Bruce Billson (Dunkley, Liberal Party, Shadow Minister for Small Business, Deregulation, Competition Policy and Sustainable Cities) Share this | Hansard source

It is pleasing that we are in a position to discuss the Building Energy Efficiency Disclosure Bill 2010, and I am sure government members will talk to the bill and the more recent amendments to it that the Minister for Climate Change, Energy Efficiency and Water, Senator Wong, and the government have agreed to in response to constructive engagement by the opposition. On the strength of those amendments, we will be supporting this bill. Our reservations have largely been addressed, and I will touch on those in my remarks.

The Building Energy Efficiency Disclosure Bill 2010 will require energy information to be provided to prospective purchasers, lessees and sublessees of commercial office space of 2,000 square metres or more. The bill will create a legal requirement for owners of large commercial buildings to obtain energy efficiency information for their building and provide this information to any prospective lessees and purchasers in the form of a building energy efficient certificate, BEEC. The BEEC will include energy efficiency star rating, information about lighting energy efficiency and generic guidance about how the building’s energy efficiency may be improved. The government asserts that this information will assist parties to make a more informed decision and take ‘full account’ of the economic costs and the environmental impacts associated with operating the buildings should they be purchased or leased.

Essentially, this is an idea that is shared across the chamber. The coalition when in government, in December 2004, announced its commitment to mandatory disclosure of commercial building energy efficiency. That was contained in stage 1 of the implementation plan of the National Framework for Energy Efficiency. This was a joint initiative involving the Commonwealth, state and territory governments under the Ministerial Council on Energy. Subsequent to that coalition commitment, the Labor Party, in the guise of its pre-election policy ‘Clean energy plan to help tackle climate change’, embraced the idea and also pledged funding towards the implementation of it. The commitment that the Labor Party made when in opposition, and now being carried forward by the Rudd Labor government, was to work with states and territories, the building industry and other stakeholders to:

… require disclosure of energy or environmental ratings for appropriate types of large commercial buildings at point of sale and point of lease. Mandatory disclosure will be phased in gradually, beginning with office buildings above a threshold of 5,000 square metres.

Since that time, the Rudd government has embraced the building energy efficiency disclosure idea and included it in its National Strategy on Energy Efficiency, which was agreed in July 2009, citing it as a ‘key plank’ in its strategy to combat climate change, to reduce the costs of emissions abatement and to improve the productivity of the economy.

There have been quite a number of announcements about the mandatory reporting scheme. Some stakeholder and industry groups noted a greater number of announcements than progress on the implementation of the scheme. But, thankfully, we are here today to discuss some meaningful progress on this idea that is shared across the chamber and which the opposition has been engaged with for some years. The consultation that has brought us to this point has been patchy—pleasingly, more engaging of late—and has taken advantage of the industry’s collaborative posture and the collaborative attitude and willingness to engage of the coalition.

Some things have changed in this bill—in fact, some things have changed since the original commitment. The idea that there would be a commencement with commercial office buildings over 5,000 square metres has been replaced by a commitment for mandatory reporting, starting with commercial office buildings over 2,000 square metres—quite a significant change but one that I am advised was inspired by the threat of some state and territory governments that, if the Commonwealth was not going to embrace a 2,000 square metre threshold, they might go off on their own. As a consequence, the government embraced that through the COAG process.

It is quite an important opportunity. The built environment in Australia accounts for 23 per cent of our greenhouse gas emissions. In the area of commercial buildings there are quite a significant number of opportunities, many of them at very low cost or in some cases a positive economic cost over the life of the investment that need to be embraced if we are to have a cleaner growth economy in Australia. There has been a substantial growth in energy use over the last 15 or so years and about 87 per cent growth between 1990-91 and 2005-06 in the commercial building sector. With increasing working hours and the greater use of energy-consuming technology in the office place, you tend to think that this increase will continue. Cost efficient energy improvements and emission reductions are available.

It is pleasing that leading companies in the property industry have really taken to those opportunities wholeheartedly and have made them quite a cause for their investments, recognising that, whether it be for market positioning—being able to present their commercial buildings in an appealing way to potential tenants and investors—whether it be in operational cost savings, whether it be in corporate reporting and a need to find demonstrable sustainability and environmental outcomes or whether it be in a drive to have building quality recognised, all of these have combined to see quite an amount of voluntary effort, particularly by leading players in the property industry.

Mandatory reporting is recognised as a way of seeing that commitment that is already there amongst industry leaders cascade its way right throughout the commercial building sector, and that is why there is a sense of shared purpose across the chamber for that initiative. It is also important in ensuring that reliable, actionable information is available to the market about building performance. This would not only make better decisions in acquisition and leasing but also drive further improvements across existing stock in the commercial building sector.

It is important, though, that we do look at the commercial building sector. Many have talked about the opportunities for new buildings, but I am advised that only about two per cent of the commercial building stock is turned over in any year. That is likely to slow somewhat with access to finance being a challenge. All of those factors combine to say that just improving our game as a nation on new commercial buildings is not enough; there is a need to do significant work for the existing building stock if we are to secure the gains of emissions abatement and energy efficiency that are there for the taking—and mandatory reporting should inform and inspire that effort.

Industry groups, including the Property Council, the Green Building Council, the Energy Efficiency Council and others that are practitioners in the engineering, air and temperature management section of the economy, have been keen to highlight what they have already achieved and are of one voice in pursuing the objectives of the bill. There is a broad acceptance within the property industry of this bill’s objectives and of the benefits of mandatory reporting. That has not been the issue. That has certainly not been the focus of the coalition’s work, because we have agreement across the chamber and broadly in the Australian economy there.

What was requiring work in recent weeks was to make sure that those objectives and that goal were successfully pursued by the design of this bill and the operationalising of the idea through the tools that this bill provides for. That has been the focus, and that is where it is pleasing that the government has taken on board constructive comments and, in some cases, concerns about specific aspects of the bill. Those specific concerns had been the focus of not only the coalition’s consultations but also submissions to the Senate inquiry—and I again congratulate Minister Wong on constructively responding to those concerns.

I touched earlier on the expanded scope of the bill—the net lettable area being greater than 2,000 square metres, compared to the 5,000 square metres that was originally committed to in Labor’s election policy—and indicated that, in the spirit of moving forward across the Commonwealth, states and territories, as a single COAG inspired effort, that change was made. There is also a need to recognise that that will drive this reporting requirement down further into the property industry, imposing a mandatory reporting burden on second-tier and smaller property owners and that that should not be just brushed aside as not significant. This will represent some new challenges for those second-tier and smaller property owners, and that has also been a focus of the coalition’s constructive engagement with the government.

The Property Council estimates that, of the more than 21 million square metres of floor space in the 3,980 commercial office properties in the major Australian population centres, 19 million square metres is accounted for by the 2,170 buildings with the net lettable area over 2,000 square metres. This represents an 84 per cent increase in the number of buildings that will be captured by this mandatory reporting scheme via the reduction in the floor area that triggers responsibilities and obligations under the scheme. There are 1,074 buildings of a net lettable area greater than 5,000—and I touched on the fact that, by reducing the trigger point to 2,000 square metres, that 1,074 buildings captured balloons out to 3,980.

There is also an issue around where responsibility lies in relation to the reporting that is being required under this bill. A number of the issues, particularly internal energy use and even behaviour of tenants, may have an impact on the reporting obligations in a way that are outside the control of the property owner. This needs to be recognised as these tools are further developed to make sure that responsibilities, obligations and penalties for noncompliance actually land with the people best placed to accommodate those responsibilities, and not have building owners, for instance, responsible and fearing penalties for noncompliance on actions, behaviours and information not within their control. This has been another area that we have engaged with the government on—the risk being a lack of cooperation about access to tenant data may expose property owners to the risk of severe penalties for noncompliance. I would hate to think that property owners would need to muscle up against their tenants simply to avoid a risk of a penalty under this bill. I am hopeful that, as the detailed regulations develop, those kinds of concerns are addressed further.

There is also some issue around the technical and evaluation tools. Whilst the bill does not prescribe the tools that are to be used, the regulatory impact statement and the explanatory memorandum make it quite clear that the NABER system will be used as the build evaluation tool. The NABERS tool is a proprietary tool originally developed from the impetus of the Commonwealth and then licensed to the New South Wales government for development in conjunction with industry, principally designed for New South Wales conditions. Adaptations have enabled its national use but the industry and the coalition—and, I also believe, the government—are aware that those adaptations for national use are in some areas contentious or contested. There are known deficiencies that result from the way in which the tool has been adapted to have its reach expanded beyond New South Wales that actually see the same building rated differently depending on where it is in the continent and that can give rise to some concern about the reliability of the tool. The government has undertaken to address these flaws. There is still a little bit of work to be done there. I have been encouraged and satisfied by the minister’s advice to me active work is being done and that those technical deficiencies are well in hand and will be resolved before the October start date of the responsibilities under this tool.

Another area that the coalition was focused on was that, if this tool and this bill are about providing reliable, actionable information to the marketplace, there are a range of market recognised tools that achieve that goal. The bill does not necessarily provide for those other tools. It does not expressly prohibit them, either, but the explanatory memorandum and the regulatory impact statement make it clear that there is a strong commitment to the further development of NABERS and that these other tools, whilst they are recognised as being available, are not at the moment embraced by the proposition before the parliament.

I raise that for a number of reasons. The idea of our commercial buildings being energy efficient and making the contribution that they can to emissions abatement involves a number of stages and a number of different players. Our architects and the design professions can create and craft a building in its physical form that is efficient in the use of solar energy and in the way in which it retains heat and manages the air and the working environment. They might design a fantastic building. In almost all cases the building will be constructed magnificently, with the professionals and the tradesmen in Australia, but that is another stage. It then may well be equipped with the most energy efficient, emissions-conscious technology for heating and cooling, for the circulation of air, and for powering plant and equipment in the building—lifts and the like. The buildings might well be designed magnificently, and that would be a tick, but if they are not deployed in keeping with their technical capability then you lose that opportunity of improved energy efficiency and emissions abatement.

The way in which the buildings are commissioned is important. I am constantly reminded by professionals and companies in the air management—heating and cooling—space that some of the best technology not commissioned well and not operated well can see gains in energy efficiency and emissions abatement just disappear very quickly. So I am highlighting to the parliament all these various stages of the life of a building—its conception, its design, its construction, the way it is fitted out and then the way in which it is commissioned and managed. These all make a contribution, and we need to be looking to the future to make sure that the mandatory reporting tools and the instruments we bring to this task recognise that development. NABERS, I am told, will be more interested in that down the track. Other tools are already some way down the track, and there are international undertakings to try to make sure that these various tools, all committed to the same objective, can actually be compared with each other—a tool exchange rate, so that if you happen to know what ratings you have for a building with one set of instruments, you know what that is equivalent to for others. These are all challenges for the future, and we were keen not to see that continuous improvement frozen out through being religiously attached to a single set of metrics that might not be developing as fast as other tools that are available and used both here in Australia and overseas. On this issue of equivalent tools, I am satisfied by the discussions and briefings with the minister’s office that they are not frozen out. They are not expressly embraced either, at this stage, but that is something that more work will need to go into over time.

The other contentious area relates to the lighting tool. We have talked briefly about reporting on the building form itself and what might be involved there. One of the tenancy issues and the use issues around the building is the lighting systems that are in place. This is a new development for NABERS. The tool for assessing building lighting has not been finalised to this day and is likely to require some further road testing. It is being trialled at present. There is some work still to be done on understanding the way the assessment process will operate. Assessors will need to be recruited, trained, accredited and available. This is an area of concern to industry and to key stakeholders in terms of how we will be able to operationalise this tool that is still under development. Again, I have taken the assurances that have been given to the coalition by the minister and by those involved in testing this new tool that it is developing well. I am also pleased that the minister has deferred the introduction of that tool by 12 months to recognise that it is still a work in progress. I think that is sensible, and I think the minister is wise to go down that pathway—not to remove it entirely, but to make it clear to the building industry that while this is on its way it is not quite right yet. To have some of the obligations that would flow from this bill attached to a tool that is still in development was thought to be a little bit reckless and perhaps a sign that the government is red-hot keen to get something in place, no doubt so that it can refer to it in an electoral context as an achievement. Recognising that political motive of the government, if it is not quite right then it would be wrong to impose mandatory obligations and a risk of quite significant penalties for non-compliance.

Among the other issues that we touched on was that there was some anxiety about whether everything would be ready to go by October. People are still keen to see the flaws in the NABERS tool resolved. The minister’s advice gives me some reassurance, and I quote:

NABERS energy certificates currently contain both the star rating of the building and information about its greenhouse gas emissions. However, emissions are calculated using emissions factors which are now out of date.

So the minister and the department recognise that. I am pleased to report that at the last meeting of the NABERS National Steering Committee it was agreed that up-to-date emissions factors should be used prior to the commencement of the commercial building disclosure scheme. Emissions are to be calculated using the same scope 1 and scope 2 emissions factors used under the National Greenhouse and Energy Reporting System—or NGERS, for people who are involved in this space—which will ensure consistency, noting that the scope of NGERS is broader than simply the base building emissions that will be reported on NABERS energy certificates. That is encouraging, and I am told by all the technical experts that bringing those factors up to date is not an enormous task. Here is a clear commitment to do so.

Another area around the NABERS energy benchmark is the unusual presence of a different average performance basis for Victoria compared with other states. NABERS energy benchmarks the performance of buildings on a scale of one to five stars, where 2½ stars represent the average performance of buildings within most states and territories. In Victoria, the average performance has been set at two stars, which means that generally buildings obtain lower NABERS energy ratings in that state. This particularly affects ratings at the lower end of the benchmarking scale. Setting the average at that level was a decision made by the Victorian government in 2000 after consultation with industry, although there is not necessarily a shared view within industry that it is appropriate; there is some mixture of opinion there. The discussions still continue. The simple point I make here is that whilst it might mean that like-for-like buildings in Victoria may be rated the same, if you have a portfolio of buildings—perhaps in different states and territories—the Victorian building will look less attractive under this arrangement than if that same building were in, say, Adelaide. This strikes me as an interesting message to send the market when this is all about reliable, dependable, actionable information. We have that anomaly, and that is something that I believe is still subject to discussions in which Victoria will need to take the lead after consultation with the local industry. That will not be resolved overnight, but it is an area that requires some attention.

The other issues we touched on included the fact that there are a number of related programs that the Commonwealth has committed to, many of which were started under the previous government, using different data collection and reporting requirements. We were mindful of the red tape and compliance obligations and were keen to see how we could streamline and harmonise that data collection effort so there were not multiple efforts going on, ostensibly to achieve the same goal but through different government programs. That did not seem a smart way to go and that is an issue before the government. There are some encouraging signs that, where there is compatibility of process, it is being picked up by the government and I think that is a smart way to go as well.

There were issues around the availability of credited assessors. This became very topical because, under the original transition arrangements that the government had foreshadowed in the initial bill it brought to the parliament, you actually needed to have a certain kind of NABERS rating to begin with to qualify for the transition period. There has been some recognition that that was going to put enormous pressure on the industry in a short period of time. The transition period has been altered to be more accommodating. I think that is a smart and practical response to a legitimate concern from the industry.

The Property Council of Australia raised concerns through the Senate, as did the Green Building Council of Australia, Lend Lease and the Energy Efficiency Council. The coalition has combined those concerns with those from industry practitioners like Napier and Blakeley and brought them to the government’s attention. Those organisations are clearly committed to this idea but recognised the government’s bill was underdone in a number of areas and that further consultation was justified. The government has done that and the changes the minister foreshadowed in her speech to the Built Environment Meets Parliament Conference last week are welcomed by the opposition.

We are pleased that the technical flaws in NABERS will be remedied and that the capacity building task in making sure appropriate assessors are accredited et cetera can be accommodated through an extended transition period. We think that is wise. The opportunities to link administrative effort reporting and data collection are, we think, good steps. Equivalents tools, as I said earlier, are not frozen out but are not mandated either. It is an area that still requires some work but the coalition is not going to stand in the way of this. The deferral of the lighting tool by 12 months is a smart move given that it is still work in progress. There is also the issue around making sure that the people administering the schemes are appropriately qualified to do so.

These amendments are welcome. The coalition supports the bill in its amended form. We note that a number of the issues we have raised have been dealt with by assurances from the government. I found my discussions with Minister Wong’s office to be completely honourable and we accept that those concerns will be dealt with.

Change to the penalty regime is a smart way to go. We still have to make sure that penalties do not arise from actions of third parties, that is, that a bureaucratic delay does place a respondent at risk of being penalised. As I illustrated earlier, where a tenant might not or choose not to facilitate the access that is required to achieve the reporting requirements, it would be a great shame and very disappointing to see building owners penalised not from their own inaction but from actions of others. The transition period is good. There is a need to make sure that the lighting tool works and there is time for that. I would urge the government to be engaging in their consultation.

Finally, I thank the Property Council, the Green Building Council, the Energy Efficiency Council and other energy efficiency organisations for their engagement with me and with the coalition. I am pleased that the government has recognised that we have aimed to be quite constructive throughout the process. The assurances are taken at face value. I have tried to read a number of them into the record tonight so that the industry and stakeholder concerns can at least see that they are also assurances that we have been given.

I support the bill and urge the industry to embrace it in the spirit within which it has been developed. We need to keep working together to make sure emissions reductions and energy efficiencies in the built environment are achieved. The government has signalled a desire to extend the reporting requirement to shopping centres. Let us move forward in a thoughtful way as stakeholders have some views about that. We need to make sure that that next step builds on the solid progress of these current commitments and is a wise way to go. I urge the bill’s early passage both in this chamber and also in the Senate.

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