Ken Morrison is about to notch up his first year as chief executive of The Property Council of Australia in July. Many people must have wondered how he would fill the shoes of the former incumbent, the larger than life Peter Verwer, who was at the helm for 22 years and now runs a much bigger version of the Property Council from Singapore.
The question for most observers is whether the change in leaders would bring a policy shift – it’s kind of expected.
For The Fifth Estate, though, the biggest question is whether there’ll be a shift on sustainability. The Property Council has been integral to the shift to green buildings. It also supported the emissions trading scheme and its short-lived progeny, the carbon tax.
In recent history, the challenge for the council members, Australia’s property giants, has been to hold firm to the logic of sustainability in the face of political hostility to anything remotely connected to a green economy or climate change.
Morrison isn’t new to the Property Council; he filled executive roles there before, including leading the NSW part of the organisation, so this is a return to the fold for him, and he knows intimately the issues that face his members.
Some of the issues won’t change. Stamp duty for instance. Morrison is injecting new life into an industry’s lifetime goal to have this irksome tax removed from the books. We’re not sure how he will fare and during this interview a few weeks back we point out that Verwer for all his powers of persuasion was in two decades not able to shift this bugbear.
But the typically upbeat Morrison is unfazed by the challenge. He also thinks the government’s emissions reduction fund part of its Direct Action strategy can be rescued for the property industry and sends a volley of deflections our way as we say the odds don’t look good.
On stamp duty he says, “Watch this space,” and points to New Zealand, which has managed to achieve this goal.
On the ERF he’s also positive, no matter that countless economists and industry experts who say it’s an expensive and ineffective way to bring down emissions.
Morrison says, “It does have a market-based mechanism at its heart. It’s a reverse auction. [It’s about saying], ‘Here’s mechanism; please invest in that.’”
But no one thinks that property is going to qualify for much of the action, we persist.
“That is a challenge,” he says.
This is central to the job for the Australian Sustainable Built Environment Council on which he sits as an executive member to improve its messaging on the ERF and sustainability in general. ASBEC, he says, can “show what’s been done in the last decade in the built environment and we might not have been good enough at telling that story”.
“A number of allies in this space recognise that we need to fill a bit of acknowledge gap in terms of where we sit at the moment but then also chart a path for the future.
“There are big challenges there and we will continue to engage with the government ahead of the election.”
The next federal election
At the time we met, Morrison was putting the finishing touches to a new strategy for the Property Council that would be unfolded in coming months. It’s more a reform agenda so it won’t include sustainability as part of a “shopping list” of desirable outcomes, he says, but that doesn’t mean there isn’t a continuing focus on it from the industry and through the Property Council.
How strong, then, is the sustainability agenda for the PCA?
“It’s very strong,” Morrison says. “We’ve gone through the process of thinking through our core issues and there’s no doubt that sustainability is very important.
“As you know the property industry has some of the world leaders in terms of sustainability. We’ve spent a long time walking the halls in Canberra, talking about things like the RET and the importance of retaining that to support investment [in clean energy and energy efficiency].”
He tips sustainability and even an emissions trading scheme, which the Property Council supported, as a core issue for the next federal election.
“That will be part of the debate that we need to have. The major parties are squaring up on that issue again. And we need to have that broader discussion in the community.
“There is no doubt we need to have the right framework,” he says.
His role on ASBEC is pivotal to the industry’s positioning on sustainability and this umbrella group for the built environment is expected to soon have sign off on a new piece of research to underpin the strategy.
Expect a strong focus out of ASBEC in 2015-16 on these issues, he says, and for the organisation to make a “big contribution” to the federal policy debate on sustainability on behalf of the built environment sector.
Growth
It’s clear that underpinning the focus on sustainability is the need to enable a growth environment for the property industry.
“The big thing for us is how this country manages growth and that’s a very strong sustainability agenda because we know cities can be hard-wired in on a sustainable basis or the opposite,” he says. “So we’re keen to have a much better framework for how cities manage, invest in and plan for the future.”
It’s a fair call. Whether we like it or not Australia will grow.
“By 2060 Sydney will be 8.5 million; the size of New York and Perth will be the size of Sydney today so it means all of our cities will be radically different,” Morrison points out matter of factly.
It’s the kind of forecast that horrifies many community groups.
But Morrison says the key is to do development to accommodate that growth in a way that “works for us all”.
The community must be part of that journey; we need engagement, conversation and yes, there needs to be a payoff too.
The key frightener with growth is congestion. IPSOS’ Rebecca Huntley whose company has conducted in-depth focus groups on what causes community anxiety says congestion is one of the biggest fears. Even xenophobia can be scraped away under questioning to reveal a fear of congestion and being pushed and shoved, she says.
The gridlock on Saturdays in Sydney and no doubt many other major cities is maddening, we say; you can hardly blame the citizens for not wanting to share more of their precious space, whether on the roads or on the streets and parks.
So why is the NSW state government, which faces an election on Saturday, and which has made it clear that the property industry and development is central to its economic strategy for growth and prosperity, directing $15 billion to a new roadway in WestConnex instead of to more public transport that could provide the much needed payoff?
It would certainly make the developers’ jobs easier if they could tell the citizens they will get greater density but it will come with fabulous new light rail, fast heavy rail and nimble buses, we say.
Morrison says public transport is absolutely important, but he’s careful to tread a reasonable line in this discussion. There are important relationships to preserve.
“So don’t under-invest in infrastructure. Plans aren’t enough, you need investment.”
It didn’t help that the previous Labor government took “10 years off investing”, he says.
“Every year we stand still we fall further behind. When you say Sydney is full, we fall behind. It doesn’t work.”
He says the Liberal National Party government in NSW has done well with infrastructure and planning, talking to the community. In opposition, it was “rightly strongly critical” of the where the state sat.
“It developed a clear plan, initiated Infrastructure NSW to provide high level advice, and undertook a lot of restructuring within government to plan for the future, but also to operate transport and we’ve seen some very good results from that.”
Now there’s the plan to recycle assets from the poles and wires to public transport and also roads.
“This is a package that largely the community has bought into so far and the NSW government should get a lot of credit for the way it turned around what was the laughing stock of the nation.”
The same thing hasn’t happened with planning, he says.
“We haven’t had the conversation with the community. We haven’t had a clear new framework put in place. We’ve had some elements of institutional reform with UrbanGrowth NSW that can look at delivery. Beyond that has been a lack of planning reform. There’s been a Sydney Planning Commission for which there’s not much detail yet.”
It gets back to the difficulty we see governments have in communicating with the public on tough issues, he says.
“Campbell Newman was turfed out because he couldn’t carry an agenda. Tony Abbott is in difficulty because he couldn’t carry an agenda.”
We need to invest the future, Morrison says, but part of that means engaging the public in the conversation on growth.
We mention that the “conversation” on important areas of growth, for instance the Parramatta Road revitalisation promised as part of the WestConnex – seem to have been taken off the table, perhaps ahead of the election.
“People aren’t stupid. If they know they are being sold a bunch of growth without the infrastructure to support it then they won’t be sold a pup,” he says.
Where’s the money coming from?
The big question of course is where will the money come from?
There’s been much talk about the need for expenditure cuts but the emerging thinking is that it’s the largesse of former prime minister John Howard’s tax cuts during his terms that are now coming back to bite the budget, rather than any sudden shifts in expenditure.
Morrison doesn’t disagree.
“At the back end of the boom we were able to open up largesse, middle-class welfare, that we can’t afford any more.
“We’re about to start a tax reform debate in this country which the Property Council welcomes. And we have taxes in our armoury which are a handbrake on activity. If you had a better tax mix you could raise more money and allow the economy to grow.”
In this context stamp duty is a front and central target, he says.
“What’s needed is a revenue base to fund what we need as a country but to also allow the country to grow as much as possible.”
We point out how destructive, then, the government’s attacks on the green economy has been, which could provide lucrative sources of revenue as it strengthens. And how a good broad-based tax could be… a carbon tax. (Effectively a GST confined to the dirty parts of the economy).
Morrison agrees. There’s no doubt that an emissions trading scheme and sustainability are issues that will only grow in political importance, Morrison says.
“Clearly we need the framework there to drive sustainability. Clearly we’re seeing the major parties squaring up on these issue with the election 12 or 18 months away and we need to do our homework so we are really and equipped to engage on that debate.
“What we’re doing is re-engaging our members in this space and charting out new research through ASBEC that will be the vehicle for setting ourselves up for the next election.
“Part of me coming to the role is looking at our policies in the past and refreshing those.”
But Morrison gives little away on the detail.
“There will be announcements in the next few months,” he says.
“So stay tuned.”