'll talk about I'm sure in a little while about council making regulations to make sure houses are more climate-friendly.
If the council has said, "Right, the floor heights have now gone up by an extra metre to accommodate future flooding and potentially sea level rise." If you need to rebuild that might cost you a third more to rebuild than just doing a slab on ground house. So certainly although insurance might say, "We'll pay you some of the money," some of the money you might have to pay a lot more to be able to re-develop or re-fix up a house after an incident like that.


Mike Mortlock:                 Yeah I definitely want to talk about building codes as well. The next point of the ANU study was about rain delays in construction. There was a metric that comes out of the industry group and the HIA that said construction performance went to 35.6. Anything below 50 is a contraction so rain delays were significantly adding to construction costs. I guess it's not just rain delays, any extreme weather event is going to have an impact on construction. Rain delay's a very common thing for project managers and quantity surveyors to see. But if we're talking about heat waves that can tap into that as well.


Heather Stevens:                 I'm expecting that there will be a time we'll start putting cut off temperatures for outdoor workers. I'm sure you'll remember at school we used to have this idea that if it got to above 40 degrees they'd cancel school.


Mike Mortlock:                 That was so exciting.


Heather Stevens:                 That doesn't actually happen unfortunately and it would be a bit of a disaster if it did because imagine letting all these children out of school in the peak heat period to go home to ... That would be chaos. However for outdoor workers councils are already starting to say that you can't work outside on temperatures over so much. I believe that for an OHS issue that'll start to happen in construction areas. In some areas we're getting two or three times more extreme heat days over 35 degrees. Yeah, I expect that we'll have not just rain delays but heatwave delays as well for construction.


Mike Mortlock:                 Yeah, and if we think about it the rain delays can cause quite a big change in construction costs, especially if it's a project going over 12 months. To add heat delays it might be around the same sort of amount of delay. The construction cost impact would be pretty big.


Heather Stevens:                 Yeah, and I would say that outdoor workers, sorry, talk about tenants in a little while too. But if you think about where your houses are and who's living in your houses we want to make sure we're protecting those most at risk. People that are outdoor workers, yeah they're much more vulnerable to heat stress because they're not in air conditioned officers during the day.
They're body's not getting a chance to actually recuperate. There's only so much heat that our body can handle so certainly thinking about with your houses if they are heat-friendly and that you have the ability to cool your houses and make your houses comfortable for your tenants. It's both a moral and ethical essential element of being a landlord.


Mike Mortlock:                 I want to get onto that so I'm going to skip through the next couple. Anecdotally I saw that Cyclone Yasi caused 3.5 billion in damage. They're saying that if a cat five hit Cairns it could be up to eight billion in economic and physical damage. Talking about electricity before and of course air conditioning is a big part of that. We saw bushfires disrupt a link between New South Wales and Victoria and cut the electricity supply by a third. This is something that investors are going to have to factor in for the well-being of tenants. It might not be legislated now. If you're living in areas where there are heat waves like Melbourne yesterday it was into the 40s.


Heather Stevens:                 Wow, and then today having a huge rain dump. 100 millimetres.


Mike Mortlock:                 I was in Cairns speaking to Mitch from our office and he said, "Gosh, it's hot here in Melbourne." "I'm in Cairns, what are you talking about? It's 32, I'm sweating." He's like, "It's over 40 here." It's crazy.


Heather Stevens:                 And that was probably still spring yesterday.


Mike Mortlock:                 With the higher temperatures and the electricity costs your focus quite specifically with your studies on heat waves, what's happening with heat waves? What is the net impact to individuals and do you see with properties from heat waves?


Heather Stevens:                 A few interesting things about heat wave is that it's not necessarily about the temperature but about the change in temperature. If you have a cool day and then you have a hot day that difference can actually be quite taxing on your body. Then it's about cool nights. So the projections for climate change are also a reduction in the temperatures in night time. Night time is the time our bodies can have a chance to actually recuperate but if you're not getting below 30 degrees at night time your body's just not getting a chance to recover. Certainly those heat waves where the nights remain hot is much more dangerous to our health. Heat waves is a real untalked of health risk. We were just talking about the Black Saturday fires in Victoria and although about 170 people died in those fires thousands of people died from heat waves in the same period of time. Heat waves has more mortalities than any natural disaster in Australia combined, but it's often untalked about because they're the ones that are most at-risk. They're the elderly, low socio-economic, don't have air conditioning, don't have access to cool spaces. I think it's not legislated right now but happy tenants equals happy land lords so I also feel very strongly as a moral obligation to keep my houses climate-friendly for those tenants. Because it's their lives, it's their health, it's the well-being of their children, their pets and themselves to make sure that they have a well heat-friendly house.


Mike Mortlock:                 That might be a little bit easier in Tasmania where you've got a couple of properties. But what about elsewhere? Heat is one thing but of course we've got bushfire zones, we've got areas where there's monsoonal rains. What are the areas of Australia that are more susceptible to these climate events and in turn are the areas that we might see capital growth restrictions on property prices?


Heather Stevens:                 Certainly I wouldn't make blanket areas and say, "Look, all of Queensland's just a write off." But rather it's almost by a street-by-street basis. I live on a hill but two streets away they're on a flat. So if there was an extreme flood event two streets away they're likely to get flooded while I won't. It's certainly as a case-by-case basis and I would recommend that before anyone buys a house just do your due diligence. Go and look at your flood maps to start with, look at your section 149 or whatever the relative report is in your state.
Find out what is your bushfire risk, call a few insurance agencies. Not just one, talk to a few and say, "What are the premiums?" Just try and get a feel for as many different ways as you can of what that risk is from flooding, from fire and also access roads and things. Make sure you're not buying in a suburb that's going to get totally cut off and isolated during a flood event. Also I would say there's a lot of positive about thinking about property under a changing climate. As you said I've been recently buying in Tasmania and I believe there's a massive growth in Tasmania because of the shift in climate on the mainland. Not only are people wanting to avoid heat waves but so are industry and a lot of say for example wineries have moved from the Hunter Valley down to Tasmania because they just can't get the quality of wine with these heat waves and this increase in temperature. Go where the work is going. If people are moving to Tasmania or to a cooler climate to be able to continue their industry, that's where jobs will go as well.


Mike Mortlock:                 Interesting. We just need another data nerd to correlate Pinon Noir growth and house prices.


Heather Stevens:                 That's a PAC I'm willing to take on.


Mike Mortlock:                 Follow the Pinon Noir. What a topic. You're a glass half full and there's more glasses in the cupboard and the tap's freely running sort of person so I want to drag you down with my negativity of the doom and gloom. What are the mitigation strategies, what are we doing, what are the positives and how can we reverse these things?


Heather Stevens:                 Certainly climate change is a very depressing topic. I must say I don't make a very fun dinner guest because the conversation can be quite depressing. But for everything that's depressing there's a chance for action and opportunity. In terms of property if you have a property that is in a climate risk area I would suggest selling because it's a buyer beware situation. The people that are left holding the jokers at the end of the game are the ones that are going to lose. I hope instead of a market crash, slowly, slowly by properties that are at risk changing hands each time they may not have the same growth or they may even go down, and eventually they will be priced at the price that they actually reflect the risk. You might own a house in a low-lying area at risk of sea level rise but you've paid a price that is according to the length of that property's life.
Certainly I think about what you have now and if you want to try and offload that before those things become too hard to get rid of. Certainly retrofitting the houses that you have so making houses heat friendly is a big one, thinking about your building materials for cyclones and for hail and that kind of thing. Of course eventually insurance companies will start pricing insurance based on the risk of your actual house materials. I've worked on some great projects with the Insurance Council of Australia looking at not just about where your house is located but what your house is made of and your floor heights. If you have a house that's climate-friendly that isn't at risk of flooding because it's off the ground or it's got great hail-proof or cyclone-proof materials you shouldn't be paying those astronomical insurances.
You can still have houses in more at-risk areas but just make sure that they are a little bit more sympathetic to those risks. So thinking about what your houses are made from and thinking about where you want to buy so thinking about areas where the jobs are going to go, where people are going to want to live. It's sad to say but globally this is happening, it's not just in Australia. So, we are going to have the term climate change refugees where people just can't live in their location anymore and they need to move. For Australia that might be people that live in low-lying suburbs that find that sea level rise is encroaching on their suburbs but globally it might be say the whole Ganges Delta where there are millions of people that suddenly find they can't live there too. Certainly buying in areas that are climate-friendly I think will have a big impact on demand over time as well as other areas feel the squeeze.


Mike Mortlock:                 Yeah well that's incredible to think about. We hear stories about Pacific island nations hosting climate talks because they can point at the sea and go, "Look! It's touching our welcome mat." But in Australia is there a real time imperative? Do you see property prices going down due to say sea level rise, which typically people think if, "That's a small, incremental change that will happen over hundreds of years."


Heather Stevens:                 Sea level rise is an interesting one because it is a small, incremental change. We're looking at two centimetres so far and looking at maybe, the projections are about what? Up to a metre by the end of the century. But what happens is that it creates the flood zones a bit higher. So currently a one in a hundred-year flood, if you add an extra 20 centimetres to that ... I mean if your topography is quite a bit flat that could add an extra couple of hundred metres of houses that are now in a flood zone.
I don't think that sea level rise is actually going to be the one that drops your property price, but regulations and policy may. A lot of councils already now are starting to say, "Look, we're going to put a sea level rise notation on your property so we can tell buyers, 'Hey, watch out. This property is at future risk of flooding.' Not maybe today but in the future."


Mike Mortlock:                 That's an interesting thing because we've seen legislation come through that says you have to disclose if someone has been murdered in your house for example. This might be another sort of badge that you don't want to really carry that could really affect property prices.


Heather Stevens:                 Exactly. People have complained and said, "That notation has significantly decreased the value of their property." But as I said before I believe we have to have this slow, incremental change to make properties valued to accommodate their risk. Certainly if sea level rise or climate change isn't going to impact your property in the next direct future legislation, insurance and those kind of more out of your control policies may very well impact your prices.


Mike Mortlock:                 Let's talk about building codes because I know you've had a lot to do with consultation with LGAs and that sort of thing. We know now that if a house is demolished when we go to rebuild there's all sorts of different codes. Like you might be actually too close to the boundary and funny things like that but with climate change you won't be able to build the same thing that you had before. Your insurance replacement costs that you might have your property covered for, it's not necessarily going to cover the changes in materials and the way that it's done will it?


Heather Stevens:                 Absolutely. For bushfire for example a lot of change has happened with bushfire materials. You can't build your house the same way you used to so if your house gets burnt down you might find like people in the Blue Mountains found that insured their house for the value that the house was. When you need to rebuild and it actually covers the materials that are bushfire more resistant it was a much more expensive process. Another interesting conundrum you sort of touched on a minute ago was the idea of density. There's two different arguments, if you live in an area where there is a climate risk so say sea level rise or flooding or bushfire, should you be allowed to increase the density of that location by adding more houses? If you buy a house can you add a granny flat, can you subdivide, can you do dual occupancy?
A lot of councils are saying, "No, you can't because you're adding extra people and extra pressure in this area that may not be supported." The flip side is the more people that live in an area the more rate payers there are, the more motivation to protect an area. There are protections available, they just cost a lot of money. Certainly on one hand you can't just leave suburbs to become ghettos, climate ghettos. But certainly if we keep intensifying there's more people that are at risk. That argument has yet to be fully played out and I think it's a suburb-by-suburb basis.


Mike Mortlock:                 Local governments will change their development control plans to make it less attractive to subdivide and split the block into, if they believe that they're exposing more people to these risks, putting more pressure on say the stormwater and that sort of thing. A property that has development potential compared to one that doesn't can make a big difference to the price.


Heather Stevens:                 Absolutely. And if you've bought a property thinking it has development potential, and this has happened a lot in the suburbs that I've been working, and then you go to actually do development three or four later and you find, "Actually, sorry you can't." Well, you've spent a lot of money and now you can't actually do the development you want to do. Buyer beware I think, forward planning and forward thinking is really crucial. Unfortunately the person I think that should be having this conversation that isn't is your conveyancer.
The conveyancers aren't up to scratch on talking about climate science and maybe they shouldn't have to be. The conveyancer might see that you have a flood notation but not actually explains to you what that means. I think that it is again due diligence and just a buyer beware. They need to do their own research and hopefully conveyancers will catch up.


Mike Mortlock:                 I'm going to get one on now and tell them that you've trash talked them. It's true, they know a very specific role and it's about the legal transfer of title. It's not about climate science. And sure, your section 149 certificate or whatever it is that's part of the contract may have to say, "Well here's the zoning, here's the flood zones, here's the bushfire areas." That's just really for you to look at as part of the package.


Heather Stevens:                 And think about, that's right.


Mike Mortlock:                 They're not qualified to advise you on that are they?


Heather Stevens:                 That's right, they can just point it out. And the thing about climate change too, it's moving goal posts. A conveyancer, it's like the legal system. They're working into a script but when the script changes how well-informed are they about what that means? So climate change will continue to change the landscape. It's not a static thing. The house you have now may very well have different policies around it in five years' time. The future is definitely changing.


Mike Mortlock:                 And talking about the changing landscape, we've seen government intervention here. Poor Peter Garrett and his insulation scheme. In essence that was a good thing, unfortunately it was poorly rolled out and some people lost their lives which was terrible. Other, more positive things have been the solar rebate, so the uptake in solar in homes. I couldn't tell you the figures but just from a roof count it looks incredible and I know there have been people that have been switching over from electric to gas hot water systems and getting rebates. What's the government been doing and what's your view on what they should be doing? Are they doing enough?


Heather Stevens:                 It's a great question. Solar rebates have made a huge difference, my power bill is currently very, very low. As a household of four we consume about three kilowatts a day. So that's really, really low. But that's because I've actually spent not that much money but I've put on a solar panel system and also solar hot water. My tenants have done the same thing because I want to make sure my tenants are happy and they can afford their rent. Power prices will continue to go up and in fact again, it's a conundrum.
The more people that do solar and eventually start moving off the grid entirely means that that ageing infrastructure is then taken up by the people that can't get off the grid. As these Telsa batteries are coming in and things like that, if you're off the grid that's great for you. What about the people that are left on that network? I would say that the government needs to do more to encourage landlords to invest in ways that we can make our properties more climate-friendly. So, insulation, solar panels, double-glazing of windows, shading, awnings, that kind of thing


Mike Mortlock:                 Is the government providing much support at the moment with that sort of thing?


Heather Stevens:                 As a landlord I haven't seen it. I've seen some private initiatives where there's been private power companies have said as to landlords, "We'll install panels on your tenant's roof, they'll pay half the bill, we'll pay half to you." They obviously get a cut out of that, so these systems are coming out. But I certainly think that yeah, there needs to be more regulation really. I think landlords need to be forced more to make this ... Retrofitting these houses. Because as I said, it's people's lives.
Heat waves, through my studies and my PHD already I'm seeing that areas in say western Sydney, you've already got low-socioeconomic, you've got poor housing materials, they don't have insulation, they don't have solar panels. It's also the hottest part of the greater Sydney basin. So we're finding that the already vulnerable people living in the hotter areas with the less quality houses, I think as a landlord you have an obligation to help that situation.


Mike Mortlock:                 I hope that people do think about their investing a little bit more ethically. It's easy to say, "In my super fund I want to make sure I'm investing in ethical companies," because the returns are going to be roughly the same. But do you want to spend $10,000 on a solar panel for your tenant because they're going to be happy and they have less bills? I wonder how that conversation is going to go with investors.


Heather Stevens:                 Yeah. I love your point just there. The easiest thing you can do, switch your obviously superannuation. That's been talked about a lot. Switch it to an ethical superannuation company, same returns much better feeling about it. And also your banks. Wherever you invest with your mortgage. I pay a lot of interest every year so every year ... I might think about the charities that I donate to once a month but do I really think about the money that I'm giving to banks each year? So I do. I really think about that and think, "Well do I want to give $100,000 to an ethical bank or to a bank that's going to reinvest in fossil fuel?" Think about where you're investing your money and put your loans in a bank that's ethical as well.


Mike Mortlock:                 I think there's a little bit of the how many grains of sand do we need until we get a pulse sort of thing. People don't realise that as individuals pooling together you can actually influence policy. Take Walmart for example, they're making a huge investment in organic foods because the market is saying, "That's what we want."


Heather Stevens:                 We want them. Yeah, great.


Mike Mortlock:                 In chatting to financial planners they're saying, "Well people are now actually saying and we're asking the question and we're getting good feedback from it. What do you want to invest in? What's important to you, how does ethics factor into your whole life?" If you buy organic hand soap why don't you have a super portfolio that follows your same sort of philosophies?


Heather Stevens:                 I said that in terms of grains of sand people that are listening to this podcast probably have a few more grains of sand than others because we've got money to invest. I have a large amount of debt really, but I have a large amount of money to move around so my voice I think is quite loud because money talks. I think we have a moral obligation because our voices can be heard a lot louder than those that don't have the opportunity to influence banks' opinion without having that capital behind them.


Mike Mortlock:                 Getting back to investors making sure that they're buying a property that is not in a flood zone, not going to be impacted by bushfire or prohibitive development controls for subdivisions they might want to be doing, the conveyance is not really qualified to look at the planning documents. You mentioned that there are some websites that people can look at. What advice can you give to investors on what they need to do or do they really need a consultant to help them with it?


Heather Stevens:                 Yeah, about four years ago I started a business called Climate Change Impact Assessments. I wanted to provide advice to property buyers about how you could buy a climate-friendly property. I got almost zero clients. I'm going to say I was before my time, but certainly I believe just like we have environmental impact assessments I wanted to see climate change impact assessments so that when you go to do an investment you can go to a one-stop-shop that actually tells you, "Here are your risks." That doesn't exist right now, I think that it should. But there are things that you can do. Certainly look at the projections. Say for example in New South Wales there's a great website through the Office of Environment and Heritage called Adapt New South Wales. Go to the Adapt New South Wales website, put in your post code.
You can see what are the projections for heat waves, for rain, for night time temperatures, for extreme heat and actually zoom right in to your suburb and your post code and have a look at what that means in your area. Other things you can do is looking at flood maps so CSIRO on a national scale there are some really great sea level rise maps and you can again look at in the next 50 years or 100 years where sea level rise may impact. And other things you can do is as I said, talk to your insurance companies. Talk to your neighbours, if you're going to buy a property ask the neighbours what kind of things have happened in the past and get a feel for your climate risk. Because you might be living there for ten years and nothing happens but you might find that after ten years it's that one in ten year storm that finally happens and your house suddenly is quite damaged.


Mike Mortlock:                 You need to find that old chappie down the street who talks about the great flood of 66 or something.


Heather Stevens:                 Absolutely. I know people buy in areas of low lying mainlands and they've only lived there, they only have a very short memory of ten years or so. But if a flood's happened 50 years ago I always love the saying people say, "Oh, we'll go back and we'll rebuild because we're fighters." I think, "Oh, you know what? It's a bit of an idiot attitude to think that something that's happened isn't going to happen again." With climate change it's a loaded deck of cards. It's going to happen and worse. I think actually a smart move if you are in an area that's been impacted by a flood or a fire, think about possibly relocating elsewhere. So yeah, I don't think you can assume that just because it's happened once it's not going to happen again.


Mike Mortlock:                 Yeah, it's going to happen again and it's going to happen more often and it's going to be more severe. It's just a matter of time isn't it?


Heather Stevens:                 Mm-hmm (affirmative).


Mike Mortlock:                 I've seen my Al Gore documentaries, I'm a Bill Nye fan but I have to admit Heather I'm quite out of my depth with this whole interview. What have I missed? Is there anything else that we haven't covered off that you think property investors and individuals involved in property and construction should know about?


Heather Stevens:                 I think you've done very well.


Mike Mortlock:                 Oh thank you.


Heather Stevens:                 You've obviously got a bit of a good head around this. But I guess the number one thing I'd like to say is be an agitator around climate change policy because, I mean we've talked about property today but it also has huge implications for our health, for our ecosystems, for a whole lot of other areas, economy. I think being an agitator, if I heard that the government was going to drop negative gearing tomorrow, I don't think a lot of listeners would start jumping up and down and saying, "Hey, that's not fair." Yet when we drop things like emissions trading schemes or a price on carbon which would actually have a huge benefit to us, society as a whole, we've just let it slide by because it seems like it's nothing to do with us. I think that climate change isn't something that we should shy away from but we should get agitated about and actually jump up and down.
Because yes, it's our property portfolios at risk but it's also our lifestyle and our economy. It doesn't have to be a bad thing. The GDP reduction or stabilisation that it will take to actually invest to fix this problem, which is fixable, is really minor. And I think that a bit of short-term slowing isn't going to hurt a long-term ability to enjoy the lifestyles that we live and hopefully to improve them. Just be a climate agitator, don't be afraid to talk about it, read about it and just keep yourself informed.


Mike Mortlock:                 Awesome. I think that's great advice Heather and I hope that everyone can get in that direction and think about the future that they're leaving to their children and children's children. So thanks very much for coming on, it's been a pleasure.


Heather Stevens:                 It's been a pleasure, yeah thanks so much.


Mike Mortlock:                 Cheers.


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