One of Australia’s top energy efficiency experts has suggested an interesting solution to the impasse over the NCC: look to the first home buyers scheme.

The latest three-year review of the National Construction Code remains bogged down over a proposal to raise the minimum NatHERS rating from 6 to 7 stars.

Research shows this change will save households $450 each year, with a number of peak industry groups and leading figures saying it doesn’t go far enough to improve energy efficiency.

Yet even this modest improvement faces resistance from some industry groups that represent developers. This includes the HIA, which has stated that: “Costs associated with the two scenarios considered – which effectively require new homes and apartments to meet a 7-Star NatHERS rating and meet higher standards for the energy efficiency of fixed appliances – would exceed benefits.”

Against this backdrop, one of Australia’s leading energy efficiency experts has put forward a solution that draws inspiration from an unlikely source: the federal government’s first home owners scheme.

Alan Pears has been involved in building energy policy and regulation since the 1980s, when he led the way on introducing the star ratings system for electrical appliances. He is currently a Senior Industry Fellow at RMIT.

Mr Pears told The Fifth Estate he is appalled that we are still arguing with the building industry establishment about improving energy performance.

“The debate about 7 star housing is not really about the cost – it’s about the up-front cost, which impacts on the building industry’s profits and home buyers, who are pushing the 80 per cent borrowing limit before they have to take out mortgage insurance,” Mr Pears said.

“This ignores the reality that better performing homes will deliver energy savings, carbon emission reductions and improved health and comfort for 70 years, and that most of the people who will occupy the home over that time have no say in decisions made during design and construction.

“The Coalition’s scheme for first home buyers is simple. The government will underwrite the risk for the loan beyond 80 per cent of property value, up to 95 per cent.”

According to Mr Pears, a similar model could be applied to any upfront costs associated with more energy efficient homes.

“If evidence can be provided to show that investing in the energy efficiency measures required to move from 6 to 7 stars would increase the cost of the home, the government would underwrite the risk if it takes the loan over the 80 per cent threshold from which mortgage insurance applies,” Mr Pears said.

“This would allow the home buyer to invest in the improved efficiency and spread the repayment over 30 years. So the buyer would be cashflow positive from day one. Home buyers and the building industry would be happy.

Because the extra cost of upgrading energy performance beyond 6 stars is a very small percentage of a typical mortgage, with repayments easily covered by savings, the risk to the federal government of such a program would be very low. 

“The people who live in the home for the next 70 years would benefit from improved comfort and health and lower energy bills. Carbon emissions would be cut and resilience to climate weather extremes improved.  And humanity would benefit. 

“The approach could be extended to cover the extra mortgage for better than 7 star performance, too. The extra cost is trivial compared with the lifecycle savings and benefits.”

The only question that remains, then, is who will adopt this idea first – Greens, independents, Labor or the Coalition? 

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  1. Professor Pears proposal is characterised by the level of creativity that one would expect from someone with his expertise in the domain of energy efficiency. However I believe that the time for appeasing the endlessly recalcitrant HIA is long overdue. Way back in 2004 when Victoria introduced our 5 Star Standard the HIA raised these same spurious “affordability” objections. Yet my own Doctoral research confirmed that compliance costs in fact were both less than Vic Govt RIS estimates, and fell rapidly as the new energy regs achieved the intended market transformation. In addition my research also confirmed that the 5 Star Standard also over-achieved in terms of projected CO2 abatement outcomes. Your readers may be unaware that research conducted by the AGO in 2008 revealed that Australia’s (then) 5 Star NCC energy requirements actually lagged 2-3 Stars behind US and UK building codes. Residential building design is a complex, multi-faceted process; with many parameters available for tweaking by designers. The industry (HIA et al) should be given explicit direction, mandated in the NCC, that 8 Star performance must be achieved WITHOUT additional cost to homebuyers. It will then be up to the market to respond appropriately and effectively to this Performance Based building energy efficiency target.