Yet another study proves that energy efficiency saves home owners thousands of dollars. But even modest improvements to the nation’s building code continue to face opposition. 

The Climate Council’s Tents to Castles report found that living in a 7 star, all-electric house in any Australian capital city saves residents an average of $450 per year on their heating and cooling bills, compared to the current 6 star standard.

The savings are even greater in cities with hotter Summer climates, with Darwin and Canberra residents keeping an extra $945 and $713 in their pockets each year, respectively. 

The figures exclude the extra money that people will save by also installing solar panels on their roof and a battery storage system.

The study debunks claims being made by some high-volume developer lobby groups, both about planned changes to the National Construction Code and the NSW’s Design and Place SEPP, that less sustainable homes are more affordable.

While building a seven star home is slightly more expensive than a standard six-star home—an average of around $2300—that difference is repaid in less than six years.

Big savings for owners and tenants

Nicki Hutley, an independent economist and councillor at the Climate Council, told The Fifth Estate that over the life of a house, the overall savings add up to tens of thousands of dollars, making more energy efficient homes far more affordable to residents.

“When we talk about housing affordability, we have to talk about not only the total upfront costs, but we also have to talk about the running costs. And this policy compared to many others has a very minimal impact,” she said.

“We’re talking less than 1 per cent of the average cost of a new home in Australia in terms of raising that standard from six to seven stars.

“And I’m sure for most people, when you’re spending thousands of dollars to build a new house or purchase one, paying a couple of extra thousand upfront knowing that you will save many times that amount over the lifetime of the home would be a preference.”

National Construction Code review drags on

The Tents to Castles report comes as the Australian Building Codes Board continues to review new building energy efficiency standards as part of the 2022 update of the National Construction Code. 

While the NCC is usually updated every three years, The Fifth Estate understands that progress on the changes was originally delayed because of Covid, and more recently because of the federal election.

The latest revision is the first since 2010 to propose an increase in minimum energy efficiency standards. It proposes that all new houses in Australia meet a minimum 7 star NatHERS standard, rather than the current 6 star standard. 

“[The changes] are really important. We can’t let vested interests get in the way of benefits of policy changes that are going to bring about benefits to households and benefits to the environment.”

Nicki Hutley

The Climate Council’s modelling shows emissions from a 7 star all-electric home are 25 per cent lower than a 6 star home. That’s equivalent to taking a car off the road every year – or around 120,000 cars a year.

Currently, only around 16 per cent new Australian homes meet the 7 star standard. If implemented, the change would improve the energy efficiency of around 1.1 million homes (including townhouses and apartments) between 2022 and 2025.

The plan, which was first put forward in August 2021, has been criticised by a number of peak industry groups for not going far enough to improve building efficiency standards. 

Pushback from high-volume developers

However, just like the now-scrapped NSW DP SEPP policy proposal, there is pushback from developers over even the modest 7 star proposal, with claims that any increase in upfront costs would hurt affordability.

“But even the modelling that was done for the regulation impact statement says actually, they’ve made almost no difference over a 30-year standard mortgage, so that’s not a valid criticism,” Ms Hutley said.

“When I was looking into the economics of universal design standards quite a few years ago, we saw similar things. There’s always this initial reticence, and some of them say, ‘Oh, this is going to add to costs’, without looking at what the lifetime benefits are.

“But then they start building these things. And they realise that actually, particularly when you’re building at scale, the added costs are quite minimal and the benefits that households are better off paying a little bit up front extra up front to get longer lifetime savings.”

A big issue, according to Ms Hutley, is that mass project developers already have their “Lego block” designs that don’t allow for innovation.

“We all know that one of the keys to Australian productivity growth and real wages growth is in fact around having innovation driving productivity gains,” she said.

“There’s no reason why the construction sector shouldn’t be looking at these sort of innovative ideas that will, in fact, lower the cost of housing over the lifetime of the house for residents. It just doesn’t make economic sense not to not to think about it in that way.”

An election issue

Given the stakes, the fate of the NCC should be an important election priority for anyone concerned about sustainable and affordable housing.

“If people want to think about cost of living and climate change as significant issues, then obviously the NCC is a way of addressing both of those issues. And it should be in people’s minds,” Ms Hutley said.

“I think part of the problem we have with some of these policies is getting the messages clearly across to as many people as possible that these are policies that are very much at their own interests.”

“We’d like to see it go further”

For its part, while the Climate Council would like to see even better energy efficiency standards, Ms Hutley said the Tents to Castle study examines the impacts of a 7 star rating because that’s what’s in the current NCC proposal.

“As far as we’re concerned, the more efficient we can be, the better it is for households. Potentially, at this point in time, we’ve still got to bring down the learning curve costs. So increasing the star ratings over time seems to be a sensible way to make sure that the increase in costs is something that gets paid off relatively quickly and doesn’t jump shift. 

“But over time, absolutely, we should be aiming to increase star ratings. We shouldn’t stop at seven by any means.”

We need to move forward

Despite the pressure from low-cost developers, Ms Hutley said it’s important to push back against energy efficiency standards in the NCC being unwound. 

“They are really important. We can’t let vested interests get in the way of benefits of policy changes that are going to bring about benefits to households and benefits to the environment,” she said.

“It’s a bad practice to not let these policies move forward when we know that they have numerous benefits from an environmental, economic and social perspective.”

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  1. I agree, the NCC should be an election issue, but the average Joe has never heard of it and doesn’t realise that it sets the minimum performance standard for every new home in Australia and that every new home added to the stock is another home that needs immediate solar retrofit to give the kids in that home a survivable future – yes it really is that serious. They don’t know that net zero homes are immediately more affordable than 6* or 7* homes and Jason Falinski forgot to mention this in his housing affordability study although I sent him all the information and discussed it with him for 20 minutes. He promised to act on it but…… Our pollies have much more serious business on their hands “Mr Speaker”. Please check out our net zero for the NCC campaign page, sign the petition and write to your State/Territory Ministers.