A student studying property has asked me a question and the question and answers are below:

“I would appreciate if you could give me your thoughts on  the following:

1) Do you think “Green” Design and Development in residential properties  is supported and progressive in Australia.

There is some support by governments.

But when you add up the positives and negatives, no, Australia’s local, state and regional governments do not support sustainable residential development because those governments do not:

1.    Give rate rebates to private developers who design their projects to achieve savings to depreciation of, or investment in, public infrastructure eg stormwater, transmission lines, electricity substations.  For example, a residential house may be forced to pay a ‘stormwater levy’ by a council as part of a council-wide levy to raise money for works to reduce stormwater pollution but the house may be so designed that no stormwater leaves the site at all; thus, the private house owner has spent money – perhaps thousands of dollars on a rain tank and on site sewage system –  that confers a public benefit by stopping water running off from the site, but still be forced to pay to clean up the pollution caused by others.

2.    No incentives for developers of multi lot or unit residential projects, only for residents who are the owners of the buildings eg units which might otherwise have solar panels more cost effectively installed in them only attract subsidies for the owners and at that later stage the body corporate approval is required and that’s a very cumbersome and often fruitless process

3.    No fast tracking of sustainable development ahead of unsustainable development for either owners of individual projects or developers of multi-lot residential projects

4.    Government owned businesses exploit their market power and the legislation they have enacted to protect their businesses to prevent energy and water efficiency eg they may require a sub station on land (typically without compensation to the land owner) which really provides additional power for other projects not for the sustainable project; eg they may require car parking when the owner or mulit lot developer does not wish to provided it and prefers to use a car share scheme and may even wish to contribute to the cost of providing the car share car at the riskier set up phase but the council will refuse to allocate a dedicated car space for the car – note: a car share car typically replaces 6 to 9 privately owned cars

5.    No minimum professional educational requirement for real estate agents or valuers by which they would be skilled up to sell, buy and value sustainable projects; the consequence is that most of these key players know very little about market values for sustainable property

6.    No data is freely published on actual costs, comparative efficiencies and actual savings achieved in living costs with solar hot water or solar panels, on site sewage.  In the absence of costs data it’s difficult for the novice home builder or renovator to know how best to buy and install sustainable infrastructure.  For example, a home owner may agonise over which type of solar panel to buy when that’s probably the least important question.  The key question, I think is:  will the folk who install my solar system be around in five years to honour any warranties and guarantees?  Will the system be built competently so it in fact delivers the promised amount of solar electricity? Most residential owners do not think to make final payment conditional upon the system delivering the promised amount of solar electricity.

7.    Very restrictive and costly rules about the use and operation of on site sewage systems which can add up to 50% of the capital and operating costs; these rules are perhaps the least justifiable and most poorly founded of all the rules affecting sustainable infrastructure for both residential and commercial projects.

8.    No reduction in fixed charges in most of Australia for energy and water efficient projects, including on site sewage, where those systems either do not use the government owned monopoly water or energy service provider or the privately owned provider.  Thus, a home owner may not use and water or sewage system provided by a local council or a government monopoly service provider but still be obliged to pay fixed charges for those unwanted services.  By comparison, if I choose not to use Telstra for my phone then I don’t have to pay Telstra even if their line is outside my house.

9.    Unnecessarily complex and technical rules compel the private owner to use consultants to obtain approvals and those costs can increase the approval time and costs by many thousands of dollars.

2) How does the economy effect this ?

The impacts above are caused by governments.  They are avoidable.  The impacts typically make sustainable development more expensive and time-consuming than private development.  Thus, there is always a bias in the market place towards unsustainable development no matter the prevailing economic conditions and this bias is exacerbated in times of financial uncertainty.  If it cost the same to go sustainable as to go unsustainable then sustainable development would become the norm even in difficult financial times, and perhaps more so due to the savings in living costs for water and energy.

There is almost no requirement for governments to account for the costs to citizens of compliance with their regulations.

3) Why is the issue important in the context of property?

The are two key issues here.

One is that those who know most about the higher costs to citizens and property owners caused by complex and unnecessarily technical red tape – consultants and experts – have the least incentive to actively campaign to persuade governments to reduce the levels of red tape and costs they generate.  A consequence of simpler rules would be a drop in their consulting income.  And it’s often not clear to the individual, once-off residential developer what is going on and they have no ready champion to look to to simplify things.  Individual property owners do not have the industry-wide lobbyists that multi-lot property developers do.  And the property industry finds it difficult to lobby for change due to the absence of data about costs for private residential developers compared to costs they incur.

The other is that governments may make red tape without being forced to achieve a level of simplicity, affordability and accountability for the impacts of the red tape except for the cost of the red tape to government.  Nor are governments required to independently audit the outcomes of their ‘sustainability’ rules.  Thus, the amount of energy used in homes in NSW and Victoria has risen despite the government rules which were promised as a way of cutting energy use (BASIX and First Rate).  It was a study carried out by the Alternative Technology Association which demonstrated this outcome, not a study carried out by the state governments or some independent auditor.  Thus, there is now an established tradition of local, state and federal governments making rules about sustainability and promising savings in energy and water use but not, at the same time they make those laws, obliging the agencies administering them to submit to independent scrutiny of the effectiveness of the laws. Examples that come to mind include the insulation scandal at federal level but that story is repeated at all levels of government and persists in the absence of auditing.”

The truth is a many-layered onion, don’t you think?

Michael