2 May 2012 – On Monday Eureka Funds Management executive director Niall McCarthy told the Property Funds Association annual conference on the Gold Coast that the Tax Breaks for Green Buildings program worth $1 billion would be scrapped.
Where he got his information from, he would not say; he would not even confirm he “knew” this to The Fifth Estate, but there it was.
By Wednesday the story had broken in the financial press and two more indicators emerged.
One was that the legislation has not been introduced and another that Parliamentary Secretary for Climate Change, Mark Dreyfus, who is in charge of energy efficiency programs – could not confirm that the program would be kept.
Mr Dreyfus’ spokeswoman told The Fifth Estate the same thing on Wednesday. “There is no information available,” she said.
There could still be a change of heart. The government could realise that the program was not just an environmental jump start to the flailing property sector but an economic one.
But that’s a long shot.
The program for a 50 per cent one off deduction for eligible retrofits was to have been introduced on 1 July after the industry asked for changes to the original structure.
PFA member and tax consultant Nicola Woodward, associate director at MBM Pty Ltd whose clients include the owners of the B, C and D grade property that needs retrofitting, says the removal of the tax breaks would be “absolutely” a negative for the industry.
“This is going to make the economic decision to spend money on green retrofitting harder again. The whole point was that this would encourage them to make the expenditure and bring forward expenditure,” Woodward said.
Chief executive of the Green Building Council of Australia Romilly Madew said the industry has been “calling for – and has been promised – incentives and tax breaks for green buildings for a long time.
“We have patiently waited for the scheme to be implemented, despite delays, because we believe it is essential for the program to be accessible to the widest possible number of buildings.”
The demise of the tax breaks program would be an attack on the economy as well, Madew said.
“The $1 billion promised will do more than reduce greenhouse gas emissions.
“Research from Davis Langdon has found that retrofitting a significant quantity of commercial stock will support the growth of green skills and has the potential to create jobs for more than 10,000 people in the building and construction industry.”
Madew said what’s left now in the massive task of retrofitting Australia’s building stock, was all stick, no carrot.
Greeens Leader Christine Milne said, “Senator Milne has raised this issue with the government as a matter of concern,” a spokesman said, but at this stage there was nothing more to add.
The program was in trouble from Day 1.
When it was first announced in the lead up to the last election the property industry sent it back to the drawing board.
The tax breaks would be too far down the timeline¬ – two or three years before anyone could capture them. Worse was that the program was pretty useless to property trusts since REITS typically pay no tax but pass through tax implications to the ultimate unit holders.
The variation proposed by the industry was to make the tax break an operational expenditure item, claimable in the quarterly BAS statements, so much more readily available and likely to actually stimulate green retrofits.
Woodward said the new proposed version of the tax was useful “because everyone could take advantage of it; the real estate investment trusts could take advantage of it and they could use it in their stapled entities.”
But this would have cost the government more, and Treasury was understood to have held out to bring the program back to closer to $700,000 to compensate for the extra cost.
Did the property industry say no, again? And hold out for the whole amount?
If it did it was a bad call. The lot could well be gone now, swept up in the contagion of austerity that seems to be pushing governments worldwide into the equivalent of a head banging exercise to cure a headache.
Former Liberal Leader John Hewson at Gleebooks in Sydney on Tuesday night had dire predictions for the entire climate challenge agenda.
Speaking to The Fifth Estate before his launch of Anna Rose’s new book based on the ABC program I can change your mind about climate change Hewson said the carbon “tax” or price as it should rightly be known, would be deferred or dumbed down in the coming budget, along with the certain demise of Julia Gillard as Prime Minister, the ascent of Tony Abbott in the job and Abbott’s removal of the carbon price, because he said he would.