25 July 2010 – Updated 26 July 2010 – Last week it was lean pickings for the green property in election promises so far. By Sunday the worm had turned in the sector’s favour with big welcome news from the Labor Party of a 50 per cent tax deduction bonus for green building work, possibly enough to stave off the inevitable hangover as the stimulus package for construction dribbles to an end.
On offer, from 1 July 2011, is a 50 per cent bonus tax deduction for approved work to bring low performing buildings of 2 stars or less, up to 4 stars or higher from the Federal Government.
“The initiative is expected to provide a boost of around $1 billion over the life of the scheme to help ‘green up’ existing buildings right across the country,’ the Labor Party said on its website.
“It will help unlock significant energy efficiency by giving businesses a clear incentive to save energy in their buildings.”
Also on offer was another $30 million to add to the Green building fund, which the Opposition siad it would drop.
Green groups and the property property industry groups roundly applauded the move, but with the caveat that more ought to be done in this sector that is consistently touted as offering the cheapest and fastest route to greenhouse gas reduction.
Following are highlights of rections from industry leaders.
The Green Building Council of Australia
The Green Building Council of Australia said the policy would motivate building owners to reduce Australia’s greenhouse gas emissions and support green collar growth.
“The GBCA strongly supports any incentive to retrofit existing buildings, as this is one of the most cost-effective carbon abatement opportunities available,” said GBCA chief executive, Romilly Madew.
“This announcement demonstrates the Gillard Government’s commitment to greening the built environment and is a strong indication of leadership.
“A retrofitting program 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.
“This retrofitting program will create jobs growth without needing to create additional commercial stock -future proofing our existing buildings, ensuring they perform closer to new standards and addressing tenant expectations.
However, Ms Madew said there was still a “long way to go, with more ‘long strides’ required to move Australia forward faster, but these steps taken are welcome.”
The Property Council of Australia
The Property Council of Australia, endorsed the investment allowance and said the $1 billion investment allowance would provide an incentive to upgrade Australia’s 330 million square metres of commercial building stock, most of which is more than 25 years old, and which account for 10 percent of greenhouse gas emissions.
The election promise announced by Environment Minister, Penny Wong, extends the life and scope of the successful Green Building Fund, Property Council chief executive Peter Verwer said.
“The incentive will bridge the significant payback gap between an investment in energy efficient capital and subsequent energy cost savings,” Mr Verwer said.
The allowance would extend the impact of the Green Building Fund to cover more building types, such as shopping centres and would build on the innovative green technologies pioneered under the current scheme.
“These measures help build a mechanism for reducing GHGs by more than 80 megatonnes over the next decade.”
Mr Verwer also called for a nation-wide energy efficiency, or white certificate, scheme to complement the measures.
He said the assistance would be particularly welcome as the construction activity taile off in line with the end of the stimulus package.
“The construction sector is headed for a rough change of gears as the stimulus package runs out,” Verwer said.
“This incentive will boost green investment and jobs with private sector dollars.”
The Australian Conservation Foundation
The Australian Conservation Foundation said the Prime Minister’s plan was an important step to cut waste and pollution.
“Most commercial buildings in Australia have low star ratings and guzzle energy and water,” ACF executive director Don Henry said.
“This initiative should give building owners an incentive to invest in good quality upgrades.
“The Coalition has previously been in favour of such measures and I would hope all parties will support this plan.”
Mr Henry said the Building Code of Australia standards for new buildings should be raised from the current 3 to 3.5 star to a minimum of 5 stars.
The WA Sustainable Energy Association
The WA Sustainable Energy Association also welcomed the Labor policy and said energy savings in commercial buildings could “easily cut 10 per cent of Australia’s greenhouse gas emissions.”
According to WA SEA chief executive, Professor Ray Wills: “The measures announced by Labor today as an election commitment are significant and will create real change in the energy intensity of Australia’s economy. Improving energy efficiency in Australian buildings will improve both business profitability and national productivity, and strengthen Australia’s economy.”
However, the measures were overdue and “still only modest, not ambitious. We must change the paradigm of wasteful energy use in Australia’s business,”
“The tax break proposed for buildings going from 2 stars or lower to 4 stars or higher must instead be strengthened.
“When spending taxpayers’ dollars, we must reward the best outcomes and not the ‘least best’.”
Professor Wills said 4 stars was “not all that ambitious” and the base for receiving the tax benefit should be “at least a minimum 5 Star Plus performance level under the Building Code of Australia.
He proposed a “graded reward” – a 25 per cent tax break if the renovated building achieved 5 stars, a 33 per cent tax break for 6 stars, and the full 50 per cent for more than 6 stars.
The measures ought to be accompanied by strengthened mandatory energy efficiency reporting of the energy use and efficiency that included all commercial buildings, “not just big ones.”
“Eligibility criteria for the tax breaks announced today must include mandatory installation of renewable energy electricity generation, as well as solar water heaters or optionally high efficiency water heating such as heat pumps, on all buildings seeking benefit from this scheme.
The Energy Efficiency Council
The Energy Efficiency Council said the energy efficiency package for buildings was positive step for business and the environment.
“Labor have put some smart ideas in this policy, and if it’s the first step in a wider program it could kick-start a transformation of our building sector,” said, chief executive officer of the council, Rob Murray-Leach.
“We need a suite of policies to green Australia’s buildings, including a national energy efficiency goal, energy market reform, support for innovation, access to capital and a carbon price. But this is a very good start,” he said.
“Greening offices, hotels and shopping centres would deliver a major win-win for business and the environment. Retrofitting Australia’s existing commercial buildings could save the economy $1.4 billion a year, cut building emissions by 30 per cent and create 27,000 jobs over the next decade.
“There are some smart ideas in this policy, particularly only giving incentives to companies that actually save energy. The government will need to work with experts and industry to get the details right. For example, the $1 billion committed over the next decade will need be available to building owners that want to move earlier,” said Mr Rob Murray-Leach.
ClimateWorks Australia estimated that if we improved the energy efficiency of our economy, by 2020 Australian homes and businesses would save $5 billion a year, he added.
Energy efficiency not only reduced the amount of energy people use, it can also lower the price of electricity by offsetting spending on expensive electricity infrastructure.”