Penny Wong

18 June 2010 – The Federal Government has ceded ground in the battle to water down the provisions of the mandatory disclosure scheme for commercial buildings, which is about to face Parliament in the final two weeks of sitting before the long winter break, and possibly a federal election.

Inside sources say both hurdles – Parliament and a federal election – could derail the hard-fought bill, which has the potential to transform the property industry’s energy profile, especially at the lower end of the market, namely – the estimated 80 per cent of laggard property owners who property insiders say simply “don’t care” about energy efficiency.

Adding to the hurdles will be lobbying by the Property Council of Australia, which has signalled that the concessions may not be enough and that it wants changes to the NABERS energy rating tool on which the scheme will rely. (See our story on this)

Under the scheme, owners of offices of more than 2000 square metres will be required to reveal the energy rating of the base building at the point of sale or lease.

The tussle, occurring largely behind the scenes, masks emerging tensions between various elements of the property industry. While the Property Council urges a softening of the scheme, other leading figures in the built environment industry want to see mandatory disclosure provisions toughened and expanded into energy efficiency and say that NABERS is a world-class rating tool.

The Federal Minister for Climate Change, Energy Efficiency and Water, Penny Wong, announced the concessions to the Building Energy Efficiency Disclosure Bill on Wednesday (June 16) during her address to the Built Environment Meets Parliament (BEMP) summit in Canberra.

Senator Wong said that the lighting provisions in the bill would be deferred to the second year of operation and that penalties would be reduced.

“The transitional arrangements will be extended so that only a NABERS assessment will be required for the first year of the scheme. The lighting tool will become a mandatory component from the second year,” Senator Wong said.

“We have also listened to the building industry and considered carefully your views concerning ongoing penalties under the Bill. So, in a spirit of ongoing co-operation, the Government will move amendments to the Bill to reduce the level of ongoing penalties under the scheme.”

Property Council chief executive officer Peter Verwer was circumspect about the announcement. It was a “basis for the way forward”, he told The Fifth Estate during the afternoon break at BEMP.

The details needed to be examined, but the move signalled that the Government was “listening to the industry”, he said.

How much it will listen remains to be seen. Inside sources say the Property Council has significant influence across the major parties, capable of derailing the bill’s passage.

In our story focusing on NABERS, Mr Verwer revealed that the Property Council has backed away from its former support for NABERS and has called for a replacement tool to be used for mandatory disclosure.

NABERS might have been fine for a voluntary scheme but not a compulsory scheme, Mr Verwer said. He said there was an unacceptable variation in the way star ratings are allocated between various states and he dismissed a major review underway to address industry concerns.

On mandatory disclosure Mr Verwer said the lighting proposal was a late addition to the scheme and would be confusing to tenants. However, he acknowledged that lighting was normally part of base building fitout.

Leading engineer Steve Hennessy, from Steenson Varming, said the variation in the tool between states “needs to be put in perspective. And I don’t even know whether you should call it an inconsistency.

“In Victoria it is a little harder to get a higher rating than it is in NSW, at the lower end of the scale. In other words, if you were expecting a two-and-half star rating in NSW it might be two stars in Victoria.”

At the upper end of the scale, the inconsistency virtually disappeared and he doubted that the variation would be a problem for quality property investors, who tended to concentrate on higher-rated buildings in any case.

“Any decent property owner is targeting the higher rating,” Mr Hennessy said.

He added that he was a strong supporter of NABERS, with much of the industry voting with its feet. International experts had also several times cited NABERS as a “leading way of thinking” in rating tools.

“They say, ‘why are you asking us, you’ve got the best system in the world’.”

On the lighting measures, Mr Hennessy said he believed property industry members would disagree with the deferral. It was important in rating the base building because it was something that the “building owner has control of”, not the tenant. However, it was a complex issue.

“Unfortunately, there are some difficulties in reporting lighting. They [tenants] should be able to look at the ceiling and know what they are getting, but because there are things that can happen with different types of transformers, and lights can be slightly different [in performance], we need to trial a few tenancies to see how well they can report on lighting.”

He said Steenson Varming was one of several companies that had tendered to develop a rating tool for lighting.

tperinotto@thefifhestate.com.au
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