Peter Verwer |
Monday, 1 March 2010 9:07 AM |
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Which policy do you think delivers the biggest planet-saving dividend?
Option one is a tax incentive that encourages property owners to refurbish early and refurbish green.
It’s a simple plan – upgrade to improve your building’s energy performance by 60-80 percent and write off the capital cost two to three times faster.
We call this ‘green depreciation’.
Clearly, there need to be safeguards to ensure green promises are delivered, which could sit neatly within Australia’s existing tax assessment and audit system.
The alternative has already been introduced as a bill in the Senate by The Greens.
Here’s how the legislation works:
- Pick a city or region based on some yet-to-be-determined criteria.
- For every building in this market, record and submit the average carbon footprint per sqm pa for the base building. Pay a penalty for not doing this properly or for getting it wrong.
- Get a bureaucrat to pick the average carbon footprint per market, taking no account of operating hours, tenant mix, building orientation, plant type, or even climate change.
- Call every building below this purely statistical average a ‘green building’ and every building above the average a ‘brown building’.
- Issue all building owners with a permit to emit carbon up to the statistical average.
- Force all ‘brown building’ owners to buy their additional permits from all ‘green building’ owners.
- Where there are no permits left in the system for whatever reason, ‘brown building’ owners will pay a fine to the Federal Government.
In other words, the scheme before the Senate is a huge churning tax and transfer system covering hundreds of thousands of buildings.
For those who believe they have plenty of ‘green buildings’ and will win from this system, it’s bad news.
For starters, it’s a dead certainty there won’t be enough permits in the system, even in year one.
Plus, the definition of ’green building’ gets tougher every year. To use the exact words of the scheme’s original proponents, the green/brown dividing benchmark will decline on an ‘aggressive trajectory’.
So here’s the rub, inevitably and soon after the system commences, there will be precious few permits to buy. And so, more and more revenue will simply flow to the Government.
By the way, the legislation does not direct any of the fines paid by building owners back to the property sector.
In other words, this scheme is simply another property tax, just another reporting system (on top of NGERS, EEO and mandatory disclosure), it’s just more regulation on top of increased building codes and two dozen new energy efficiency programs launched under the National Strategy for Energy Efficiency.
The system is not only enormously complex, it also:
- Fails to weigh up costs versus benefits – it doesn’t even bother to predict how much carbon will be saved
- Fails to optimise existing regulation – one of the merits hailed by its proponents
- Clashes with and undermines the emissions trading scheme, ironically making it easier for carbon generators to meet their emissions trading caps
- Is utterly inequitable, as it makes owners responsible for energy loads and emissions caused by building occupants, over which they have no control, and fails to recognise why buildings perform in different ways
- Totally ignores simpler, more efficient alternatives.
Some will want to bag the Property Council’s green credentials simply because we oppose poorly conceived legislation.
Our track record tells another story: we launched the world’s first building energy efficiency benchmark, helped develop and supported ABGR/NABERS, BASIX and Green Star, not to mention dozens of self regulation and leadership schemes.
The Property Council’s alternative to this new tax is:
- Accelerated depreciation tied to stringent environmental performance measures
- A nationally integrated voluntary energy efficiency certification scheme
- A nation-wide building tune-up program
- Smart regulation via building and planning codes (that pass cost-benefit tests)
- Green precinct and other incentive programs.
These add up to a radical approach rather than another tax hanging off 29 pages of legislated penalties and compliance rules – especially as accelerated depreciation has been modelled to take the equivalent of 6.4 million cars off the road every year, with no long-term cost to the tax payer.
The cruellest cut is the claim that the property industry won’t change unless it’s beaten with a stick while being poked in the eye with a carrot.
All the evidence shows that the emissions intensity of buildings has improved pretty much constantly since the second oil crisis of the late 1970s.
The Property Council wants to rapidly speed up improvements in building energy efficiency. A tax that eats its own incentives is the worst way to achieve this goal.
Peter Verwer |
Monday, 1 March 2010 9:07 AM |
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