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

Nick Champion (Wakefield, Australian Labor Party) Share this | Link to this | Hansard source

I rise to support the Building Energy Efficiency Disclosure Bill 2010. It is great to hear that this bill has bipartisan support and will get a speedy passage through this chamber and, hopefully, through the other place. This bill addresses two main problems that affect the commercial market. Firstly there is a market failure in this area because at the moment energy efficiency is not valued in a coherent way by the market. You only have to look at the building you work in, including this magnificent building, to know that often energy efficiency has not been valued in the past. That is one of the reasons this bill has come before the House.

Secondly, because energy efficiency is not valued by the market, buildings are often designed to be grossly inefficient and this designing locks in high carbon emission for the operational life of a building, and forces tenants and the broader community to wear the long-term costs of those designs. It is all very well to tell people to switch off their lights and other things but unless a building is designed to be efficient, unless those things are built in at that very early stage, often the actions of individuals are made very small. If energy efficiency is implicit in the design then individual actions have a much greater effect.

The commercial building sector currently accounts for 10 per cent of Australia’s total greenhouse gas emissions. It is a very significant proportion of our emissions. The strategic importance of targeting commercial buildings is highlighted by the fact that energy efficiency represents one of the fastest and cheapest ways to reduce Australia’s greenhouse gas emissions. Just think about it: there is residential energy use and emissions from driving a car to work, but a big factor is the building you work in—turning on the lights, using the conveniences, heating and cooling the building all have a very big effect on an individual’s greenhouse gas emissions.

As part of the National Framework for Energy Efficiency, the bill before the House will require large-scale commercial buildings covering 2,000 square meters or more to display information regarding the buildings energy efficiency. A building energy efficiency certificate, BEEC, will be required when a commercial office space is advertised for sale, lease or sublease. The disclosure will include three main components: a national Australian built environment rating system, NABER, star rating—and these are used at present; an assessment of the energy efficiency of the lighting; and generic advice on how energy efficiency may be improved.

This disclosure is aimed at countering the current market inefficiencies that are preventing the implementation of economically feasible energy efficiency improvements by commercial building owners. Just the simple act of providing this knowledge will arm tenants and owners with some information about how they might improve things, and how they impact on Australia’s emissions overall. These inefficiencies include an asymmetry of information between building owners and potential buyers. Potential buyers currently do not have access to adequate energy efficiency performance information. This is due to the fact that the energy efficiency of a commercial building is not immediately observable.

Potential buyers or tenants generally use a comparison between design qualities to establish differences in the energy efficiency of particular buildings. However, there is often no substantial correlation between good design features and energy efficiency performance. This results in a building’s energy efficiency having little, if any influence, upon a buyer’s or a tenant’s decision to invest. Referred to as ‘adverse selection’, buyers and tenants are not able to differentiate between a building of high energy efficiency and low energy efficiency. It basically results in owners of commercial buildings having no financial incentive to improve the energy efficiency of their buildings. This process produces, at the moment, sub-optimal market outcomes and an under-utilisation of valuable resources. So this measure will provide information to incentivise improvements. This bill aims to put an end to this vicious cycle, which currently promotes energy inefficiencies, by rectifying these market failures and making sure that in the future there is a real incentive to make all buildings efficient.

The BEECs will result in potential buyers or tenants directly benefiting through an ability to choose a premise with a higher energy efficiency rating over one with a lower efficiency rating. These benefits will be in the form of considerable savings to individuals who choose to occupy energy efficient premises. There are many businesses out there that seek to market themselves in this way; they have a social conscience or corporate responsibility. It is a very big thing now. Not only do they aim to save money but they aim to communicate to the community their values. The other day I saw a truck which had ‘carbon free transport’ emblazoned right across the truck. Obviously that is designed to market their product to consumers who are concerned about our emissions. The indirect benefits of this bill will arise through voluntary energy efficiency improvements of commercial building owners and the subsequent greenhouse gas reduction that these improvements will produce. The brutal reality is that the more well informed the marketplace the better the performance of businesses.

This bill will reward current market leaders and encourage more attention to energy efficient opportunities. This can be the actions of individuals switching off lights and heating systems when the building is unoccupied. Some improvements have been made to this building: removing the permanent heating of hot water in members’ offices and encouraging us all to use kettles. Things like that do have an effect. It will also involve more complicated and sophisticated methods of building management. The benefits of this scheme will outweigh the costs if just 3.9 per cent of sale and lease transactions result in the disclosed information of commercial buildings being used to purchase or lease office space that is more energy efficient by one star.

There is a substantial amount of work to be done if Australia is to reduce its greenhouse emissions, and this bill demonstrates our commitment to action on climate change. It also represents our ability to deliver on election promises. Energy efficiency is a big part of the overall task and this bill is an important step towards preparing the commercial building market for a low carbon future and a stronger and more environmentally friendly posture. I congratulate the Minister for Climate Change, Energy Efficiency and Water for the introduction of this bill and I commend it to the House.

Judi Moylan (Pearce, Liberal Party) Share this | Link to this | Hansard source

I am pleased to have this opportunity to speak on the Building Energy Efficiency Disclosure Bill 2010. From time to time I have engaged with people in the property industry, the peak organisations and, indeed, local government to encourage them to move towards sustainable developments. It makes good sense as it will make a real contribution to reducing our greenhouse gas emissions in this country and it also makes good commercial sense to conserve energy. I was Chair of the Parliamentary Standing Committee on Public Works for nine years. I think that committee made a very solid contribution by quizzing agencies with major projects on behalf of the government to ensure that they had engaged with the Greenhouse Office to develop energy efficient buildings. It is really important that the government always takes the lead in these matters.

Luigi Di Serio is an urban planner who maintains a highly visited webpage on skylines of the world. In the introduction on his site he very eloquently describes the central role of cities. He says:

The downtown core of big cities across the world, are the cultural pulse and economic engines of urban regions where millions of people live. The skyline is the fingerprint of that city. All urban life begins each day and ends each night under the watch of the city’s tallest skyscrapers and most grand architectural structures.

City skyscrapers are often only viewed though the prism of being marvellous feats of engineering and aesthetics. As beautiful as they are, each building’s primary purpose is functional—that is, to provide the space where commerce and industry can thrive.

The Property Council of Australia estimates that there are more than 21 million square metres of floor space in 3,980 commercial office properties in major population centres around Australia—that is, approximately one square metre of office space for each person in Australia. In Perth alone there are over 1.3 million square metres of commercial office space and more than 100,000 people travel Monday to Friday into the CBD to utilise that space.

As the focus of economic life, it should not come as a surprise that energy used by commercial buildings accounts for approximately 10 per cent of Australia’s greenhouse gas emissions and that emissions from the commercial building sector are growing by three to four per cent each year. From these figures, it is quite apparent that reducing the environmental footprint of commercial buildings is an important element in any strategy to lower Australia’s emissions. Moreover, promoting energy efficiency is commercially sensible, with large cost savings to be recognised through simple measures such as having more energy efficient air-conditioning and lighting, installing insulation, recycling water and making greater use of renewable energy sources.

The Building Energy Efficiency Disclosure Bill will require information about the energy efficiency, including lighting, of office areas greater than 2,000 square metres to be disclosed at the point of sale, lease and sublease. At present, there are 2,170 buildings in Australian major centres with lettable areas over 2,000 square metres. Disclosure will take the form of building energy efficiency certificates, which will show star ratings. The star rating must be disclosed in any advertisement for sale, lease or sublease and shall be accessible in an online database. The intention is to promote greater consideration of energy efficiency and empower the market with information to encourage more energy efficient improvements.

The origins of the bill were initiatives by the former coalition government. In December 2004 the National Framework for Energy Efficiency was agreed to. A key element of stage 1 under the plan was a nationally consistent legislated regime for mandatory disclosure of energy performance of commercial buildings by the end of 2007. The change of government at the federal level appears to have delayed the bill coming before the House, but this very welcome measure is better late than never.

There are, however, issues that the government must address to ensure that building energy efficiency certificates accurately represent a building’s efficiency. Proposed section 21 of the legislation does not specifically prescribe the method of assessment; instead, it delegates that authority to the secretary of the department. The explanatory memorandum to the bill assumes the National Australian Built Environment Rating System—otherwise known as NABERS—will be utilised; however, NABERS does not currently provide a nationally consistent star rating.

To achieve the top five-star rating the building must well exceed the industry average for energy efficiency. A rating of one star is below that average, but to determine the industry average NABERS bases its algorithms on the now superseded Australian greenhouse rating system, which varied state to state. The methodology means that the industry average benchmark could be 2.5 stars in New South Wales but three stars in Victoria and two stars in Queensland. The result is confusion when you compare star ratings across the states. A three-star rated building in Queensland—signifying higher than average energy efficiency for that state—would equate to an average rating in Victoria.

In submissions to the Senate inquiry on this bill, Peter Verwer, the CEO of the Property Council of Australia, raised the star disparity as potentially confusing to investors. He made the point:

While this flaw might be overlooked if investors only compared homogenous markets, the reality is that multiple geographical markets are often considered before investment decisions are made.

Investors seek out energy-efficient buildings as they are cost-effective to run and maximise potential returns. As environmental and investment considerations are in synergy, it is beneficial to those selling interests in buildings to maximise their star rating against both their domestic and interstate peers. Achieving clarity across borders will ensure no undeserved geographic advantage and will further promote energy-efficient practices in the battle to win investor funds.

NABERS is currently under review because of the star disparity across state and territory borders and, as a consequence, concern has arisen that this House is being asked to endorse a bill that envisages using an as yet unrefined system. That being said, delaying this bill in search of the perfect system might in fact give us less impetus to quickly and correctly update the NABERS system. What is certain, however, is that the government yet again has not lived up to its promises. The government promised that the flaws would be addressed to prior to mandating the systems used, and clearly that has not occurred.

Industry supports the NABERS methodology, though, and has been the driving force in promoting meaningful change. Since its first iteration, the measure has fundamentally transformed, adopting many industry suggestions. Tenancy and base building efficiency have been separated into different rating components, and waste, water and indoor environment are all individually measurable. From fierce industry opposition of the originally unworkable management system, NABERS is now accepted as the industry standard. I can only say that this shows the value of working closely with industry in order to get the legislation we passed on this place right, to make the necessary changes to make it workable. As I said, the industry has strongly supported the NABERS methodology and has worked constructively to try and promote meaningful change.

Matthew Clark, the manager of NABERS in the New South Wales Department of Environment, Climate Change and Water, estimates that 50 per cent of all Australian CBDs have a NABERS rating. That equates to 10.5 million square meters of rated commercial space in more than 1,000 buildings. In fact, it is now possible for anyone, including office managers, to easily rate their tenancy efficiency free of charge using the example application on the NABERS website. The method of measurement could also easily apply to hotels, shopping centres, schools and hospitals, and I think many of us hope to see the focus on energy efficiency extend across all building types. That certainly would be my wish—including for residential buildings. As I said, this not only makes sense in terms of reducing our carbon footprint but makes good economic sense both for householders and for commercial, industrial and public building owners and builders.

The most important aspect of NABERS is that it sets an above-average stretch target, where building owners can aim to outperform their peers, playing on the competitive nature of the market. As commercial buildings across Australia spend approximately $4 billion on energy each year, the potential for economic and environmental benefits are vast. The stretch target is already proving successful, with most tenants who re-rate their buildings achieving an average of 13 per cent improvement. Across the industry, that has resulted in 200,000 tonnes of carbon savings a year, and a $520 million financial saving.

For tenants, the greatest carbon and financial savings can be achieved through efficient lights and tenant lighting management. The building energy efficiency certificate proposed under this bill specifically singles out lighting for scrutiny, which is a welcome focus. But, worryingly, little headway appears to have been made on developing a cost-efficient lighting assessment process. In testimony to the Senate inquiry on this bill, the Department of Climate Change and Energy Efficiency commented:

Finalisation of the tenancy lighting assessment, including on-site testing, is due to be completed in May [2010]—

which date has passed—

Training is scheduled to be provided from July [2010]. This allows sufficient time for tenancy lighting assessments to be carried out prior to the commencement date of disclosure obligations (anticipated to be around October 2010).

But now, in June, the lighting assessment tool still remains to be finalised. The window for industry to be ready is quickly closing and it is unfair for the government, which is dragging its heels working out the assessment tool, to expect industry to work by the rigid time frame. The government must act quickly, in consultation with business and to their satisfaction, to remedy this situation or delay the commencement of the lighting tool.

The NABERS assessment can currently assess tenancy energy consumption based on electricity bills, of which lighting is the predominant factor. Cumbersome floor-by-floor lighting audits can be undertaken as well, although such audits are costly exercises. This shows that the capacity to measure lighting efficiency does exist. It is now just a matter of the government transferring practice into an industry tailored software calculator.

The benefits from simple lighting changes are exemplified by the WA government owned Dumas House in Western Australia. A full lighting upgrade was undertaken across the 14 floors, replacing outdated florescent lamps and adding timers to control lights. The project cost $130,000 but has reduced electricity use by 510,000 kilowatts, equating to $63,000 per year, in energy savings on lighting alone. After only two years, the initial capital outlay was fully regained—again, very impressive figures.

Another example is Perth’s tallest building, Central Park. In 2001, the building received a base rating of 4.5 stars, but the whole of building was rated at 3.5. Commenting on the disparity, Shaun Arseven from property manager Jones Lang LaSalle noted:

This shows that the tenants’ light and energy consumption in this building has potential for savings so we will now concentrate on achieving significant reductions in these areas …

Central Park now boasts a five-star base rating, with 21 per cent of energy being drawn from renewable energy sources.

Direct action to maximise building energy efficiency has proven to be, and will continue as, an effective method of reducing carbon emissions and costs to business. As previous chair, as I said, of the Public Works Committee, this policy was put into practice. For every government building and major infrastructure work scrutinised, the committee asked proposing agencies to develop the buildings in the most efficient way, including conserving and utilising water more wisely. One 14-storey building constructed as a departmental headquarters utilised the surface area of the roof as a water catchment facility and built in an underground storage tank, on top of incorporating the most up-to-date energy saving measures at the time. Such forward thinking should drive our approach to building design.

Analysis conducted in 2004 as part of the National Framework for Energy Efficiency and reported in the previous coalition government’s forward-thinking white paper Securing Australia’s energy future identified substantial areas where commercial energy efficiency opportunities were not being taken up. It found that significant proposals with payback opportunities of four years or less existed across the commercial, residential and industrial sectors—not including the transport sector—but were not taken up. The analysis estimated that, if only half of the gains were implemented, it would increase GDP by approximately $975 million a year once fully implemented. With this analysis in mind, I reiterate to the House words I spoke last year. Promoting energy efficiency to the maximum makes good sense all around: it reduces costs, boosts the economy, conserves finite resources and reduces emissions.

In closing, I shall refer again to the words of Luigi Di Serio, the creator of the ‘Skylines of the World’ website. In ranking Perth at No. 39, he comments:

Perth has been leading Australia in population growth for several decades now. Just a few decades ago this city was nothing more than a large town. With numerous nightlife spots, Perth is now a major business and tourism centre having more 5 star hotel rooms per capita than any other large city in the Oceanic continent. Perth is a tourism hot spot with a great nightlife. As the city grows, so does its skyline.

To indulge Luigi’s thoughts, I would say that as the skyline grows so will the necessity of energy efficiency. This bill is a welcome move to support that aim, and I am very pleased that Minister Wong, the minister responsible in that other chamber, has addressed some of the concerns raised by the coalition and by the member for Dunkley, as the shadow minister, to ensure that this bill is made much more workable than it otherwise would have been. As I said before, it is important to stress in this place that we need to have close consultation with industry in order to get the settings right in our legislation and our regulation. We have seen the terrible mess that occurs when this does not take place. In the operation of any new laws, we have to make sure that they are workable and practicable and that they can be put into place in order to achieve the aims that are set out. Together the coalition and the government, and indeed the industry input, have made this legislation more workable than it otherwise would have been. I commend the bill to the House.

Kelvin Thomson (Wills, Australian Labor Party) Share this | Link to this | Hansard source

The Building Energy Efficiency Disclosure Bill 2010 will create a legal requirement for owners of large commercial office buildings to obtain energy efficiency information for their building and to disclose it to prospective purchasers and lessees. It will also require head tenants who are subletting office space to disclose this information. The bill follows on from a landmark agreement to expand and accelerate energy efficiency efforts through a National Strategy on Energy Efficiency released by Australian, state and territory governments in July 2009 which outlined the following four key themes. The first was assisting households and businesses to transition to a low-carbon future, the second was to reduce impediments to the uptake of energy efficiency, the third was making buildings more energy efficient and the fourth was government working in partnership and leading the way.

The $88 million National Strategy on Energy Efficiency builds on the existing resources and financial support available to improve our homes and workplaces. Energy used by our buildings accounts for approximately 20 per cent of Australia’s greenhouse gas emissions, split fairly evenly between homes and commercial buildings. The business sector is by far the largest energy user in the Australian economy. The industrial sector alone accounts for almost half of Australia’s energy end use, and around two-thirds of stationary energy use. Australia has one of the more energy intensive industrial sectors among developed countries. In terms of carbon pollution reduction measures, energy efficiency has been something of a Cinderella and has been somewhat overlooked. The fact is that this is an area which would benefit from a lot more attention.

Energy consumed by residential appliances and industrial and commercial equipment is a major source of greenhouse gas emissions in Australia. By addressing a large number of areas where low-cost energy efficiency opportunities exist and are yet to be fully exploited, this strategy enables Australians to access highly energy efficient appliances and equipment for residential, commercial and industrial applications, aligned with leading international standards. As the minister for Environment Protection, Heritage and the Arts has outlined:

Greener offices are not only more comfortable to work in, they can also boost productivity, bring down sick leave, support green building industry jobs and have the potential to deliver savings of 20-40 percent on energy bills.

Energy efficiency is a fast, cheap way of making inroads into Australia’s greenhouse gas emissions. This scheme will provide a strong incentive in the market for building owners to improve their properties by investing in cost-effective energy efficient upgrades. The disclosure scheme will also apply to office buildings owned by the Australian government, in line with the government’s commitments under the National Strategy on Energy Efficiency.

Building owners will need to disclose a valid Building Energy Efficiency Certificate, which will include an energy base building star rating under the National Australian Built Environment Rating System, which is known in the trade as NABERS. It will also include an assessment of the lighting energy efficiency of tenancies and some suggestions on how to improve the building’s energy efficiency. This scheme is part of an ambitious plan to make Australia’s homes and businesses more energy efficient by improving base standards and star ratings—for appliances, equipment and buildings—and by phasing out inefficient technologies. This strategy sets the foundation for a transformation of Australia’s building stock through cost-effective voluntary action in response to better information about building energy use. Armed with this information, consumers and businesses will be able to make informed choices about the energy efficiency of the buildings they buy and lease—and builders and building owners will respond to those market signals by investing in energy efficiency. New buildings will be designed and constructed according to improved energy efficiency standards that will lead to a reduction in energy consumption. These standards will account for climatic variation. Major renovations will be subject to the same standards.

Another result of the agreed National Strategy on Energy Efficiency is a national buildings framework that aims to deliver consistency on how buildings are assessed and rated for energy efficiency and to set out a pathway for increasing minimum performance standards over time. As the Department of Climate Change and Energy Efficiency has observed, the framework will:

• set increasingly strong minimum performance standards over time for new buildings and major renovations, with standards to be reviewed and increased periodically—

for example, every three years—

• cover all classes of residential and commercial buildings;
• apply to new and existing buildings;
• cover the building envelope including roof, walls, doors and windows as well as the energy efficiency of key building services;
• aim to bring together assessment and rating tools for existing and new buildings;
• include common measurement and reporting to help in setting building standards and assessing building performance;
• allow for the use of rating tools developed by the market, provided they are accurate, transparent and user friendly;
• encourage innovation in meeting defined performance standards;
• continue to communicate energy efficiency improvements using star ratings; and
• facilitate effective monitoring and compliance.

I think these are all very worthwhile steps forward. In talking about the issue of energy efficiency, I want to suggest some measures which would enhance building energy efficiency and help lower our greenhouse emissions. At the moment consumers can find what is the most efficient refrigerator or car from a government website. I think that kind of information about building performance should also be publicly accessible. In addition, building rating certificates should be displayed in building foyers, again for public accountability and transparency. I think the tenant’s rating should also be disclosed. Given that tenants consume about half the energy in a standard building, they should be required to disclose details in a foyer and on a government website. Disclosure of ratings should be extended to other building types such as hotels, hospitals and retail and shopping centres. While there is a focus on energy efficiency, I think water conservation is equally important and disclosure of a water rating should also be considered.

I mention to the House the submission by the Australian Conservation Foundation to the Prime Minister’s Task Group on Energy Efficiency, which said:

Forward-looking and energy efficiency focused building code revisions would require new buildings to meet a minimum of 5-star NABERS requirements now. Such measures are simple and generally well-understood and as such provide a robust means of directing greater investment into energy efficient measures and practices. This would significantly improve the energy efficiency of new building stock and eliminate the need to retrofit them in the short- to medium-term upon revisions of the building code to more environmentally stringent standards …

A greater focus needs to be placed on the 98 per cent of commercial floor space that is existing building stock. A strategic approach to greening existing commercial buildings must involve retrofitting. However, barriers and impediments to the investment in ‘green’ retrofitting persist. Getting policy leverage will require providing unambiguous market signals as well as providing incentives for investing in modern technology. Accelerated depreciation would help to shorten the payback period by enabling owners/investors to defer tax payments (in exchange for implementing energy efficiency measures earlier).

I have also mentioned recently in parliament the benefits of smart grid technology and the consumer interface with this grid, the smart meter. These could communicate with smart thermostats, appliances and other devices, giving people a much clearer view of how much electricity they are consuming. As the Economist points out:

Studies have found that when people are made aware of how much power they are using, they reduce their use by about 7%. With added incentives, people curtail their electricity use during peaks in demand by 15% or more.

I have mentioned to the House previously that I have been to visit the CSIRO zero-emissions house in Doreen, which has this kind of smart metering whereby you can see exactly what kind of emissions are being generated in any one room at any one time. I believe that is an excellent incentive for house owners. Groundbreaking research by the Warren Centre for Advanced Engineering has demonstrated that better management practices deliver high-performance buildings and that large advances in energy efficiency can be achieved without major capital expenditure on technologies. Its Low energy high rise building research report, which involved a survey of 127 buildings in Australia’s capital cities and extensive analysis covering the attitudes and energy management practices of tenants and building asset and portfolio managers, showed that most buildings could achieve a four-star NABERS energy base building rating solely through improved management practices. According to the centre:

Project Director, Sue Salmon said that the findings were good news in the current financial climate.

“This report is internationally ground-breaking.

“It proves that despite the global financial crisis, major improvements in energy efficiency are possible without huge capital expenditure.

“What it is telling us is that the greatest environmental gains can be achieved with little or no cost. Even better, the energy savings can put money back into the pockets of owners and tenants,” …

Ms Salmon said key features of buildings that perform well related to human attitudes and practices.

“For example buildings where management is at least partially in-sourced perform better by as much as 1.3 stars NABERS energy rating and buildings where the building, asset and portfolio manager all feel able to affect efficiency perform better by 0.9 stars.

“Buildings that disclose their NABERS performance to tenants perform better by 0.5 stars NABERS Energy.

“This corresponds to a performance improvement of approximately 30 per cent for an average building.

“Extrapolated across the CBD office building sector—

this amounts to—

a 1.2 per cent reduction in Australia’s total emissions.”

This report:

…was based on three years of development and research by the Warren Centre for Advanced Engineering, involving extensive and detailed investigation of attitudes and practices among tenants, building managers, asset managers and portfolio managers.

Participants involved the leading tenants and landlords in Australia.

“With the NABERS Energy benchmark and now these new research results the Australian commercial property sector has the tools to be global stars in cutting greenhouse gas emissions,” …

There is a global push towards the concept of carbon neutral buildings and precincts. I refer again to the submission from the ACF, which stated:

The 2008 G8 Plan of Action on IEA Energy Efficiency Policy Recommendations, which was endorsed earlier last year by the Australian Government, recommends that governments should adopt a package of priority measures for promoting energy efficiency …

Dick Adams (Lyons, Australian Labor Party) Share this | Link to this | Hansard source

Order! It being 8.30 pm, the debate is interrupted in accordance with sessional order 34. The debate is adjourned and the resumption of the debate will be made an order of the day for the next sitting. The member for Wills will have leave to continue speaking when the debate is resumed.