On the tipping point from voluntary to mandatory – are we there yet?

Are some governments starting to test the water for higher achieving mandatory targets on climate? There are some interesting moves afoot.

Here at The Fifth Estate we love words like market! Competition! Freedom! (Even though the latter has become a bit of a dirty word after the anti lockdown demos.) 

We also love that wonderful hybrid concept of “co-opetition”, in the property industry where companies compete with each other but also collaborate to share the latest thinking. 

All of these things have lifted the industry to globally acknowledged excellence and delivered high level performing buildings with the bonus of a glowing halo of green loveliness for their owners’ portfolios.  Well, some buildings, anyway; some portfolios.

At levels below the premium and A grade buildings the expectation was that the trickle down effect would drive market transformation. And while it’s true the demand for timber is now so huge it’s created a spike in prices and that we can now source low carbon concrete generally most buildings below the premium grade remain pretty shoddy and the residential sector is woeful with a few outperformers and the rest as bad as it ever was.

Market transformation will absolutely work for these lagging sectors but how long will it take? Do we really think that the built environment will go from generating around 40 per cent of emissions to close to zero in 10 years. Or are we happy to wait to 2050?

Considering the planet’s Code Red was officially called by one of the most conservative climate forecasters in the world recently, the Intergovernmental Panel on Climate Change, maybe it’s time to expand on our love of the big V word, for voluntary actions, and add the big M, for mandatory. Then an E for enforcement because Australia has some excellent laws for environment and building quality but not much in the way of enforcement. And of course S for speed which is the reason for the above.

A few people we spoke to about mandating sensible environmental outcomes certainly seemed more reasonable and less hysterical than they were a few years ago about anything at all that would add cost to the consumer.

If we’ve only got 10 years left (9.25 now) to get things right, then maybe it’s time to weed out the weasel words from the spin merchants’ lexicon and embrace these instead. It would be a good look for the thought leaders to help.

Because when it comes to transition the market is good but the government is faster. 

Think of the US in the Second World War. It took just six months to shift the economy to a war footing. With Covid it takes just a few days to mandate lockdown (in New Zealand at least; a few weeks in New South Wales.)

Maybe Covid has given us a template for collective action to achieve a commo n outcome. Let’s hope. 

The property industry is not a bad place to start. It’s always championed the idea of a level playing field. Westfield for instance has pretty well embedded this concept in the industry’s DNA, fighting black and blue to enforce planning rules to stop pop up bulky goods centres near its shopping centres years ago. Now wouldn’t it be nice to get this powerful giant on side, whose influence is so huge it’s often spoken about in hushed tones? Maybe it will finally permit the adoption of another positive level playing field, the Commercial Building Disclosure program, that so many of its peers want.)

There are baby steps afoot

In recent times we’ve seen some tentative steps from state governments to level the playing field for better collective action, not just the leaders.

There was Victoria’s call last week to start mandating items such as canopy cover in new housing estates (30 per cent), higher natHERS standards for new housing (7 star by 2022 and ahead of the rest of the nation if needs be 8 Stars by 2025), disclosure of energy efficiency in houses offered for sale (something the Australian Capital Territory has had for years), and removing the need to include gas in new housing estates. It’s a start. Hopefully they will actually ban gas in new buildings soon.

A few days later, the NSW announced some small mandatory targets of his own. Primarily the banning of black roofs on houses in estates in Western Sydney and a version of geen canopy, by way of a tree or two on each house site.

When we spoke to Jonathan Spear deputy chief executive officer for Infrastructure Victoria he suggested the property/developer lobby was not apoplectic over the moves, concerned more about the time line to bring in the measures than being opposed.

A few people we spoke to about mandating sensible environmental outcomes certainly seemed more reasonable and less hysterical than they were a few years ago about anything at all that would add cost to the consumer. 

Some people can’t believe there are any black roofs still allowed

In Sydney the executive director of NSW Master Builders Australia Brian Seidler, taking a few minutes out from the onerous job of helping to patch up an ailing construction sector in lockdown, said from his point of view he couldn’t believe black roofs weren’t banned years ago. 

He also said he would expect to find it difficult among his peer group to “find someone who disagrees with planting more trees”. It makes sense to design for climate change. No more black roofs is a good start.

Seidler sees the whole issue of mandatory improvement in housing, including accessibility,  as part of the puzzle of piecing together liveable housing that will accommodate us as well get older. 

“I know if I personally build something in the future it will be reasonably traditional building materials but it will be very strict in insulation for instance.” Also, ideal orientation and correct water proofing. None of this is expensive but retrofitting shoddy work is very much expensive.

Others are a tad stuck in the antediluvial age

Urban Development Institute of Australia’s NSW branch president Stephen McMahon, for instance, told The Sydney Morning Herald that his lobby group “supported the environmental aims” of the new NSW planning mandates but objected to the new rules because they were “ill-conceived and unworkable”. Painting the roofs white would result in “bureaucratically imposed blandness” [as opposed to creative ingenuity and design joy in existing housing estates?]

Somehow, he knew, white roofs would bring only “negligible improvement in thermal performance” [dismissing in a single breath countless academic studies and data]. 

Use insulation instead, he suggested [that would be a genius and clearly novel idea to some], building design, shading and other measures to reduce heat impact [and the reason for not using these measure to date are…?]

He didn’t like the idea of making people plant a tree either.

Don’t let Melbourne prices go like Sydney’s

Danni Hunter who’s now heading up the Victorian division of the Property Council of Australia was hardly vehemently opposed to the changes but was concerned about cost.

She says the difficulty with government agencies is they often “don’t seek to understand or even to quantify” the cost to the end user. 

A lot can be achieved by trusting community education and choice, she said and consumers had been good at driving sustainability outcomes.

“We need to put more faith in the consumer”. 

Hunter likes the idea of putting “an affordability lens” on the ticket price of housing that would prove the long term financial benefits of well designed sustainable houses.

But unless the authorities consider housing cost up front, she says, Melbourne might end up like Sydney.

And then there’s Covid. We need to “keep pushing forward on climate change and accessibility but also make sure we can recover from the pandemic to people in jobs and recover from this.”

But what about the S word, Speed. Hunter says it took only five years for broadscale uptake of solar. 

That’s hopeful.

But if we thought we could get consumer led demand for net zero housing by 2030 we’d be as relaxed and comfortable as John Howard.

The new housing code is looking very good

Phil Harrington author of that explosive report in 2015 that found most developers didn’t even meet the quite lowly environmental standards for new housing says he likes what the Victorians are proposing but they’re hardly radical. The value of tree cover has been well proved to reduce heat island impact. 

The higher NatHERS rating to 7 stars was proposed way back in 2019. Consultation on a new RIS (regulatory impact statement) for the higher rating is still ongoing, delays standard. Release date has been shunted from July to September. 

What’s new in the code, he says, is not so much the higher energy efficiency standard for the “thermal shell” or building fabric but a new “whole of home” approach. 

This means is a bigger focus on the components of the home that consume energy, such as pools, spa pumps, lighting and hot water systems. It expands the reach of the rating from building shell to items that are wired in such as space conditioning and photo voltaics on the roof.

So how’s this new mandatory agenda playing out in discussions?

“It’s a bit of a red rag to a bull in the policy process,” he says. 

And yet and yet… Harrington can see good momentum at the state and definitely the local government levels, certainly not the Feds. 

And he thinks the development community is these days pretty well exposed to this kind of thinking. “It’s very common for developers to think of preserving trees.”

It’s also pretty used to stronger sustainability demands included in LEPs (Local Environment Plans) created by councils, especially in big collaborative groups that have emerged in Victoria that call for “above code requirements”, especially in terms of tree over and access to transport and so on, he says.

The rights of these councils to mandate certain planning outcomes has been challenged in the Victorian Civil Administration Tribunal which found in favour of the councils, Harrington says. 

Easier to mandate in commercial than resi

In the commercial sphere Steven Hennessy of WT Consultancy says it might be significantly easier to mandate stronger sustainability outcomes for commercial property than for residential because of the optics when polling time comes around. 

Commercial property owners are smaller in number and not as sensitive to anything that adds cost as consumers in the residential markets. 

But in any case there’s been big advances over the years. He points to the Green Building Council that’s created its own shifts. Green Star now precludes gas in new buildings and Hennessy says it’s created a market where “no self respecting developer is going to ignore that because in years to come the market will look on them poorly”.

“No-one mandated that but it’s happening anyway. Also, it’s very easy to say the government’s doing nothing but actually our state governments are doing pretty well and they’re getting on with it despite what’s happening in that regard, and that’s on both sides of politics.

“So I’m a bit positive.” 

He also says he’s got three clients right now who say they want to plan for replacements of their chillers to be electric, when the time comes.

And there’s the effective mandates at the broad business level from insurers and big investors who are demanding better climate and sustainability performance in order to attract their funds. 

Which are voluntary but not.