Steve Irons (Swan, Liberal Party) Share this | Hansard source

I rise to speak on the Building Energy Efficiency Disclosure Amendment Bill 2014 in the second reading debate. I quote:

Australia’s productivity is being choked by red tape, with the combined cost of administering and complying with public and private sector bureaucracy costing the nation $250 billion every year.

These are the words of Chris Richardson, the co-author of Deloitte Access Economics' latest report Get out of your own way: unleashing productivity, which was released in October. They are words that clearly depict the reality for productivity and profit margins that Australian business, industry and government is currently facing. It is also the reality that we need to work together now to stop in its tracks if we want to return our country to the level of prosperity that every Australian enjoyed a decade ago under the Howard government.

The report highlights exactly what this government has been saying for the past seven years: unnecessary regulation is a burden on government and it is a burden on industry. It is a burden which is costing this country's productivity margins every day it exists. Yet, it is a burden which the Labor Party insisted on increasing day in and day out for the six long years they were in government. It is a burden that, as this report states, the private sector is also imposing on themselves, through $155 billion in annual costs to administer and comply with their own rules.

We talk about doing it tough in the global economic environment we are currently living in, but this report has showcased the level of hindrance we are also causing to ourselves. It is a hindrance that is costing industry both time and money. That is because instead of employees spending their time working to boost productivity, they are filling in what is often unnecessary and duplicative administrative paperwork. They are also doing this without taking the time to weigh up whether the internal rules and regulations they are abiding by are actually providing a benefit to the company or in fact achieving their objective.

As the Deloitte report stated:

… not all compliance is bad and much of it is necessary. The issue is that many of the rules that are put in place either overcompensate or carry a heavy burden that is not justified on a risk/reward basis.

This is evident when you look at the breakdown of the private sector's regulatory burden, with $21 billion of this total $155 billion in costs being spent on developing and administering compliance rules, while a massive $134 billion is being spent purely on compliance costs. I think members on this side of the House would agree that the coalition government is doing its part to reduce this regulatory burden; but for these measures to be effective, industry must also do theirs.

The Building Energy Efficiency Disclosure Amendment Bill 2014 is one of many repeal bills the coalition government has introduced into this place to reduce the impact of regulation across Australia as part of our commitment to cut $1 billion in red and green tape each year. That is because on this side of the chamber there are people with experience who understand businesses. They understand the economy and they understand that where money and time is wasted it costs Australia's economy as a whole. That whole is $2.1 billion.

This is definitely not a small number, but I am pleased to inform the House that it is the amount of unnecessary compliance costs that will now be saved in red and green tape as a result of legislation introduced by the coalition last month on our spring repeal day and in March as part of this parliament's first ever, and I must say unprecedented, autumn repeal day. It is also a number that I am pleased to advise the House is more than double our original commitment, because that is how much unnecessary regulation is currently choking industry and choking our government departments' ability to work efficiently and effectively.

The coalition government is trying to ease this regulatory burden and we are achieving our goal by working to open up our markets to new businesses and to boost productivity levels across existing industries. The coalition's commitment is not just evidenced by this $2.1 billion in compliance savings but also through our overall policy agenda to work hand-in-hand with business rather than in opposition, as seen under the former government. That is because at the end of the day our goal is the same: to drive profit for business, which in turn will boost our national economy.

The government's recently announced free-trade agreements with some of our largest global export and import markets, including Japan, Korea and most recently with our largest trading partner China will play another key role in boosting our economy, creating jobs and driving higher living standards for Australians. That is because the coalition is a government that recognises that, without business productivity, this nation as a whole will fall flat. We are a government that takes the time to listen to industry and takes note of their needs.

With that in mind, I am pleased that the Building Energy Efficiency Disclosure Amendment Bill is this government's direct response to industry stakeholders' calls for regulatory burdens to be removed and administrative processes to be streamlined for building owners and lessees when applying for a Building Energy Efficiency Certificate under the provisions of the Building Energy Efficiency Disclosure Act 2010. The original intent of the legislation was to improve the energy efficiency of Australia's buildings, while also helping buyers and tenants to make informed decisions about efficiencies when entering into an agreement. It is legislation, I am pleased to say, that had bipartisan and stakeholder support at the time of its implementation and it continues to have that same support today. As we heard from the member for Perth, the opposition are supporting the bill.

The Commercial Building Disclosure—CBD—scheme mandates that energy efficiency ratings of commercial buildings or an area of a commercial building which is more than 2,000 square metres and is used for administrative, clerical, professional or similar information-based activities be publicly available. It also creates a requirement that these buildings must have a current Building Energy Efficiency Certificate before their commercial space can be offered for lease or sale, with the certificate being valid for up to 12 months. Currently, for a Building Energy Efficiency Certificate to be issued the following information must be determined by an accredited assessor. A National Australian Built Environment Ratings System, more commonly known as NABERS, energy star rating for the building needs to be assessed. For those members who are not aware, NABERS is Australia's national rating system which measures the environmental impact or operation of a building, and it does this by assessing its energy efficiency, water usage, waste management and the indoor environmental quality of a building or tenancy and its corresponding impact on the environment. A star rating between one and six is then given to the building, with one star indicating poor energy performance and six stars being regarded by industry as market-leading performance. For a certificate to be issued, an assessment of the energy efficiency of tenancy lighting in the area of that building that is being sold or leased must also be undertaken. With lighting accounting for over 30 per cent of all energy used in commercial buildings, this is important information for prospective tenants, as their future energy bills could be significantly reduced by leasing a property that has a higher performing energy efficiency. Lastly, for a certificate to be issued, the owner or sublessee must provide general energy efficiency guidance information to any prospective owner or tenant.

As I am sure members can see, this is all important information when trying to determine the best value for money in the property market, particularly when identifying the impact of a low versus high energy efficiency rated building on their bills, while also helping to accelerate energy efficiency in some of Australia's largest administrative buildings. For those members who are not aware of the potential impact of a building's low versus high energy efficiency, I will clarify what this means. If a building has a high energy efficiency rating, it would therefore be expected that the business owner's or tenant's corresponding energy bill would be lower than those buildings with poor energy efficiency. This would create savings in the long term, while a higher energy efficiency would also ensure that the building's environmental impact is lower than that of a building which has poor energy efficiency. As identified in an analysis by the Department of Industry, which looked at the investment performance of high versus low NABERS energy-rated office assets from September 2008 to September 2013, higher NABERS energy-rated offices consistently outperformed low energy offices. In September 2013, this saw an annualised return of 9.8 per cent, comprising a 7.3 per cent income return and a 2.3 per cent capital growth.

As I am sure members would realise, buildings across Australia which require a certificate are more commonly found in CBD areas due to the prevalence of large tower buildings. In Swan, there are, however, five buildings which have been issued a Building Energy Efficiency Certificate, which, as it happens, includes the office building where my electorate office is based in Victoria Park. I am pleased to advise the House that I selected my office well. It has an energy efficiency rating which is higher than all other Swan buildings, with 4.5 stars. Although members in this place expressed bipartisan support for this scheme when it was first introduced and have done so since that time, that does not mean its processes cannot be better streamlined and reviews should not be undertaken.

As I said earlier, a big part of reducing unnecessary regulation and compliance costs is to look back at the policies this place has implemented and to find ways to improve them rather than taking the 'if it isn't broke don't fix it' approach, which could potentially cost government and industry billions of dollars in the long run, as identified during this government's Autumn and Spring repeal days. The amendments proposed in the bill before the House are expected to deliver improved administration to the CBD scheme while also ensuring that additional regulatory burdens that hinder industry are removed, creating an annual predicted saving of $600,000 million in compliance costs. As I mentioned earlier, commercial office buildings or an area of an office building which is more than 2,000 square metres are required to have an up-to-date Building Energy Efficiency Certificate.

Although the CBD scheme when issuing these certificates is overall working well, stakeholders have identified a number of issues with the scheme when applying its rules and regulations in practice. The bill directly responds to these concerns by making a number of amendments to better streamline its protocols. One key amendment that will be made is the introduction of an exemption for building owners or tenants to provide an energy efficiency assessment when an offer to buy or lease that commercial property is unsolicited. Currently, the owner of a building would be required to have a Building Energy Efficiency Certificate in place before they could respond to any unsolicited or uninvited requests to sell or lease that building or an area of the building. By making this important amendment on behalf of industry, the coalition will create an estimated saving of $300,000 for businesses by removing this onerous regulatory burden. A second key amendment to the scheme also proposed in the bill will allow transactions between wholly-owned subsidiaries to be excluded from disclosure obligations. Again, this amendment will lead to another $300,000 regulatory burden reduction. Thirdly, as I mentioned earlier, a certificate is issued for a maximum of 12 months and, under the scheme's current provisions, this certificate must commence on the date of issue. According to stakeholders, this is impractical for those building owners and tenants who want to exercise due diligence in maintaining or improving their energy efficiency standards. The coalition has listened to these concerns, with a third proposed amendment allowing the commencement date for a certificate to be later than the date of issue.

Another provision that is currently required for a certificate to be issued is for standard energy efficiency guidance text to be provided to a prospective building owner or tenant. The coalition again believes this is an additional regulatory burden on industry, which could be better streamlined by instead having this information provided online in a live, interactive format.

As I mentioned earlier, although the general requirement is for commercial office space that has an area of more than 2,000 square metres to have a Building Energy Efficiency Certificate, there are exceptions and exemptions to this rule. Under the scheme, newly constructed buildings, which are those under two years old, and strata title buildings are automatically exempt from the scheme. There are also a number of exemptions to the scheme's requirements which are determined on a case-by-case basis. Such exemptions include the building being used for police or security operations, if it is not possible to assign a NABERS energy rating to the building, or for vacant buildings.

In the case of exceptions to the scheme, you do not have to apply to obtain one; however, a building owner or tenant may be required to substantiate why they should be considered an exception under the scheme. Typically, exceptions can relate to the type of building, such as new buildings where a certificate of occupancy has not yet been issued, or for buildings which have completed a major refurbishment for which a certificate of occupancy was issued less than two years earlier. They can also relate to the type of transaction.

Under the scheme's current provisions, new owners and lessors are required to reapply for an exemption and possibly pay a fee even if a valid exemption is in place. Under this bill's proposed amendments, this requirement will, however, be removed to get rid of this unnecessary and costly burden on industry.

While it is important that these amendments are passed in this place to assist industry and respond to their calls for reform of the scheme, I also highlight that the Minister for Industry has commissioned an independent review of the CBD program following a direct request from the Prime Minister. This independent review is currently underway by ACIL Allen Consulting and will report to the minister by March 2015. I look forward to reviewing this report, which I am sure will give all members a greater sense of whether the scheme is continuing to meet its objectives, the scheme's level of effectiveness, and other areas where reform may be needed.

On behalf of the stakeholders who these amendments will benefit, I commend this bill to the House.

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