Home Page Opinion

Dumb blonde can jump puddles to sweet spot

Peter Verwer — Tue, 31 Jan 2012 22:54:00 GMT

Australia has been tagged the “dumb blonde” of the world. It’s attractive, but shallow – a kind of Pacific Paris Hilton, “living every day as if it’s your birthday” from inherited, unearned resource riches.

More sober commentators, such as Stephen Hartcher in The Sweet Spot, attribute Australia’s prosperity to “deliberate acts of nation building”.

Hartcher says it’s not the resources boom – which in 2011 added a handy but not overwhelming 13 percent to national income – or China that kept Australia from recession.

Instead, he points to the ambitious re-booting policy reforms of the 1980s and 90s – tearing down tariff walls, floating the dollar, independent monetary policy, compulsory superannuation, competition and deregulation programs, along with more flexible labour markets.

These gutsy reforms progressively annealed a brittle national economy and supercharged productivity in the process.
Unfortunately, the dividend from the 80s and 90s reforms is dwindling, which is why Australia’s now sagging productivity levels are back in the news.

Growth in Australia’s multi-factor productivity (the one that accounts for both labour and capital) has slumped drastically since the turn of the century and has been negative for the past three years.

Nobel laureate Paul Krugman has declared, “productivity isn’t everything, but in the long run it is almost everything”.

This is particularly the case for countries (including Australia) that are moving into demographic sour spots caused by the high cost of servicing ageing populations with high expectations.

The classic remedies to declining productivity are:

Skills and training programs
A competition policy repecharge, focusing on taxis, newsagents, pharmacies
Labour market flexibility that better balances John Howard’s Work Choices and Julia Gillard’s Fair Work legislation
More infrastructure investment into transport, ports, energy, etc
And, from business groups, tax reform.

The missing element is urban policy. We need to better understand that cities and productivity are indivisible.

Well designed and managed cities can help Australia grow faster while maintaining a low rate of inflation.

A cities-based productivity agenda can help repeat the double bounty of the 80s and 90s reforms – increasing real wages within a framework of falling unit labour costs and higher capital returns within a less volatile marketplace.

Many Asian countries are employing the urban accelerator as a premeditated public policy lever to fast-track economic power and mass prosperity.

It’s why the current Asian renaissance is so tellingly a story of stunningly swift urbanisation – an Adelaide every six days.
So, where is Australia’s urban productivity agenda?

In truth, we’ve journeyed to the Everest base camp of cities policy on several occasions.

Up go the tents and prayer flags. Out come the discussion papers, pilot programs and multilateral forums.

And yet, in no time we’re retreating down the valley to cosier, more comfortable lotus-eating flat lands.

The modest result is all too often the “bridges over puddles and roads to nowhere” derided by Infrastructure Australia chairman, Rod Eddington.

It’s ironic that a country that beat the rest of the world to so many big picture policy reforms in the 80s has been so spineless on cities.

The double irony is that Australia is intensely urban. More than 80 percent of GDP is generated in cities and the immigration growth that fuels urban progress accounts for “four out of 10 dollars in growth in Australian national income in the last generation”, according to Hartcher.

Here’s the irony trifecta. The current generation of pollies are on the nose because people feel poor. They don’t see the comparative GDP stats. They feel the congestion, the child care and hospital waiting lists, the housing affordability squeeze, the scarcity of retirement and aged care facilities.

People don’t believe politicians care about these issues – issues that are fundamentally about the way we design and manage liveable, competitive and productive cities.

Cities are the Achilles heel of risk averse, focus group-driven policy-makers.

The community is so fed up it can be mobilised to demand action.

Next month, we’ll outline the Property Council’s social media campaign to do so in 2012.

Humans are now an urban species.

For the first time in history, more than half the planet makes its home in cities – by 2030, two thirds of us will.

That’s because cities furnish humans with monumental evolutionary advantages.

Economists talk of ‘agglomeration’, which is about more efficiently sharing markets, labour, services and infrastructure to stimulate economic value-adding multipliers. The disciples of ‘new economic geography’ throw in the connectivity of knowledge workers and incubators of innovation to explain urban advantage.

The more poetic talk about “crucibles of creativity”.

New vibe for a more livable castle

Peter Verwer — Wed, 30 Nov 2011 23:05:00 GMT

The Kerrigan family’s Castle, “filled with love as well as pride”, is slated for a makeover.

Australians are forecast to spend more than $570 billion on new homes over the next decade, adding to existing stock of around $3.75 trillion. On current trends, a remarkable $520 billion will also be spent on alterations and additions.

The dream home of everyday Australians has transformed mightily over the past generation. Home providers and builders are delivering more housing choice to meet changing lifestyles. Smaller, more versatile homes are a now feature of many communities.

Smarter design thinking and new building technologies are also transforming the traditional detached house.

Many home providers are including greener, lower energy, more water efficient features in homes. Although it’s a way off in terms of affordability, several larger property companies are successfully experimenting with carbon neutral residences.

Clearly, the property and construction industry is responding to the changing needs and lifestyle demands of Australians.

Profound social trends will continue to reshape the design of homes. As Australians age they’ll require dwellings that enhance mobility. The number of Australians with disability will inevitably rise as the population grows and ages.

One in five Australians currently have a disability of some type – about 320,000 are kids. And plenty of us are temporarily incapacitated at some point during our lives, mainly from sporting injuries.

The family home also accounts for 62 percent of all falls and slip-based injuries.

Given the overwhelming preference to age in place – in a familiar environment close to friends and relatives – more and more homes will need to be designed and built with ease of access as a core feature.

Accessible homes will also help older and injured Australians better connect with spirit-lifting support networks.

US research reveals a 60 percent chance that a new house will be occupied by someone with a disability at some point.
This person is more likely than not to be someone you know – a parent, child, sibling or friend.

In short, well designed homes that incorporate ease of access design features are equally important to pregnant mums, young families with kids, weekend sporting heroes and senior Australians.

More versatile homes can also reduce skyrocketing community health costs. According to research group AHURI, reduced hospital stays, government subsidies for home modifications and in-home assistance could save taxpayers up to $273 million annually.

Consequently, homes designed for livability can buttress a more affordable health care system.

These challenges and opportunities are being met by the newly minted Livable Housing Australia (LHA). [see break-out box below].

LHA is a catalyst organisation that champions livable housing design, which means designing Australian homes to meet the changing needs of occupants across their lifetime.

A broad assembly of stakeholders have already developed voluntary silver, gold and platinum specs for houses that will help make homes easier to enter, navigate and occupy, as well as more cost-effective to adapt.

LHA’s goal is to achieve 100 percent silver ratings for all new homes by 2020, with significant milestones to be achieved before this deadline.

The proposed livability features are overwhelmingly inexpensive. The trick is to include these features at the home design stage, as international research indicates it’s 22 times more efficient to design the house for change than retrofit it when an unplanned necessity arises.

As Kirribilli Dialogue member, Cynthia Banham, remarks from personal experience: “You never plan for a life-changing injury… it’s something you just hope never happens.”

Whether it’s the 25 percent of Australians who will soon enough hit the post-60 mark, people with disability, wounded weekend warriors, families or pregnant mums, smart livable design is an investment in community resilience.

As Darryl Kerrigan might have noted, “ … it’s the new serenity”.

What Is Livable Housing Australia?

LHA is a partnership between community groups, government and industry. Its patron is Therese Rein.
LHA arose from the Kirribilli Dialogue on Universal Housing Design, led by Minister Bill Shorten MP and Parliamentary Secretary, Senator Jan McLucas in 2010.

LHA will:

Promote voluntary guidelines on livable housing design
Accredit home designs based on a silver, gold or platinum attainment
Increase community awareness of livable housing design features and benefits
Work with community, professional and trade groups to transform industry practices
Provide advice on integrated public policy solutions and incentives.

LHA draws on the tremendous collaborative work of the Kirribilli Dialogue members, which included:

Community groups – individuals with disability, as well as representatives from the disability and aged care sector, including the National People with Disabilities and Carers Council, Disability Council of NSW and the Council on the Ageing.
Industry – the MBA, HIA, Australian Institute of Architects and the Property Council (including several large members)
Government – Federal and state government departments and agencies, including Human Rights and Opportunities Commission (HREOC), the Department of Families, Housing, Community Services and Indigenous Affairs (FaHCSIA) and the Victorian Building Commission.

The LHA is currently in set-up mode led by newly appointed executive director, Amelia Starr, and will officially launch in early 2012.

For more information on LHA’s livable housing guidelines and objectives prior to the release of the LHA’s own website, please check out www.propertyoz.com.au/livablehousing

Finding common ground

Peter Verwer — Mon, 31 Oct 2011 22:31:00 GMT

The tax forum (aka summit) was a dud. Or at least that was the script written for it by the schadenfruedinistas in the media.

The summit was the unloved child foisted on Julia Gillard by Rob Oakeshott as a condition for supporting a Labor minority government.

And yet, the meeting between governments, business, academics and community groups proved a passable success, often for unlikely reasons.

Admittedly, there was some set-piece tetchiness from several state treasurers and between the unions and employers However, the summit yielded two positive outcomes.

First, there was universal agreement that state business tax reform was critical to improving Australia’s long-term competitiveness.

The Business Coalition for Tax Reform, which includes the Property Council, submitted a report by the Allen Consulting Group that showed how state tax reform could improve GDP, investment and social welfare.

We called for a high-level implementation body, chaired by an independent, eminent Australian, to craft a long-term reform program.

We said such a program should deliver an action plan for:

Tax maintenance that would fix the inefficient hydra-headed business taxes of the eight jurisdictions, starting with payroll and land tax, stamp duties, developer charges and fire services levies

Longer-term strategic reform – a blueprint for transitioning to a small set of efficient broad-base, low-rate taxes that improve competiveness.

Federal Treasurer Wayne Swan gave us a twin-track process.

Two state Treasurers, Mike Baird from NSW and Andrew Fraser from Queensland, will devise a plan to reform the administration of state taxes, starting with the harmonisation of payroll and land taxes. This is promised for next year.

The Property Council will push hard for redesigned property taxes, centralised (electronic) assessment and revenue collection processes along with the removal of aggregation.

In addition, former Premiers Nick Greiner and John Brumby will investigate more strategic reform after they complete their current gig – devising a smarter method for carving up and distributing GST revenue.

The Property Council will press for an ironclad agreement (and timetable) to replace outmoded legacy taxes with broad-based approaches. This will include a serious discussion about the future of the GST.

Another important summit outcome was the appointment of Chris Jordan to prepare a plan to lower the company tax rate and improve corporate tax rules, such as carried forward losses. This is due in early 2012, with a discussion paper released by year end.

The Government also canvassed a new approach to tax lawmaking.

Assistant Treasurer Bill Shorten flagged a proposal to embed future tax legislation with clear objectives and issue draft tax rulings in tandem with black letter law.

Such a move would overcome the massive reliance currently placed on the explanatory memorandum that accompanies legislation – and which is often the only bit of new laws that is coherent.

The summit’s second dividend was the emergence of a powerful dialogue between business and social justice groups.

To the surprise of many, we found plenty of common ground in our discussions.

That’s because the risks of low productivity, low savings and stagnant participation rates in an ageing Australia are stark.

The not-so-genteel decline of many OECD countries provides bleak examples of nations that fudge the big policy issues.

Several business leaders have signalled the case for more summits to forge a persuasive consensus for action.

If governments won’t come to the party, we should go it alone. In a world of more tremulous politicians, prone to the waverings of focus group patter and an incessant 24-hour media cycle, a cross business-community group mandate will be needed to ignite serious reform.

Such a mandate can only be shaped on the back of closer dialogue and a common fact base.

How will the carbon price impact on your business?

The Property Council and the Allen Consulting Group (ACG) have developed a calculator that helps you estimate the impact of the carbon price on your business.

Check out www.propertyoz.com.au/carbon for this handy tool, which calculates the pre- and post-carbon price impacts on new developments and operating costs.

The accompanying report also provides tips on preparing for the new carbon price regime, which commences on July 1 next year.

ACG estimates building costs will rise by 1.4 to 1.7 percent, with operating costs to rise an average 1.8 percent.

The Property Council is working closely with the Federal Government to ensure the compensation provided to major product suppliers and energy generators flows directly to their customers in the property industry.

We are also negotiating transition provisions for members with fixed-price contracts, particularly gross leases.

Please see the Property Council’s micro site for more details.

Talkin’ ‘bout cogeneration

Peter Verwer — Fri, 30 Sep 2011 23:36:00 GMT

Imagine green grids of buildings and precincts that power themselves … renewably.

At first, these green grids will complement the traditional, centralised coal-fired brown grid. In time, they will evolve into localised, self-sufficient clean energy power stations.

Co- and tri-generation technologies offer a critical step toward this goal.

The Property Council, in league with ClimateWorks and Seed Advisory, have released a report – Unlocking the Barriers to Cogeneration – that identifies the benefits of tested cogeneration technology.

The report also explores barriers to wider take-up, based on the hard evidence of multiple case studies.

Finally, the report offers an action plan for realising green grid dividends.

Unlocking the Barriers to Cogeneration shows this readily available technology is 80 percent more energy efficient than conventional energy sources – it also yields 60 percent less carbon emissions.

The CSIRO has previously reported that green grid technologies can abate up to 18 megatons of carbon emissions by 2020 and 40 megatons by 2030.

They found the cost savings of these technologies could be $130 billion (in today’s dollars) by 2050.

In addition, the Prime Minister’s Task Group on Energy Efficiency identifies these precinct-based technologies as critical complements to a carbon price.

As the Federal Government’s proposed carbon price scheme currently relies on the purchase of billions of dollars of offshore carbon credits to meet its emissions reduction targets, it makes more sense to invest in proven technologies, such as cogeneration plants, in Australia.

The main barriers to mainstream adoption of cogeneration are:

An inefficient connection process that is costly and time-consuming, due to outmoded case-by-case assessments characterised by unclear rules and standards
The absence of clear guidelines about the roles and responsibilities of distribution network service providers
A bias against multi-site, precinct-level cogeneration plant and systems.

At present, property owners who wish to install and share the benefits of cogeneration are hugely frustrated by approval processes and regulatory regimes that block them at every turn.

Unlocking the Barriers to Cogeneration proposes a suite of practical solutions to these problems, including:

A national, standardised connection process
Automatic connection rights
Practical, district-level licensing frameworks.

In addition, the Property Council calls for rational feed-in tariffs.

Such tariffs reimburse building owners for the increasingly renewable energy they feed back to the brown grid.

Overseas experience shows that feed-in schemes increase the use of renewable energy, reduce greenhouse gas emissions and relieve pressure on the traditional electricity grid. They can also create green jobs and increase public awareness of green technology.

It’s important to set tariffs at the right rate.

Too low and there’s not enough incentive for owners to install and share renewable energy.

Too high and the scheme can become expensive for government.

It’s also important that feed-in schemes are big enough in scope, which is why they should include both domestic households and all commercial property types.

Feed-in schemes must also run long enough to provide property owners with the confidence that they’ll receive a return on their investment.

Finally, feed-in schemes should be flexible enough to accommodate tested and emerging technologies in addition to cogeneration.

The Property Council is actively advocating the massive benefits of moving to a green grid approach and fostering the widespread adoption of cogeneration technologies in particular. We’re:

Working with stakeholders to advocate sensible reforms to Australia’s national energy markets
Submitting our views on connection charge guidelines to the Australian Energy Regulator
Developing a toolkit for developers and property owners that will guide them through current and emerging regulatory processes
Drafting a standard connection manual and cogeneration technical guide, in close cooperation with industry participants, including energy providers.

Cogen and trigen in 60 seconds

Cogeneration is the simultaneous production of electricity and heat from the same fuel source.

Trigeneration adds cooling to the mix.

These systems are typically fuelled by gas and, increasingly, by renewables.

Generating multiple forms of energy from a single fuel source can be highly efficient.

Conventional power plants convert raw materials (such as coal) into customer-ready energy at less than half the efficiency of co/trigen systems. Even more energy is lost in transmitting electricity over long distances from power stations to customers.

Co/trigeneration occurs in the vicinity of the energy user – a huge efficiency advantage.
Plus, the thermal efficiency of co/trigen reduces CO2e emissions – a double efficiency dividend.

Given the billions of dollars required to expand and maintain the traditional brown grid, which inevitably translates into higher energy bills, co/trigen can also alleviate the financial burden of households and businesses.

Finally, an effective grid of self-sufficient, local power generators can also improve the resilience of Australia’s critical energy infrastructure.

Why won’t they listen (for their own good)?

Peter Verwer — Thu, 01 Sep 2011 00:02:00 GMT

FALLEN GOVERNMENTS SUBJECT themselves to a panoply of rituals.

After the sackcloth and rending of garments comes the obligatory documentary featuring former big beasts recounting great deeds, tales of ritual blood-letting (visited upon colleagues) and gilded phrases from their forthcoming memoirs.

Then comes the moment of truth: where did this political Titan go wrong, what struck them low, how could they have avoided the calamity and humiliation of their electoral sacking?

As the camera closes in for a tight shot to capture a molecule of celluloid honesty, our hero always utters the same response:

“I should have consulted more widely.”
“I could have listened more closely to people in the real world rather than public servants and the hot house of policy advisors.”
“I think we lost touch … blah, blah, bah”

It would be easy to condemn our pollies. And yet, they are overwhelmingly honest, diligent and hardworking.

OK, in rare cases they are venal, power hungry bullies – such as when asked why he raised property taxes, one state treasurer replied “because I can”. Another told us he would squeeze the property sector until the “pips squeaked”.

More often, they don’t want to risk looking weak as they’re locked into a course of action, or are simply overwhelmed by the sort of advice that would furrow the brow of your average taxi driver. Other times, pollies simply panic in the face of an unrelenting media cycle.

It’s common these days to complain about ‘career politicians’ with little feel for real world issues and circumstances. There’s some truth to this insight. However, the bigger problem is bureaucratic advisors who despise and distrust the private sector.

The policy world would be a better, more rounded place if every senior bureaucrat enjoyed a secondment to the private sector, or even a non-government community organisation, for at least 12 months before they entered the senior executive service.

The Property Council’s approach is always to provide solutions to problems, present the evidence, avoid overreaching or gilding the lily, and seek to resolve issues away from the glare of the media.

Nevertheless, in more than 20 years of advocacy, this lobbyist has rarely won the industry’s case on the back of a rational argument.

A telling anecdote is generally as powerful as a truckload of econometric analysis.

For instance, after years of submissions and inquiries, the liberalisation of trading hours in Queensland was secured when we presented the Premier with a map of greater Brisbane revealing the absurd patchwork of extended and restricted hours by suburb.

The truth is that politicians need both a good reason (the evidence) and a real reason (an emotional, political Gordion knot slicer) to bunk their advisors.

The most enduring feature of policy mismanagement is faux consultation.

Overwhelmingly, bureaucrats hate consultation. It exposes their dogmas to testing questions.

Not for them the rigors of the reporting season to which major companies are subjected each six months. At least politicians go to the people every few years.

Consultation exposes the weakest link of modern policymaking - staggeringly amateurish project management by bureaucrats.

Just last week, a government figure told the Property Council that we should acknowledge his department’s expertise on a matter, given they’d been working on it for years.

He didn’t twig to the reality that they’d made a meal of every aspect of the legislation.

Indeed, the fact that they’d ignored industry’s advice at every turn while aping mini-me legislative Frankensteins should have sounded alarm bells that rang louder than your typical AC/DC concert.

The recent extension of the NABERS rating system from five to six stars is another example of Clayton’s consultation.

This process was a textbook example of the fait accompli school of consultation that effectively crippled the logic and integrity of an industry-endorsed system for the sake of a quick ‘announceable’.

As we observed to the media, “six stars for intentions, no stars for collaboration”.

The latest example of Dr Suess policymaking is the so called ‘lighting tool’ that will accompany the NABERS base building rating required to comply with the mandatory disclosure regime for the leasing or sale of office buildings.

For starters, no sane person believes that a potential lessee or purchaser of buildings will be influenced by the lighting tool’s Nominal Lighting Power Density metric. Hello … ??

However, in the parallel universe of consultation that was established to test industry views, the relevant government department won’t even allow the members of its consultation panel to vote on whether the tool will meet the goals of the mandatory disclosure legislation – which we support!

To make matters worse, the department took 10 months to cobble together the rules for the tool, leaving industry only 10 weeks to comply.

The Government is also nonchalantly unconcerned that there are only a handful of approved assessors to rate hundreds of buildings before the 1 November start date for this wonky tool.

Ministers need to insist their bureaucrats professionalise policymaking and legislative efforts by moving to a new era of world class project management, or start rehearsing their lines for the inevitable documentary, which should be called “(insert name of government) – deja vu all over again”.

Lets run a ruler over Civic plan

Catherine Carter — Tue, 30 Aug 2011 05:00:00 GMT

The ACT Government has announced that it will soon invite organisations to register their interest in designing and building both the office block proposed for Gungahlin and the one proposed for Civic. (more)

Treasurer Andrew Barr made it clear in his media announcement that the government had originally decided that owning and constructing the building themselves was the way it wanted to go, but, after receiving strong submissions from the Property Council it, will now allow businesses to propose alternatives, through a market testing process.

The property industry has always supported moves to accommodate the ACT public service in better quality office accommodation, but there have been concerns about the delivery model which was originally proposed.

The ACT Government had forecast that the Civic project alone would cost $432 million. A project of that size is extremely significant and very expensive, as well as being the largest infrastructure project ever undertaken by the ACT Government. For these reasons alone it is appropriate that a high degree of scrutiny and independent analysis be undertaken to ensure taxpayers and the community receive significant benefit.

It is in fact highly unusual for governments, including the Commonwealth, to build, own and manage their own office buildings. This is also generally true for large banks, mining companies and other corporations. The reason for this is simple: it is not core business for governments and major companies, and experience has found that the property sector can deliver better, more efficient outcomes.

So, the Treasurer’s announcement reflects a sensible, pragmatic approach to the issue, provided the market testing process is open ended enough to enable proper evaluation of alternative solutions and innovative ideas, and that reasonable timeframes are allowed.

As Canberra is currently experiencing the highest commercial office vacancy rates of all the capital cities, at 13.4 per cent, there may be opportunities in the market for some owners to upgrade and retrofit existing buildings to meet ACT Government accommodation requirements as well.

No rent seeking by property sector

Catherine Carter — Tue, 09 Aug 2011 04:30:00 GMT

Those who have recently accused the property sector of ‘rent seeking’ are doing no more than creating a ‘straw man’. This accusation deserves further evaluation.

It’s easy to take a swipe at the property industry and those developers who may make a commercial return from investing in our city by providing office space and housing for the people of Canberra, and to try to make an ‘enemy’ out of the development sector.

But the accusation rests on a series of falsehoods.

Firstly, the property sector has never said or believed that government or the community owes it a living. Those in the property sector take their own risks, and take the rewards, or losses, as they come.

Secondly, the property sector has never expected government to reward it for rent-seeking behavior, despite what some might say.

Thirdly, as those in government would know from their economic advisors, once government-owned property has been released to the market, economic rents do not exist in the ACT property market because of the level of competition.

Economic rents can only be available in a market where gains over and above the ‘normal’ level of profit can be made because that margin cannot be competed away. The principle condition for the creation of economic rent is control of supply. In the ACT there are many owners and developers of buildings so any potential economic rent from withholding supply from the market quickly vanishes as competitors move in.

The only economic rent on property in the ACT in fact accrues to the government because it is a monopoly supplier. It is able to potentially reduce the supply of land and is able to drive up prices beyond those that would prevail in a competitive market simply because it is able to control supply, instead of having to respond to market forces.

In addition to increasing its monopoly rents through delays in land releases and zoning restrictions, the government imposes unreasonable taxes such as the new lease variation charge. The cost to the community is both through high land prices and land not being put to its most productive use.

So, it is government – the monopolist – who is the rent seeker and collector, not the property sector.

Carbon questions

Peter Verwer — Sun, 31 Jul 2011 23:22:00 GMT

The Gillard Government’s proposed price on carbon raises five major questions for the property investment and development industries:

How will the carbon price impact construction and building running costs?
How will price increases flow through to property returns and affordability?
How should the industry and individual companies manage the transition to a carbon price – particularly in relation to fixed contracts?
What impact will the carbon price have on economy-wide spending and investment levels?
How do we best prepare for a floating carbon price under the final cap and trade system to be launched in 2015?

(For a more detailed set of questions and a carbon price issues map, please go to www.propertyoz.com.au/carbon ).

The Property Council has contracted the Allen Consulting Group (ACG) to model the impact of the carbon price on construction costs.

ACG is developing a tool to estimate cost impacts for different property types, including detached houses, apartments, offices and shopping centres.

There is no Treasury modelling of these critical building blocks of Australian communities. In fact, the only Treasury modelling is for the broad construction sector, which shows that a carbon price will shrink gross construction industry output faster (and for longer) than most other sectors.

That’s why the Property Council has called for a joint government-business working party to assess and manage the impacts of a carbon price on our industry and its customers.

The Federal Government will need to consider targeted assistance if the carbon price reduces housing affordability or increases business costs.

The ACG modelling will provide a solid basis for such discussions.

It will all boil down to the operation of the carbon price shielding mechanism.

‘Shielding’ is the technical name for compensation – that is, transitional assistance that shields emissions intensive, trade exposed industries from the full impacts of emissions pricing. In theory, if a sector or product is shielded from a carbon price, then the price should not rise much above business as usual.

Shielding rates for several key building components are quite high. For instance, 94.5 percent for aluminium, steel and glass; 66 percent for timber and plastics.

That’s the good news from a materials price inflation perspective. However, it’s not all plain sailing.
First, the shielding rates fall each year by 1.3 percent.

Second, there are building products that aren’t shielded.

Third, transport costs will still increase as only light transport is excluded from the carbon pricing regime.
Fourth, there is no guarantee that product suppliers will pass on the benefits of shielding.

Preliminary modelling by ACG shows that the extent of shielding flow-through makes a huge difference to construction costs.

This means the Property Council’s focus will be to persuade the Federal Government to develop mechanisms that guarantee shielding benefits flow to the Australian customers of major product suppliers.
A similar issue will arise with energy costs.

The ACG modelling tool will help owners and managers calculate the carbon price impact on
operational energy costs for buildings, portfolios and companies.

In Europe, after the introduction of its emissions trading scheme, energy providers took generous compensation and still gouged their customers.

We need a strong hand to avoid similar behaviour in Australia.

The ACCC, the new Clean Energy Regulator and state-based independent pricing authorities will all play a role in containing price rises.

There are many other operational issues that require urgent attention. Here are just a few:

How will the Government deal with fixed-price contracts that are silent on a carbon price?
Will the Government attempt to remove a carbon price-related inflation spike from the CPI?
How will owners with CPI-related rent increases remove the risk of unwarranted attention from the ACCC or other regulators?
How will the carbon price impact on electricity reselling contracts?
Can we use the carbon price framework to rationalise increasingly onerous environmental reporting schemes, such as EEO, NGERS and mandatory disclosure?

The Property Council has established a working party to guide its advocacy on the carbon price framework.

There is a huge amount of work to be done in the lead-up to the July 1, 2012 implementation date.

For more on the Property Council’s action on carbon pricing, and some good news on opportunities, please check out www.propertyoz.com.au/carbon

R&D... or not

Peter Verwer — Fri, 01 Jul 2011 00:02:00 GMT

You’d think the Federal Government would pull out all stops to promote research and development (R&D) in Australia.

For starters, the nation’s productivity levels are at record lows.

As Treasury’s 2010 Intergenerational Report notes, Australia’s productivity performance has slowed to 1.4 percent in the past decade compared with 2.1 percent in the 1990s.

Then there’s the looming ‘baby bust’ that will soon see more Baby Boomers leaving the workforce than Gen Ys entering the labour market. It’s sobering to note that in just five years, Australia’s natural net population growth will peak – coffins will outnumber cradles. This will place huge pressure on the labour force to work smarter.

With dependency ratios (the number of taxpayers to retirees) rising sharply due to a 43 percent decline in net labour market growth rates, it’s crucial the nation lifts its productivity.

A rational R&D framework, along with sensible immigration levels, higher participation rates, skills development and a more robust retirement savings regime are all critical.

The Federal Government has responded by acting on the recommendations of the Cutler report, Venturous Australia – building strength in innovation. Many of the proposed changes are well targeted and positive.

However, they also contain a bitter pill.

Legislation currently before the Senate looks like blocking the property sector from utilising R&D tax concessions to improve construction sector productivity.

The Government swears black and blue that the Property Council and its advisors have got it wrong.

Kim Carr, the Industry Minister, has provided multiple assurances that the R&D incentive will still apply to the development sector in the same manner as in the past.

The CFMEU has also gone into bat and received similar assurances.

However, the legislation is crystal clear. Under the new rules, the building exclusion denies incentives for (at ss 355-225(1)):

(a) Expenditure incurred to acquire or construct:

(i) a building or a part of a building; or

(ii) an extension, alteration or improvement to a
building.

The Assistant Treasurer’s second reading speech says that:

“Companies experimenting with innovative construction techniques in the course of actual construction will continue to be eligible for non-building R&D activities such as research, consulting, conceptual design and other testing not physically incorporated into the final building.”

Weirdly, this means a property developer can conduct legitimate offsite R&D on (say) a building’s superstructure and receive the incentive, but the incentive will be denied if the R&D is conducted on-site as a part of the building’s construction.

In other words, developers can claim construction R&D as long as they don’t install or utilise that innovative technology.

The Bill’s explanatory memorandum provides examples that show R&D can be claimed on path-breaking, in situ bridge construction techniques, so why not building technologies? Why the discrimination?

The Property Council understands that the R&D allowance should not be claimed for mainstream construction – the so called ‘dominant purpose test’.

We get that the incentive should only apply to investment in experimental technological solutions and practices. Nevertheless, unlike a widget, innovative design, manufacturing and construction techniques require real world in situ stress testing to prove utility and safety. It make no sense to dismantle a structure that works in order to qualify for the incentive.

The irony is that rapid adoption of innovative practices is one of the great challenges of R&D regimes. Yet the property sector gets pinged when its technological breakthroughs prove their worth. Several of Australia’s most iconic (and greenest) buildings have been designed and erected with vital on-site construction R&D.

At 92 storeys and 300 metres, Melbourne’s Eureka Tower is one of Australia’s tallest. It could not have been built without on-site R&D to develop and test super strong concrete and unique liquid damper tanks that stop the building swaying and collapsing under its own weight.

The Soleil Tower in Brisbane is one of the world’s most slender buildings. With a 1500sqm base and 77 storeys, it is the architectural equivalent of standing a pencil on its end. The existing R&D regime allowed this multi-unit residential project (with an aspect ratio of 14:1 versus the more typical 8:1) to develop and test an ultra-strong superstructure to withstand wind loads.

The design concept for Melbourne’s Rectangular Stadium is a brilliant example of Australian innovation.

The bio-frame roof is designed to provide more interior space while using significantly less materials, which ensures better sun and airflow than conventional designs. The bio-frame could not be built without significant on-site R&D to develop and test a lightweight structure that uses half the steel of a typical roof.

Melbourne’s carbon neutral Pixel building is a textbook example of world-class R&D. Indeed, Pixel scored the highest environmental rating ever given by the Green Building Council.

However, the incentive to proceed with these exemplars of technological innovation would not be possible under the new R&D rules.

The Property Council has given the Government legislative solutions that will totally preserve the integrity of its new R&D rules, while fostering bona fide innovation in the property sector.

The Coalition supports our proposals. As with so many issues, unless the Federal Government’s position shifts, The Greens will decide the fate of this measure post July 1.

Property Council calls for more details on new lease variation charge

Catherine Carter — Thu, 09 Jun 2011 23:30:00 GMT

As part of the ACT Budget handed down this year, details were revealed about changes to be made to the Change of Use Charge system that has been historically used to calculate the change in value attributable to a change in the land usage. The new system, to be implemented from 1 July will be known as the Lease Variation Charge, and brings into effect a new codified system with the intention of providing certainty for Change of Use Charges in development applications.

Industry has no argument with a codified system so long as it produces certainty and does not have a dramatic impact on the existing market and property values. However, it has long expressed concern that the draft tables and formulae that have been disclosed to date point to a significant increase in the cost of these charges. The information to date suggests that the charges will even exceed those currently being paid under the Government’s “rectification” scheme for the current system, which the Government believes represents fair value.

Along with the high values in the published tables available to date, this is a result of the new system disregarding the value of improvements and not taking into account the full value of upgrades to government infrastructure that are paid for by the property owner. The net result will be that the cost of redevelopment will be significantly higher than in the past resulting in increases on residential unit development by up to $50-60,000 per unit in some areas. Inevitably this cost will be passed on to new residents through higher prices, or stop new projects altogether – further exacerbating housing affordability problems in the Territory because of a shortage of supply.

Of immediate concern too is that although we are now only three weeks away from the implementation of the new system, the Government has still not released important details about how the new system actually work. For example, no one has yet seen the final codification schedules that have been produced for each suburb or the maps. The maps are important because most suburbs have been divided into three localities, each with different values. Differing localities will change costs dramatically. Without this detail no one is able to make concrete decisions about the new system, how much it’s going to cost, and whether in fact a new development is going to be viable at all.

Industry and the community urgently need more information from government. And we need it now.

Policy marriage leaves horse without carriage

Peter Verwer — Wed, 01 Jun 2011 01:45:00 GMT

For more than a decade now, the Property Council has agitated for a serious plan to better manage the nation’s cities and regions.

The trifecta of population, regional and urban policies announced by the Government fills a yawning gap, but is more like a celebrity dentist capping rotten teeth than undertaking much-needed root canal work.

It’s not all policy floss.

Simon Crean’s regional policy, with its $4.3 billion spending bounty, is credible and targeted. Anthony Albanese’s urban policy is a promising framework.

However, the Government’s overarching ‘population strategy’ is little more than a policy version of the internet planking fad that’s left it face-down staring at swirling thought bubbles.

Let’s focus on the upside.

The Urban Policy seeks to join up government efforts to improve infrastructure delivery, transport, jobs and housing through better planning systems.

The Government has also provided clearer instructions to Infrastructure Australia, which can now get on with the job of developing a long-term prioritised infrastructure roll-out program.

It was way back in 1972 that a Labor minister said:

“The long-term costs of our unplanned urban growth [are] stark – not enough homes for people who need them most; high and spiralling land prices; poor sewerage services and public transport; poor educational, health and cultural facilities in new development areas; and an increasingly overloaded and polluted environment.”

That was Tom Uren, who went on to head the Department of Urban and Regional Development (DURD).

He even predicted that Australia’s population would be 23 million by the turn of the century and that we better get on and start planning for the inevitable.

Despite the myths about the infamous DURD, Uren sought to work closely with the states and local government to better plan and manage growth areas.

Uren was staring at population growth of 80 percent.

For all the hand-wringing angst over Treasury’s predicted population of 35 million by 2050, the figure represents growth of only 60 percent.

Nevertheless, for a nation that is increasingly hostage to global commodity cycles and “surpluses made in China” – in a country that will shift out of its demographic sweet spot by 2014 – planning is more crucial than ever.

Anthony Albanese’s urban policy signals a new resolve to co-ordinate policy programs.

He will tie state and territory government funding to achieving planning criteria strongly endorsed by the
Property Council.

Launching the Urban Policy at the Property Council, Albanese said the Federal Government was “putting in place all the levers at our disposal to drive, foster, encourage and, if you like, intimidate recalcitrants, if need be, to make sure they do get on board.”
The Property Council believes three crucial steps would boost the effectiveness of the Urban Policy.

First, allocate a multi-billion dollar budget to Infrastructure Australia and consider establishing a sovereign wealth fund to maintain ongoing investment.

Second, Australian governments should accept that urban policy can deliver the same dividends as National Competition Policy, which was based on agreed targets and an independent umpire.

COAG should agree to establish a Sustainable Communities Commission that will cement a carrot and stick approach to driving long-term sustainable development and micro economic reform at all levels of government.

An independent commission would ensure collective discipline and ownership across all spheres of government, based on measurable performance targets.

Third, the Government should build on the lessons of former Deputy Prime Minister Brian Howe’s Better Cities program by consolidating and boosting existing funding pots into a single, bold program for revitalising cities.

If the Government can spare $4.3 billion for regional Australia, it makes sense to spend a comparable amount on our urban communities that consistently generate 80 percent of the nation’s GDP.

Better Cities had its flaws, chief of which was the absence of clear and measurable performance targets; nevertheless, it was a serious attempt to connect up and reboot Australia’s urban circuitry.

Modern demonstration programs could revitalise urban black spots that languish as a result of poor planning and even worse co-ordination. Well-designed demonstration programs could also champion the shaping of new communities that are better connected and more self-sufficient.

As for the ‘population strategy’, it seems it has something to do with putting more jobs into regional Australia, somewhere, sometime …

$10.1 million has been allotted to develop a dashboard of social and environmental indicators.

The Property Council loves indicators, but, like the rest of the nation, we’re more interested in outcomes, which require setting performance targets and mobilising resources to meet them.

A credible population policy would set economic, social and sustainability progress targets that aim to cultivate burlier economic muscle and greater liveability. It would forge the levers to achieve these goals.

Oh well, at least the urban and regional strategies represent a de facto plan for sustained growth.

We now need politicians with the mojo of Tom Uren and Brian Howe to get on with nation building as core business.

Inflation dragon fires up

Peter Verwer — Mon, 02 May 2011 03:55:00 GMT

In this year of disasters we’ve been shocked by black swans – disruptive forces such as earthquakes, floods and tsunamis that trash fiscal and monetary policy tweakings, as well as exquisitely calibrated asset allocations models.

However, inflation is more your common or garden (or lake) white swan. We can see it gracefully gliding toward us, but fail to register that this time it’s equipped with knuckle dusters and a taser.

After spending the past few days in China, it’s clear the mega threat to world economies is a new era of inflation, similar to the contagion that erupted after the two major oil shocks of the 1970s.

Some notable economists believe the post oil shock era is the best guide to the investment performance prospects of property assets.

Let’s start with China.

During this last cycle of global economic growth up to the GFC, China exported disinflation. It helped meet the West’s exuberant demand for commodities at a far cheaper cost of production than high wage, high taxing developed nations.

However, in the words of one Communist Party official who spoke to a captive property audience at the recent APREA conference in Beijing, “China is big, but not strong”.

The thrust of China’s 12th five-year plan focuses on domestic demand, rather than export-driven growth.
The snag is that prices are already rising in China, due mainly to its burgeoning middle classes and the wage growth demanded by a newly urbanised workforce.

It was fascinating to hear Communist Party bigwigs directly referring to human rights in the context of wages policy. While there was lots of speechifying about a “harmonious and inclusive future”, it was easy to read between the lines.

China’s solution to the political disruptions of the Middle East is to pay its workers more and encourage them to stimulate their home-grown markets by purchasing local goods and services. But that makes China more expensive and reduces its competitive advantage over the West.

China’s official response is price controls, regulation (of residential real estate, in particular), higher capital reserve ratios for its banks and some currency flexibility.

However, that doesn’t make food cheaper or decrease the price of oil. It doesn’t deal with tens of millions of unemployed and under-employed Chinese workers.

While last months’ startling headline inflation figure for China was 5.4 percent, the cost of food and staples rose by more than 11 percent.

In short, China (and many other Asian countries) face a classic wage-price spiral.

We also need to consider the massive debt the West has racked up in response to the GFC.

Politically, it’s nigh on impossible for governments to tighten their belts by the required notches. It’s also politically ‘courageous’ to persuade citizens to accept higher taxes to write more bail-out cheques.

In this light, inflation is an attractive temptress for governments because it eats into the mountains of public debt and helps them juggle their books.

This may be one reason why official inflation statistics generally underestimate real price cost increases.

The United States doesn’t even include food or energy costs in its consumer price index.

The upshot is twin inflation drivers: a wage-price vortex and weak governments that fail to encourage productivity improvement, labour market flexibility, liberalised trading markets and spending discipline.

What does this disturbing new age of inflation mean for the real estate industry? Basically, there’s good news and bad news from the growing literature on this topic.

An inflation hedge will outpace both increases in prices and inflation-linked Treasury bonds.

Many think a true hedge will also move in lock-step with inflation – CPI goes up, investment performance rises in sync.

Finally, an inflation hedge should continue to provide steady income streams. In technical terms, that means a low Sharpe Ratio (excess returns divided by volatility).

On the plus side, property prices tend to strongly correlate with economic growth (unlike equities). Lease covenants often contain inflation protection clauses that build on CPI.

A recent NAREIT study of property returns showed that REITS easily outperformed inflation and other asset classes over the medium to long term.

On the flip side, another recent study by the Investment Property Forum in the UK says property returns might outperform inflation increases, but don’t hedge them – that is, returns don’t move up at the same time as inflation.

In addition, highly leveraged property is easily bruised and bloodied by the interest rate stick that governments brandish to fight off inflation.

A new study into the relationship between inflation in property investment performance in eight major Asian property markets released at the APREA conference raises perverse conclusions.

There is no short-term correlation between property performance and inflation, and thus no hedge.

However, property is co-integrated over the long term (10 years) – that is, property return and inflation indexes share common long term fluctuation profiles.

The APREA study also concluded that the extent of hedging depends on the economic and market dynamics of individual cities.

Maybe this is another argument for investors to take a longer-term perspective and give greater attention to research into stock/asset selection in specific markets.

Amenity, in eye of beholder

Catherine Carter — Wed, 13 Apr 2011 22:30:00 GMT

The ABS population forecast released earlier this month have stimulated discussion, especially on increasing density in the ACT’s existing built areas.

One surprising view I’ve heard is the belief that greater density will inevitably hurt the community by reducing amenity.

I’m surprised because I recently moved with my family, including young children and small dog, from the traditional Australian dream home – in the suburbs on a quarter-acre block – to an apartment in a more central location. And the move has made our home life much more enjoyable, partly because of the greater density and closer proximity to amenities.

I can now walk to shops and restaurants, the children’s school, and beautiful, established parks. Already we’re riding our bikes more – for pleasure, as well as transport. The dog is pleased too because my travel times are shorter I have more time for walks.

The park is in my line of vision from the apartment so my children can play under my watchful (but not too intrusive) gaze. The difference to them? They now have to go through two doors instead of one, before they reach a green play area.

And I can enjoy the gardens around me without having to weed or mow then (though I do have plans for greenery on our terrace).

Moving to an apartment wouldn’t suit everyone. But I like the style, and I’m already finding myself part of a new community in my new neighbourhood.

When I hear people’s fears that increased density will cost amenity, I can only assume they mean that it will reduce open space. But city life, especially in Canberra, where many of our corridors and open spaces are protected, suits me fine.

Amenity, real amenity, involves a choice of how you want to live. And there are plenty of people in Canberra who, like me, enjoy the reduced travel time, the convenience and liveliness of urban living.

Catherine Carter is ACT Executive Director of the Property Council of Australia

APPraising demography and destiny

Peter Verwer — Thu, 31 Mar 2011 23:05:00 GMT

Australia is growing by a person every 87 seconds (net). This demographic dynamic relentlessly reshapes the demand for our national software and hardware.

The software is services such as healthcare, education, shelter, food, water, energy and connectivity.

The hardware is the hospital beds, classrooms, homes, dams and water pipes, power stations and transmission lines, roads and public transport (to name a few) needed to deliver software services.

In short, the hardware is Australia’s built environment.

Surely someone has calculated how much extra software and hardware Australia needs to service a growing nation?

The Property Council scoured the land for a program that did these calcs. We asked academics, Treasury departments, the Productivity Commission, even the Council of Australian Governments (COAG).

We ended up empty handed.

Sure, there are answers to bits and pieces of the demand puzzle lying about the place. Indeed some tools, like transport demand models, are sophisticated and powerful.

But there’s no single program in the public domain that directly converts population growth into forecasts of hardware demand.

So, at the risk of antagonising dozens of experts, we asked the respected Allen Consulting Group (ACG) to take a crack at the task.

We asked them to devise a nation building app that anyone could download on an iPad. Not only did we want them to predict Australia’s population for each of the next 40 years, we also asked them to forecast where Australians would live.

As of today, the ACG app covers 41 cities and towns across the nation.

Given the importance of immigration, the app also provides a sensitivity slider that lets users plug in different immigration levels.

The app is now in beta testing. Here’s what it predicts for all 41 locales for each year between 2010 and 2050:

Housing demand indicators

Number of households
Total number of new dwellings
Occupied detached dwellings
Occupied multi-unit dwellings
Total private dwellings

Social hardware demand indicators

Hospital separations: the number of people leaving hospital – one way or another
Hospital beds
Retirement village population
Aged care places
Child care places

Core staples demand indicators

Water
Energy

Private sector hardware demand indicators

Retail space
Office space
Car travel

Policy indicators

Dependency ratios – seniors
Dependency ratios – total
Number of taxpayers
Taxpayer burden per capita (Australia only)

ACG is also pondering how to build a module that will credibly predict the cost of constructing hardware by indicator and locale.

The app will give users total control. You can ask to see forecasts for all indicators by a particular locale or even compare two cities.

The app also generates league tables of winners and losers, for instance:

Which city populations are growing the fastest? Answer: Gold Coast/Tweed, Mandurah, Bunbury and Hervey Bay

Which cities are shrinking? Answer: Dubbo and Orange

Which capital city has the fastest growing retail space market? Answer: Perth

What cities have the highest ratio of workers to seniors? Answer: Kalgoorlie, Darwin, Gladstone, Cairns and Townsville

Which city has the highest ratio of retirees to workers? Answer: Port Macquarie

Which capital cities have the fastest growing school population? Answer: Brisbane and Melbourne

Which capital city has the fastest growing aged care market by number of places? Answer: Melbourne

What about by rate of growth? Answer: Darwin, then Canberra

Of course, a model is only as good as its assumptions. That’s why ACG has made all the assumptions transparent.

The model can’t predict improvements in technology, the impact of price feedback loops on demand and supply, trends in divorces, the weather or kids returning to the nest.

We freely admit that a small change in an assumption, such as the average number of people living in households, can knock the numbers around.

We expect the model will evolve in its sophistication and look forward to the comments of Property Council members and experts alike. If anyone wants to modify the open source methodology or add more cities they can contact us – please have your cheque book open.

The Property Council commissioned this app to underline a simple point: “demography is destiny”, so we should start planning now.

When August Comte coined the phrase in the early 19th century he was saying that changes in birth rates work themselves out over decades – they flow through to every dimension of society. Comte’s insight holds true to this day.

Each additional Australian is a producer (eventually) of economic value and a consumer of products and services.

Their decisions, habits and needs result in what we’ve called software and hardware.

The Property Council’s nation building app makes the case for long-term planning and infrastructure investment more powerfully than a thousand policy submissions.

A sneak preview of the app will be provided to attendees of the Property Council’s Cities Summit, to be held on May 5, 2011 in Melbourne.

Projections help plan for future

Catherine Carter — Mon, 21 Mar 2011 14:00:00 GMT

According to Chief Minister Jon Stanhope, the official 50-year population projections show Canberra's population increasing steadily by 0.6 to 1.6 percent a year to reach 400,000 people by 2018 and 450,000 by 2030.

By 2057 it will be 550,000.

Given recent apparent misunderstanding of such projections it seems he has to stress the following point: These are not targets. They are not figures the ACT government are working to achieve or designing policy to promote.

They are simply reflections of what is currently happening to our population and what will continue to happen unless we take significant steps to change things.

Getting such projections is good news, because, without the figures we can't plan for what we know will happen, and, if we decide as a community that the projected figures are unacceptable, we can't take steps to change the future.

“Projections of the level and characteristics of the ACT’s future population are fundamental to quality policy development and informed decision making by the Government," the Chief Minister said.

Obvious really, but, demography is a relatively new discipline. Until recently this clear and simple reasoning was routinely overlooked by governments of all levels.

“The Government will use these statistics in its planning for future land releases and the provision of services such as schools, aged-care facilities, health centres and playgrounds,” he added.

Good thinking. Population figures and planning for land use and infrastructure needs are two sides of the same coin.

Each is pointless without the other. Getting the projections and failing to use them for planning is pointless.

And, similarly, trying to plan without knowing how many people you have to plan for is also pointless, especially as different age groups have different needs – children need schools, seniors need medical services, and so on.

Hasty and ad hoc responses to our increasing population are expensive in economic, environmental and social terms. Using this information to plan strategically for the future is the only intelligent option.

Feral abacus catches love bug

Peter Verwer — Sun, 13 Mar 2011 13:32:00 GMT

The pocket-sized Himalayan Kingdom of Bhutan led the way in the early 70s.

While the Western world puzzled over the meaning of Don Maclean’s American Pie, the newly crowned 16-year-old Bhuttanese king declared his people should not just have their cake, they should eat it and pen their own food review.

The young ruler decided his nation’s priority was happiness, not simply economic growth measured by GDP.

The result was the world’s first index of Gross National Happiness (GNH).

King Jigme Singye Wangchuck turned out to be the coolest dude on the policy block.

These days every caring political leader wants to play the “going beyond GDP” riff.

David Cameron, the UK Tory Prime Minister, has said measuring happiness is one of “the central policy issues of our time”.

“It’s time we admitted that there’s more to life than money, and it’s time we focussed not just on GDP but on GWB – general wellbeing.”

French President Nicholas Sarkozy – clearly cheesed off by “the cult of figures” that assumes the “cult of the market is always right” (and that the French economy grows at a snail’s pace) – commissioned Nobel Laureates Joe Stiglitz and Amaryta Sen to devise dashboards of GDP alternatives.

The eminent economists concluded it was time to complement metrics of economic production and market activity with measures of sustainable wellbeing, social progress and quality of life.

Taking their cue, G20 leaders decreed they would “encourage work on measurement methods to better account for the social and environmental dimensions of economic development.”

The Summer of Love Woodstock generation has morphed into wonks wielding Excel worksheets.

Maybe they should download the results of the TrackYourHappiness project, which employs an iPhone app to get volunteers to record their state of mind three times a day for a few months.

The research (in progress) concludes people are happier when their minds are occupied, while daydreamers tend to sulk.

Well, not just their minds. The study revealed the highest rated happiness activity is having sex. It seems only 30 percent of participants let their minds wander during carnal exertions …

Australia is no laggard in the quest to unveil GDP alternatives.

The Australian Bureau of Statistics has operated its Measures of Australian Progress (MAP) program for several years.

Community Indicators Victoria and TasTogether are just two Australian dashboard projects that measure the social vibe behind an economic beat.

Industry and the Property Council are also on board.

The Green Building Council’s draft Green Star Communities Framework sets out six multiple bottom line principles for designing sustainable neighbourhoods.

The Property Council is also involved with an Australian Sustainable Built Environment Council (ASBEC) project to settle on an agreed dashboard of sustainability metrics that industry, community groups and government can sign up to.

Last month, the Property Council released a unique perspective – My City: The People’s Verdict – on the liveability of our major cities.

Auspoll asked more than 4000 Australians to define and then rate their city’s liveability. In doing so, we acknowledged that Australian citizens, not academics, politicians (or even the Property Council), were the experts.

Check out last month’s Property Australia editorial or www.propertyoz.com.au/mycity for the results.

An inevitable ‘announceable’ from the Federal Government’s current population and cities consultations will be a dashboard of liveability indicators.

This is where we get nervous.

Even metrics loving KPI junkies such as the Property Council see the dangers of measurement fetishism.

The biggest problem with Australia’s governments is their failure to make decisions based on a long-term view, followed by an inability to make decisions that join up to a coherent platform of action.

Governments can hatch dashboards and indicators to rival the latest mind-boggling Airbus cockpit. It won’t improve the lot of Australians unless we modernise the nation’s disjointed machinery of government.

By all means measure liveability, sustainability, economic competitiveness, security and the like.

However, start by setting meaningful targets for improving national performance in each of these prosperity categories.

Ensure the targets map together.

Then totally re-organise the machinery of government at all levels to guarantee efficient delivery on these targets.

As the Property Council’s Auspoll study revealed, Australians rate delivery, not promises.

Population Symposium finds agreement on big issues

Catherine Carter — Sun, 20 Feb 2011 20:30:00 GMT

Our ACT Population Symposium (held last week) featured lively discussion and a full range of views on our ideal population level from the delegates.

We looked at demographics, the Commonwealth strategy for a sustainable population, political trends, the ACT situation, urban infill and the Australia-wide population debate.

When asked the ideal population size for Canberra, delegates named figures ranging from a million to considerably less than our current population of 359,000.

Some believed a bigger population would stimulate infrastructure growth and raise living standards, others felt it would increase the strain on existing resources and lower living standards.

Some produced compelling arguments to show that increasing population would, by leading to more efficient use of resources, reduce our per capita carbon footprint.

Others produced compelling arguments for the opposite point of view.

But all were heard, and all points of view were discussed. And there were several significant points of agreement between all delegates.

Everyone agreed, for example, that considering population without also considering infrastructure was just plain foolish.

Whatever the size of our population, we cannot have an efficient, environmentally responsible and pleasant Canberra without incorporating strategic infrastructure planning into the daily running of the Territory.

All speakers acknowledged Canberra's large per capita ecological footprint and all acknowledged that the right population size and density were crucial to reducing it. The point of disagreement was whether we needed a larger, static or smaller population to improve the situation.

Another significant point of agreement was this: it is both pointless and irresponsible to consider the issue of the ACT population in isolation from the rest of the country, and indeed, the rest of the world.

We live in a spacious land and, though many of us see much of Australia as functionally uninhabitable, we acknowledged that people manage to live in equally or more inhospitable environments elsewhere in the world. Canberra is a green (generally) and generously proportioned city.

Many other Australians have much less open space, many fewer parks and much smaller glimpses of sky between the buildings than we do.

The debate centred around what our responsibilities to the rest of the world really are. Some speakers, for example, felt it was a duty to share what we had.

Others said it was our duty to provide a model of ecologically intelligent living for the rest of the world to see and emulate.

But nobody contended that it would be right to plan our population in isolation from our neighbours.

When the topic moved from absolute numbers to density, or the amount of land space per person, delegates found a further point of agreement. Canberrans, they said, should enjoy choice.

The Territory should feature a range of housing options, a range of dwelling sizes, prices, locations and types. Those who want the convenience of an inner-city apartment should be able to have it in Canberra.

And those who want their own garden and suburban lifestyle should enjoy that too. The proviso was that all lifestyle choices should be catered for with quality buildings, first-rate design and the greenest possible materials and construction methods.

So the symposium established that all sides in the population debate share a fundamental understanding of the issues, challenges and responsibilities involved.

That provides us with a solid foundation on which to build a productive and effective strategy for achieving the best possible Canberra for now and the future.

Catherine Carter is ACT Executive Director of the Property Council of Australia

The verdict of the people on Australia’s cities

Peter Verwer — Mon, 24 Jan 2011 14:30:00 GMT

Australians are city-dwellers.

Three out of four Australians live in major cities, which generate around 80 per cent of our economic growth and are home to more than 75 per cent of jobs.

The beating heart of our cities is its people. They run businesses, raise families and regard cities as a promise to help shape fulfilling lives and realise aspirations.

How are our cities living up to this promise? What makes them liveable and economically prosperous and where is the room for improvement?

Who better to ask than the people themselves?

Have your say!

Read the full commentary below on the survey:

The Property Council of Australia commissioned Auspoll to survey more than 4,000 Australians in all eight capital cities. The poll captures the voice of citizens, not experts, interest groups or politicians.

The verdict of the people is that our governments are failing to plan for and manage liveability.

‘Liveability’ summarises the complex factors that determine individual and collective opportunity, such as access to jobs, education, health care and affordable housing as well as our public and private transport systems – our ability to connect with others.

‘Liveability’ also covers the experiences offered by cities – clean and pollution free environments, safety and security, culture, recreation and the design quality of our neighbourhoods.

In other words, cities comprise infrastructure hardware and community services software that foster greater prosperity and liveability.

Adelaide ranks as Australia’s most “liveable” city, followed by Canberra, with Melbourne third. Sydney’s residents rated their city as the nation’s worst.

Overall, Australians give cities the thumbs up for their recreational and outdoor areas (79% average city approval); natural environments (76% approval); culture and entertainment (74% city approval); and school and educational facilities (69% city approval).

Australians were scathing about government performance in areas such as healthcare (50% approval); roads and traffic congestion (39% approval); public transport (36% approval); environmental sustainability and climate change (33% approval) and access to affordable housing (31% approval).

Only 51 percent of people thought their state and territory governments were doing an excellent, good or fair job.

If cities are a promise to deliver opportunity, most politicians hold themselves out to make the promise a reality.

At its simplest, Australia’s political parties promise they will forge a more liveable and economically productive nation.

The clear verdict of Australia’s citizens is that our politicians are not delivering. This judgment has huge implications for all levels of government.

Many experts thought the previous Victorian Labor Government was doing a decent job and yet they were still sacked by the people.

The NSW and Queensland Labor Governments’ insipid popularity poll ratings reflect disenchantment with the management of key liveability drivers – the efficient delivery of community services and enabling infrastructure.

The Howard Government lost to Labor in 2007 as much because of frustration over housing affordability and city ‘software’ issues as the lightning rod of Workchoices.

Last year’s hung Federal Parliament occurred partly because voters searched for political leadership, vision and nation building programs. Voters hedged their bets when they perceived spin and focus group sound bites.

Our cities struggle because politicians are failing to effectively plan for and manage urban growth.

For some Australians, the answer is to stop population growth altogether.

71% Australians will only support a plan to grow the population if it is managed appropriately.

However, we need a growing population to fuel the economic development that funds the infrastructure and builds a skilled workforce that will deliver liveability in a sustainable manner.

The Property Council argues that all our cities need 30-year plans to manage growth. Not Soviet-style dictums, but plans that can be adapted to evolving circumstances.

The starting point is to set performance targets for community service delivery across the nation.

These targets relate to all the drivers of liveability valued by citizens – access to education, health, child care, decent transport options, low congestion, neighbourhood safety, energy, water and much more. Only South Australia does this at present.

Independent auditors should report on performance against these targets annually.

We need 30-50 year infrastructure delivery programs that are synchronised to our growing population.

We need to design our cities so that jobs, homes and community services are close to each other.

We need to join up government efforts to manage growth. At present, government departments and different levels of government spend more time trumping each others’ programs than collaborating.

We need to get serious about the relationship between the built and natural environments. We need to better calibrate our approach to biodiversity, and better manage the interdependent relationship between regional and urban communities.

Australia’s recent horrific trials by flood and fire should hasten the development of plans to improve the resilience of our cities against natural disasters.

We need to streamline and speed up government decisions, cut the red-tape that stifles business innovation and look to more credible ways of bringing citizens into planning their cities up front, rather than when development occurs.

We also need to be more innovative about infrastructure funding. As well as using the government bonds that so effectively paid for nation-building projects over the past 200 years, we should better utilise public-private partnerships and devise a sovereign wealth nation-building kitty to complement the Future Fund.

We need to get over the political obsession with reducing public debt to zero as capital investment builds social and economic capital for future generations.

The Federal Government has recently released separate discussion papers on population and cities. 69 percent of those surveyed by Auspoll want the Federal Government to take a much greater role in planning and investing in Australia’s cities.

The Federal Government can start by joining up its own disparate policy approaches to cities, the environment, growth and skills development by setting its own community service delivery targets and by providing more resources to COAG and Infrastructure Australia.

None of this is easy, but it can be done if we make the liveability of our cities a national priority and if governments heed the voice of the people.

Peter Verwer is the CEO of the Property Council of Australia.

Have your say below ...

Strange bedfellows conceive policy backbone

Peter Verwer — Sun, 05 Dec 2010 13:31:00 GMT

It’s said politics makes strange bedfellows. Although Groucho Marx joked that marriage is a more outlandish bedfellow than pollies.

The Property Council goes to great lengths to work with influential friends.

Our new five-year Powerhouse 3D strategy sets great store in these alliances.

As Property Council national president Daniel Grollo says, “close collaboration with community and industry stakeholders enhances our political effectiveness and corporate reputation.”

That’s because politics is about mobilising constituencies. There is greater strength in a chorus of voices united in common cause.

When we fought and defeated the NSW Government’s idiot vendor duty, our most effective ally was the CFMEU.

The union saw the tax killing off jobs and was more than happy to lend its political muscle.

That included carrying a coffin to Parliament House during our mock funeral for the NSW economy.

More recently, our campaign supporting a solar bonus scheme for property owners included the youthful social activists GetUp!, along with Greenpeace and the Total Environment Centre.

We’ve worked with groups such as the Australian Conservation Foundation (ACF) and the Australian Council of Trade Unions (ACTU) on several occasions.

The Property Council happily took full page ads supporting an increase in mandatory renewable energy targets with ACF.

In return, they supported an investment allowance to retrofit buildings to a higher environmental standard. If you’re going to ask for a property tax cut, it helps mightily when green groups cheer from the front row.

Our work with Green Cross on their Harden Up campaign – a program to build weather resistance – is another example of strategic alliance building.

The defeat of the Queensland Government’s wacky land tax valuation rules was led by the Property Council and the Shopping Centre Council.

Amongst our many allies were farmers, miners and resort operators.

This year’s 40 percent cut in land tax rates in Tasmania under a Labor-Green government gained heft and credibility under the banner of a broad coalition that included the Newsagents Federation, the Small Business Council and several chambers of commerce.

BEMP: Built Environment Meets Parliament is a unique alliance that presents our views about planning, innovation and infrastructure directly to politicians at Parliament House in Canberra each year.

BEMP comprises the Australian Institute of Architects, the Green Building Council, the Planning Institute of Australia and Consult Australia.

We also work very closely with our friends at Infrastructure Partnerships Australia to press for a greater commitment to nation-building infrastructure priorities and smarter funding.

When it comes to planning issues, we swap notes with the National Growth Areas Alliance and the Council of Capital City Lord Mayors.

Housing sees us working with the Community Housing Federation and Australian Housing Urban Research Institute.

All of our construction industry advocacy is undertaken with the Australian Construction Industry Forum, which includes the Master Builders Association and Housing Industry Association.

Hallmark guidelines on liveable housing design resulted from a unique conversation with diverse stakeholders including disability advocates, the Australian Human Rights Commission and Council on the Ageing.

The Property Law Reform Alliance seeks to establish one set of real estate rules for Australia. It includes RICS, the Real Estate Institute of Australia, most law societies and the Urban Development Institute of Australia.

A spectacular example of strange bedfellow success is the Australian Sustainable Built Environment Council (ASBEC).

In the world of old politics, this eclectic mix of two dozen community and green groups, along with trade bodies and professional societies, wouldn’t give each other the time of day.

ASBEC’s priority programs for sector targets, incentives and energy efficiency trading certificates were rejected by governments just one year ago.

Today they are government policy.

ASBEC proves the great power of coalitions. So often, focus group-led policy results in no policy at all.

It’s collaborative industry and community groups that lead by not only helping develop policy solutions, but handing over a backbone for government to use.

A more traditional alliance is the Business Coalition for Tax Reform (BCTR).

The Hawke-Keating tax summit in 1985 shows what happens when business “jumps out of the tax cart”.

A polarised business sector leaves a vacuum for the ad hoc and accidental.

With a new tax summit slated for mid 2011, the BCTR will be a major idea contributor and advocate.

The BCTR’s agenda will carry even more weight if it can design a tax reform package that’s supported by social welfare groups, such as the Australian Council of Social Service (ACOSS).

In a world of independents, The Greens and minority governments, it’s crucial that we get our collective act together.

Building on our network of international alliance partners is also a big priority for Powerhouse 3D.

We need powerful friends to address the increasing array of rules developed by faceless bureaucrats bent on dreaming up global standards on everything that moves, usually with no understanding of our industry or national priorities.

But that is a story for another day.

2010 was the year political blandness and cowardice were rejected by Australian voters.

With smart policies and powerful friends we can make 2011 a year of political courage and policy innovation.

State treasurers give Hollywood celebrities a good name

Peter Verwer — Tue, 09 Nov 2010 13:31:00 GMT

They’re not as insightful as Alanis Morrisette: “I wish people could achieve what they think would bring them happiness in order for them to realise that that’s not what happiness is.”

Our treasurers are more rudimentary. One mid-sized state treasurer recently opined: “the government is from Mars and the Property Council is from Venus.”

Another noted (accurately, as it turned out): “I’ll squeeze property developers until the pips squeak.”

When asked why he raised property taxes when the economy was tanking, one small state treasurer said: “because I can”.

However, it was a prickly NSW state treasurer who took the biscuit with the remark, “why would you plan when things keep changing all the time?” In a burst of honesty, he added: “besides, if you set targets it’s easier for people to hold you to account.”

Maybe he was channelling Richard Nixon, who remarked that “solutions are not the answer.”

At the other extreme, the Chinese Communist Party spent October finalising its 12th Five-Year Plan, which kicks off next year.

The Property Council, also a fan of long-term planning, launched its latest five-year strategy at Congress in September.

Last month’s Property Australia printed highlights of the strategy, which has been sent to all members. A dedicated website at www.propertyoz.com.au/Powerhouse3D provides all the details.

Powerhouse 3D: New Dimensions is the third in a series that aims to:

Secure greater political influence that serves member interests
Forge a more connected, informed and professional property marketplace
Enhance our industry’s image.

At its heart, Powerhouse 3D is a plan to foster a more attractive and prosperous asset class.

To do this, our industry needs to fulfil its role as a nation builder.

This involves a dual track: using our influence to reform public policy frameworks, and improving our collective performance as an industry.

Here is a super cut-down version of the Powerhouse 3D strategy’s 10 implementation programs:

1. A quantum leap in political activism

Doubling the Property Council’s annual advocacy budget from $6 million to $12 million, will mean more solutions-focussed research and more concerted political campaigns on heartland issues.

2. More member homes

We’re moving into the retirement living sector and beefing up coverage of the unlisted and private markets.

3. A centre of asset management excellence ... and a portal to market intelligence

We’re creating a new generation of property performance benchmarking and diagnostic tools, best practice guidelines and case studies. This program includes working with our allies, such as the Green Building Council and IPD, on green benchmarking.

We’re also rebooting our popular portal to the world’s best thinking on industry trends and market facts. Watch out for our pioneering property intelligence apps.

4. Launch the Property Council Academy

Our exciting new relationship with Bond University will be the first of several quality partnerships.

The imminent launch of Australia’s first Executive Master of Real Estate Finance course heralds a new era of world-class education for property professionals.

5. Reaching out to Australia’s regions and suburbs

We’ll open new Property Council chapters in Australia’s population growth centres.

6. Stronger partnerships and alliances

Smart alliances strengthen advocacy muscle. Oftentimes, strange bedfellows can prove your best allies.

The Powerhouse 3D strategy hardwires partnerships with like-minded groups, such as Built Environment Meets Parliament, and fosters left field alliances, such as GetUp!

7. Networking that delivers

We’ll supplement our 360 events and 1100-strong volunteer network with new ways of making markets and swapping industry intelligence.

Our virtual web seminars will help time-poor professionals gain access to top quality thinking. We’ll also refresh our annual summits on cities, retirement living and existing buildings.

8. Priority lane international gateways

Our global network of property industry allies is ever-expanding. The next step is reciprocal membership rights between powerful industry leadership groups.

9. A positive industry image

Technology has revolutionised our capacity to converse with the broader community about the dividends we deliver as an industry. Powerhouse 3D will employ social media to reshape our image. No boosterism, no propaganda, no spin – just the facts.

We’ll also help educate everyday Australians about property investment with our new Build Your Wealth information website.

10. Unveil the case for growth

Powerhouse 3D will counter Australia’s emerging anti-growth sentiment.

We’ll establish a think tank to take a longer, sharper and more strategic view about Australia’s future.

We’ll pioneer a direct conversation with Australians to better explain the benefits of managed growth and the downsides of stagnation.

Growth is cool, Daddio

Peter Verwer — Wed, 06 Oct 2010 13:31:00 GMT

Imagine it’s 1970. The black and white telly is tuned to Brian Henderson’s Bandstand.

You’re tucking into a hearty beef with black bean sauce from the local Chinese, while swigging a sparkling Porphyry Pearl.
Daddy Cool, the latest Aussie sensation, is belting out Eagle Rock when there’s a news flash (weirdly, Brian Henderson is also the presenter).

Australia’s population is 12.6 million.

The Federal Treasury forecasts Australia’s population will grow by 78 percent over the next 40 years!

That’s an extra 9.8 million people. Nearly four million of them will arrive from overseas.

We’ll need to build 1.6 million flats and 4.1 million houses.

There’ll be more suburbs than tie-dye shirts.

All up, we’ll have to find and fork out $3.1 trillion to fund the infrastructure needed to service this bigger Australia.

The laid back Aussie might have freaked but, as we now know, the nation did the job in a canter.

Yes, there’s more traffic congestion and maybe we’re morphing into a nation of H.R. Pufnstuf look-a-likes.

But, on the flip side living standards have risen sharply.

Household purchasing power rose 41 percent (in real terms) for low income groups during the past decade – the figure was 45 percent for middle income households.

Household wealth per capita for all Australians has doubled in just 20 years.

We’re also living a decade longer and there’s 2200 less annual road deaths – a 60 percent drop.

There’s not a survey of world trendiness that doesn’t include a clutch of Aussie cities in their top 10 rankings.

Australia now pulses with fun, culture, mojo ... and it was all underwritten by economic growth.

Above all, the nation enjoyed its longest ever run of economic prosperity – no recession for 19 years, and counting. All of which means loads of jobs and opportunity.

Contrast that with the rest of the ‘advanced’ world economies, which are still limping through the GFC and its aftershocks.

The anti-growth brigade now wants to jam down the stop button – some want to press rewind.

They say a big Australia is a bad Australia ... it’s a planet-destroying Australia.

Memo to critics: property investors deplore unsustainable growth.

We champion planned cities, not accidental ones.

Nevertheless, anti-growth rhetoric is rising to a clamour, aided by some ex-business leaders who claim we can achieve “prosperity without growth”.

Do we really believe we can’t match the grit and guile and smarts of previous generations?

Australia needs long-term, linked-up urban and regional growth strategies. We need to synchronise infrastructure roll-out with community needs. In short, we need better nationwide planning, with modernised tax and regulatory systems to match
Community prosperity will suffer unless the business world makes a more convincing case for sustainable growth.

In 1970, there were 7.5 workers for everyone aged 65 years or more. That figure has dropped by a third to five workers per retiree in 2010. Even at current rates of growth, this ratio is set to plummet by a further 46 percent over the next 40 years, leaving a society with only 2.7 workers for every retiree.

We’ll need massive productivity growth and improvements in competitiveness to avoid the not so genteel decline of some Western economies.

Next month, I’ll talk more about the Property Council’s new five year strategy: Powerhouse 3D.

A core feature is our plan to unveil the case for growth.

Given the huge strategic importance of this issue, world quality thinking is required – in short, a think tank.

In doing so, we’ll pioneer honest and frank conversations with the Australian community to better explain the benefits of managed growth and the downsides of stagnation.

The precise model and role of the proposed think tank is being explored for the Property Council board by former national president, Greg Paramor.

The so-called logic of low growth leads to less affluence and opportunity for everyone. We need to get that message out now. We can do so with a clearer plan for balancing social and environmental goals with economic growth.

Otherwise, imagine it’s 2050: the Jetsons are a reality except there’s just one kid, no dog (too expensive) and mortgages are worth more than homes.

The evening news in 2050 will be chock full of Australians bemoaning “Why didn’t you tell us low growth meant higher taxes?”

And let’s remember, our national song is “Advance Australia Fair”: advance, not retreat.

Growth or bust

Peter Verwer — Tue, 31 Aug 2010 20:30:00 GMT

The 2010 election has produced at least one consensus – robust population growth is bad.

In their own words:

“Australia should not hurtle down the track towards a big Australia.”

“We don’t need 43 million people by 2050…a consensus might be built around 29 million.”

“No one wants a big Australia …”

“Thirty-six million is not a big Australia – it is a dense, congested and overloaded Australia we won’t recognise, much less want.”

The speakers are Julia Gillard, Tony Abbott, Dick Smith and the convenor of the Stable Population Party (one of several new anti-growth political candidates).

The prosperity without growth mantra is a half-baked magic pudding concocted to feed growing urban angst (and a dose of middle class self-loathing).

Yet our political leaders have uttered not one word about how we can lift living standards without growing.

Maybe Dick Smith will make a clean breast of it. He’s proffered a million dollar prize to a young Australian who can “go out and start communicating with the world the fact that we have to have prosperity without growth”.

He also cites the cheap bogeyman of big business and developers as co-conspirators who’ve conned governments into high growth trajectories.

For many, migrants are the convenient scapegoats for poor government planning.

More worrying is Bernard Salt’s warning that the old White Australia Policy is now masquerading as a “green Australia policy”.

Make no mistake, the anti-growth sentiment has caught hold and it’s our job to put the alternate case before the Australian people.

A recent Lowy Institute poll found that 69 percent of people wanted the population to be 30 million or less in 40 years time.

We should start with a clear recognition that concerns about increasing congestion, declining housing affordability, over-stretched hospital waiting lists and shrivelling access to basic services, such as childcare, are genuine.

These challenges require solutions. Smart forward planning and better management are the pathways to sustainability.

There are few voices in the business community calling for untrammelled growth. We champion sustainability based on intelligent planning.

Australia was once good at growth.

In the first wave of Australian urbanisation in the decade to 1891, Melbourne’s population grew by 74 percent; Sydney’s by 78 percent – in 10 years flat!

In the quarter century to 1971, Melbourne grew by 92 percent and Sydney by 65 percent.

Australians have been bold and successful experimenters in urban living.

Since 1970, when Australia’s population was just under 13 million, we’ve added a further nine million people.

The results are on the board: the Australian economy tripled in size, we recorded unprecedented improvements in living standards, fewer recessions than the rest of the developed world (including the worst excesses of the GFC) and less debt for future generations to pay off.

We also live longer, the air is cleaner, environmental protection is handled more responsibly and the social safety net is more effective than was the case four decades ago.

Good outcomes have been achieved hand-in-hand with growth in the past, and likewise for the future.

However, virtually every forecast of growth for the next 40 years, including Treasury’s infamous intergenerational report, assumes far slower population increases than in the past.

Treasury also forecasts slower economic progress as a result.

If low growth is Australia’s destiny, future election campaigns will inevitably feature elderly couples lamenting the dearth of young people in their suburbs; farmers complaining that their customers are disappearing faster than water stocks; small business people with great ideas griping about shrinking markets; home owners wailing about soaring interest rates and mortgages that are higher than house values; and palms-up, ashen-faced Treasurers declaring they have no choice but to stiff us with higher taxes to pay for basic public services.

In this bleak future Australians will complain that they weren’t told about the implications of low growth.

It’s our job to make that case now rather than wait until we end up like Western Europe, on the verge of economic and social bankruptcy.

The community rightly demands greater livability and sustainability. We need to invest in these community assets and recognise that economic growth is the seed capital.

As we’ve said for years now, better forward planning, smarter governance, increased infrastructure investment and higher productivity are the answers.

We also need to get serious about regional development.

We’ll need to redouble our efforts to get that message out.

There are no shortcuts. The virtues of growth need to be communicated to every Australian honestly, convincingly and urgently.

ACT Tax Review

Catherine Carter — Thu, 26 Aug 2010 03:44:38 GMT

ACT Treasurer, Katy Gallagher, has promised a mini Henry style review of tax – an excellent idea, especially for the property sector.

There is no doubt that property provides far more than its fair share of taxes in the ACT. 52 percent of the ACT Government’s taxation revenue comes from property.

And property taxes continue to spiral upwards, out of step with other taxes.

Over the 5 years to 2009-10, the ACT’s total revenue increased by an average of 6.6 percent per year.

Over the same five years the average annual increase in all property taxes was 13.3 percent, or twice the growth in total government revenue. And tax revenue from stamp duty on property transfers blew out by an average of 17.3 percent per year.

But unfairness and inequity isn't the only thing wrong with stamp duty and the other property taxes, such as the deeply unpopular and poorly designed Fire and Emergency Services levy.

Stamp duty, for example, is a volatile tax, making the whole government dependent for money on property sales. And, as we have just seen over the last few years, property is, in turn, affected by larger financial issues.

In recession, a government overly dependent on property taxes, for its revenue, suffers twice. It has to deal with the fall-out from the recession, and it has to do it with reducing revenue sources. Put simply, governments should never put all their eggs in one basket.

The ACT Government has relatively few ways to encourage growth in the economy. Changing tax settings is one of them. Lowering the rates of selected taxes would deliver economy wide benefits by helping to attract greater business activity.

The property sector is one of the key drivers of economic growth in Canberra, and it is important that government recognises that undue levels of tax discourages participation and reduces growth.

So this announcement is very genuinely welcomed. It gives a chance for independent assessment of our current taxation system, and provides government with the opportunity to create a taxation regime which is competitive, fair and well-targeted for our ongoing community wellbeing.

Have your say ...

Keeping our cities healthy

Catherine Carter — Sun, 08 Aug 2010 15:30:00 GMT

Among the many things humans have in common is our dependence on the built environment: we live in man-made structures, we travel using man-made infrastructure, we meet in man-made meeting places and we trade in man-made marketplaces.

Of course, the sophistication of these places varies, but we all use the built environment one way or another.

During election time, we have a right to ask our politicians what they are planning to do with the built environment to make it economically and ecologically sustainable.

How they are preparing for future changes in demand and what they are doing to ensure that our future environment enhances and serves the community inhabiting it.

The majority of this country’s economic activity is carried on in cities, and while the State and Territories have the right to represent their constituencies, as they have been elected to do, the Commonwealth also has a responsibility to ensure the Australian built environment is as it should be.

If cities lose their economic viability, so does Australia. So it is a national issue to keep our cities healthy, and that means planning for the future.

A new Property Council briefing paper on the important issues for the Federal election recommends the appointment of Minister for Urban Affairs and Population who can, for example, relate immigration policy population targets according to economic criteria.

Considering that economic criteria have been used to justify calls for greater populations, smaller populations and static populations, it seems only sensible to consider them when deciding immigration policy.

The paper also calls for Commonwealth help with the housing affordability crisis by addressing the chronic land shortage.

COAG agreed on a set of criteria for city planning in 2009. It’s time the States and Territories used these criteria in their city planning. We suggest that infrastructure funding be tied to compliance with these criteria.

And it would be helpful at the more grassroots level to tie funding to other issues, such as the speed of assessing development applications.

The terrific and the toxic

Peter Verwer — Tue, 03 Aug 2010 06:03:44 GMT

ere is a tale of two property industry standards.

One is a happy story – the birthing and release of new guidelines on livable housing design.

These guidelines were developed in six meetings flat and offer a model for fashioning standards that can effectively joggle industry behaviour.

In contrast, there’s the sad chronicle of stillborn laws on the mandatory disclosure of energy use by office buildings.

These rules took six long years to (partially) hatch and, although now law, are still gestating.

The terrific

Let’s start with the cheerier story.

The livable housing design guidelines, released last month, will help make homes more accessible. They offer cradle-to-cradle solutions that will serve seniors as well as young families and Australians suffering permanent or temporary injuries.

The guidelines recognise that homes need to adapt with the lives of their users.

It’s simple common sense to design-in adaptability from the outset.

The livable housing design guidelines spell out silver, gold and platinum levels of adaptability and accessibility.

What made the process of formulating the guidelines work so well?

First, there was a steering committee that included all the key players. The relevant industry bodies got involved at a senior level – the Master Builders, Housing Industry Association and the Real Estate Institute, as well as ourselves.

The Australian Institute of Architects, representing the design professions, provided their expertise. The community was represented by groups such as the Council on the Ageing and the Human Rights Commission. The Federal and State Governments also played a critical part in all six meetings.

Cynthia Banham, a journalist at the Sydney Morning Herald who is intimately familiar with the suffering that can strike down any Australian, chaired the meetings and acted as a one person Greek Chorus.

The steering committee sorted out disagreements and steadied the focus of discussion on solutions. The starting point was to set a target, which is anathema to most public policy negotiations in this country.

Our first resolution was to agree that all homes should be designed and built to a silver standard by 2020, with incremental
progress to be achieved along the way. We also agreed to measure progress against our long-term target on a regular basis.

The guidelines are easy to grasp – the silver, gold and platinum standards are set out clearly with diagrams that can be used by any designer or builder.

We also jointly committed to an industry education program and to establish a notfor-profit body to roll out the guidelines.

This will include a service to objectively validate building designs against the silver, gold and platinum standards.

We also called on top-flight marketing assistance. The secret to transforming the market will be to rouse consumer awareness of the livable housing design brand.

We invited BMF, one of Australia’s leading ad agencies, to provide advice – which they did pro bono.

The final ingredient to success was political leadership that wasn’t subcontracted to medieval bureaucratic processes.

Bill Shorten, who was Parliamentary Secretary for Disabilities going into the election, acted as Mother Superior, confessor and negotiator. He attended all meetings.

Therese Rein, the former PM’s wife, was also involved and offered the use of Kirribilli house to host several meetings.

She also provided insightful marketing advice based on her business experience.

Shorten used his political skills to forge a consensus. Wherever a bottleneck arose, Shorten guided or cajoled as necessary.

Above all, he fomented the goodwill which led to solutions.

The completed guidelines were launched within a year of the first meeting and can be found at www.fahcsia.gov.au or www.propertyoz.com.au/livablehousing

Several of Australia’s largest developers have already signed up to the silver design standard and are committed to moving to gold in the near future.

The toxic

In contrast, the mandatory disclosure policy-making saga is a dismal tale of a rudderless journey.

No steering committee, but plenty of meandering where industry feedback was sucked in to a murky Bermuda Triangle vortex of lost opportunity.

In theory, it should have been plain sailing – discussion papers by experts, public consultation papers, regulatory impact statements and industry workshops were all loosed to the winds.

However, the result was a bureaucratic tangle.

At the height of the consultation farce was the confidentiality statements forced upon us to ensure we couldn’t consult widely.

The Property Council has no problem signing confidentiality statements for market sensitive discussions over, say, tax laws, but this was deeply neurotic.

The less said about the regulatory impact analysis, which didn’t even analyse key elements of the final legislation, the better.

It’s ironic that the process for designing a law to improve the flow of information to the market should resemble a sequel to the Da Vinci Code.

The greater irony is that a law designed to remove ‘information asymmetries’ will publicise information that few understand.

Let’s be clear: there is merit in disclosing the environmental performance of buildings to the market. However, it’s a no brainer that to do the job effectively, the information must be meaningful.

It’s no secret that the NABERS energy tool, which lies at the heart of the mandatory disclosure rules, is in desperate need of modernisation.

A comprehensive, independent and public review was promised and is now urgently overdue.

The Property Council supports NABERS and so will initiate its own review.

Then there’s the bureaucracy’s proposed tenancy lighting disclosure tool, which will be activated next year. It’s looking like
another Claytons consultation – a sour epilogue to serial failures to genuinely listen to industry, despite hand-on-heart promises.

If only policy-makers would learn from the success of the livable housing design guidelines.

In sympathy with distressed readers, we’ll avoid recounting the 18-year process that has delayed the release of disability access guidelines for commercial premises, despite industry and community groups agreeing to a sensible compromise standard three years ago.

A plan for managing our urban assets

Peter Verwer — Mon, 12 Jul 2010 03:59:21 GMT

Australia’s cities are in rapid transition. The issue is: how do we manage the transition?

Strong population growth, economic restructuring and increasingly aspirational communities are critical urban drivers.

These are positive and dynamic forces, but our existing management systems aren’t coping with change.

Many of our metropolitan strategic plans – the nation’s urban blueprints – are poorly designed, and even the better metro strategies are not well implemented.

In fact, the quality of Australia’s city planning regimes scored a bare pass mark according to a recent KPMG study.

The research, conducted for the Property Council and its partners in the BEMP: Built Environment Meets Parliament alliance, ranked major cities against benchmarks adopted by the governing board of Australia, the Council of Australian Governments (COAG).

In addition to measuring formal planning frameworks, KPMG also assessed each capital city’s performance against real world criteria such as housing affordability.

The first table reveals the relative ranking of capital cities based on their formal planning strategies.

The second table shows performance against four additional benchmarks – budget management, congestion, population growth management and housing affordability for key workers.

The complete KPMG report, including a detailed explanation of the performance benchmarks, can be found at www.propertyoz.com.au/KPMG

KPMG offers eleven strategies for improving capital city planning and performance:

1. Increased Federal Government involvement – establish a robust carrot and stick framework that will incentivise states to improve their planning regimes.

The framework should be based on a national urban policy driven by a Federal Cabinet level minister.

The Building Australia Fund should be complemented by a totally refreshed Better Cities program that provides seed funding for ‘circuit–connecting’ urban infrastructure.

2. Establish a metropolitan delivery authority in each city – place one entity in charge of delivering zoned and serviced land for housing, jobs and community services, along with joined-up critical infrastructure.

3. Ensure metro strategies take precedence over all planning instruments – develop one set of rules that neither local councils nor ancillary state government departments can override.

Compliance with these rules should be the dominant criteria for assessing development applications.

4. Streamline and improve development assessment – fully adopt the 10 Development Assessment Forum principles for reforming development control processes.

By 2012, complying development (sometimes called ‘as of right’ or ‘code assessment’) should be the principal method for assessing development in growth corridors, activity centres and precinct plans. In addition, the entire system should be electronic by 2015.

5. Establish 15-year inventories of zoned/serviced capacity and 30-year overall capacity plans for all cities.

6. Develop and roll out 30-year infrastructure pipelines.

7. Adopt modern public finance mechanisms including growth area bonds – cap developer contributions at reasonable levels by establishing an independent umpire for setting developer charges. Champion PPPs and provide an annual statement of PPP opportunities.

8. Set city-based performance targets – establish measurable economic, social and environmental objectives along with trigger points for delivering critical land supply, housing affordability and growth area priorities.

9. Commit to meaningful public reports on performance against agreed targets on an annual basis, that are independently audited.

10. Increase Australia’s strategic planning and design capability.

11. Improve community consultation – switch from archaic word-based strategy documents to dynamic, 3D, visual representations of planning options.

These measures would revolutionise the management of Australia’s capital cities, one of the nation’s most valuable economic and social assets, and could also extend to other major urban and regional centres.

The Property Council of Australia looks forward to championing these initiatives with its BEMP alliance partners – the Australian Institute of Architects, Consult Australia, the Green Building Council of Australia and the Planning Institute of Australia – as well as other key stakeholders, particularly local government.

Table 1.

Relative capital city planning performance

Rank	Capital city	Score - %
1	Melbourne	69
2	Brisbane	64
3	Adelaide	61
4	Perth	56
5	Canberra	54
6	Sydney	47
7	Darwin	44
8	Hobart	38

Table 2.

Performance against external indicators

Rank	Capital city	Score - %
1	Adelaide	73
2	Canberra	68
3	Hobart	58
4	Brisbane	55
5	Darwin	53
6	Melbourne	48
7	Perth	45
8	Sydney	40

More work needed on ACT Infrastructure Plan

Catherine Carter — Thu, 03 Jun 2010 14:31:00 GMT

As we said when the ACT Budget was handed down in May, when announcements about the forward capital works program were made in conjunction with details about future land release, we strongly support the provision of such works to support the rollout of new homes sites.

But we were concerned that much of the capital works program announced in earlier budgets (worth $153.9 million) remains unspent.

While the ACT Government has some ideas about future community assets, the failure to spend the full amount allocated each year demonstrates ongoing systematic problems in their delivery.

We need to lose existing bottlenecks and impediments to capital works development, and we need to use more private sector resources to ensure that the full amount appropriated each year is spent in that year, especially for critical infrastructure.

This first ACT Infrastructure Plan contains snapshots of the current situation for health, education, transport, housing, community services, justice, land development and planning, water, energy, even culture and the arts.

But capital works take time to deliver, and to be ready when they are needed they must be planned and funded ahead of time.

A longer-term set of priorities needs to be included – specific priorities with anticipated start and completion dates and funding requirements. The time line should span the next 20-30 years.

And it would be helpful to include, as we requested in last March's roundtable on the subject, some explanation of the methodology used in prioritising those capital works.

The criteria for deciding such priorities should include assessments of their social, economic and environmental benefits. Such methodologies have been used in successful infrastructure planning overseas and would certainly be helpful here.

The Property Council made a submission to the government outlining a suggested methodology two years ago.

The Property Council has been calling for an infrastructure plan for several years, and we have the expertise to offer research, suggestions and practical aid to assist the government and help transform this start into an actual workable plan for Canberra's future. We will continue our advocacy on this very important issue.

Click here to view the Chief Minister’s media release.

Click here to view the ACT Government Infrastructure Plan 2010

Click here to view the Property Council Infrastructure Priorities Report 2008

Parkour policy-making

Peter Verwer — Mon, 31 May 2010 14:31:00 GMT

It’s been policy parkour over the past few weeks. Like those agile French kids jumping, vaulting and somersaulting over street barriers, the Federal Government has been exercising new policy muscles.

Policies have hurtled out of several independent inquiries and the Federal Treasury.

There’s been the release of the Henry tax review and the Rudd Government’s response; the Johnson report on Australia as a Financial Centre; the Board of Taxation report into reforming managed investment trusts (MITs), along with the Government’s response.

Let’s not forget various instalments of the Cooper review into Australia’s superannuation system, with a final report due on June 30 this year.

And then there’s the Federal Budget.

We’ll examine the Johnson and MIT reports in a future editorial.

In short, they deliver great news for the property industry. Once implemented, Australia will boast a more elegant, competitive framework for managing investment trusts that’s superior to any in the world.

Other rule changes will transform the Australian property industry into a more powerful magnet for the world’s savings.

The Property Council website (www.propertyoz.com.au) provides a comprehensive analysis of the reports.

The Federal Budget disappointed many.

For the record, the Property Council wanted to see far more on nation-building infrastructure, housing supply and tax
incentives for retro-greening buildings on a mass scale.

Nevertheless, there are significant positives in the budget:

Australia is better placed to move into the black earlier – fiscal responsibility will temper inflation flare-ups and interest rate hikes
The Government is re-directing CPRS money to a new $652.5 million fund that will address renewable energy and energy efficiency, including incentives for property owners
The Government announced several measures that will encourage deeper and more liquid debt markets, including
a corporate bond regime
Finally, the budget welds together several critical elements proposed in the Henry, Board of Tax and Johnson reviews. In particular, it outlines a timetable for increasing super to 12 percent and educing the corporate tax rate to 28 percent.

A highlight of the recent spate of policy parkour was the Henry Review.

Henry has defined the tax agenda for the next decade.

In doing so, he’s provided us with an advocacy platform, particularly on state and territory tax reform.

Here’s a sample of his definitive statements:

“Stamp duties on conveyances are inconsistent with the need for a modern tax system … they are volatile and highly inefficient and should be replaced with a more efficient means of raising revenue.”

The report says transaction taxes are “highly inefficient and inequitable” and that “stamp duties are a particularly bad
tax on business”.

Consumers are also impacted: “higher tax rates apply to those goods and services that disproportionately depend on property for their production.”

The Henry report notes that the effective property tax rates for capital city homes is 87 percent, with Darwin on 126 percent.

It then states that effective property taxes on business are worse.

The Henry report makes clear that certain real estate taxes are potentially efficient, but that cynical state government policies distort the system.

In response, Federal Treasurer Wayne Swan says the Federal Government won’t extend land tax to the family home.

However, he says he’d include real estate tax reform in future waves of reform, depending on negotiations with the states.

We’ve said real estate taxes should front a second wave of reforms.

Within a fortnight of the Henry report, the NSW Government conjured up a new transaction tax – and we all thought vendor duty was the world’s dumbest tax.

The NSW property tax grab pants on the heels of the Queensland Government’s efforts to redefine ‘unimproved’ to include improvements – success, hard work, goodwill, etc.

The Property Council and Shopping Centre Council (along with many allies) persuaded the Bligh Government to drop this skewiff proposal.

Henry said poor real estate taxes are bad for the country – Australia needs one efficient real estate tax. Maybe he was thinking of these recent examples of policy venality:

A tax on a property developer to relocate kangaroos by helicopter (to minimise stress) after paying to desex them
Parking levies that keep doubling even though less than 5 percent of tax income pays for congestion reduction programs
A development requirement to pay for stacks of non-standard light poles for the next couple of decades (and pay for
their storage until they’re needed)
Water authority drainage fees charged on gross rental value rather than drainage area or volume
Ambulance levies collected on the basis of an electricity bill – the very definition of an unfair charge
Utility augmentation connection taxes – you get to pay for service upgrades 10 suburbs away.

The lesson is that governments will keep coming back to the property well with dopey taxes unless we fix the entire show –only a radical solution will work.

We’ve commissioned KPMG Econtech, the Federal Treasury’s own advisors, to model our preferred real estate tax solution against the current ramshackle system and Dr Henry’s proposals.

Then we’ll need a brace of parkour skills to persuade all spheres of government to take the plunge.

Treasury trapped in coprolalia land

Peter Verwer — Sun, 02 May 2010 14:31:00 GMT

Beware the Treasury economists’ variety of Tourette’s syndrome, which is generally betrayed by involuntary, wild-eyed outbursts of scorn for property investment.

“It’s unproductive,” they yelp.

“It leads to asset price bubbles,” they bark.

The axiomatic ‘unproductivity’ of property investment is one of the weirder maxims littering Treasury textbooks.

Twitching Treasury economists prefer spending on ‘productive physical capital’, which is code for “we should make more stuff to sell to foreigners”.

Property investment, they say, diverts scarce capital from efforts to make more widgets that help Australia trade out of its current account deficit.

In addition, many economists recoil at the phantoms of property investment bubbles that hover menacingly over their Excel spreadsheets.

However, like most well-worn mantras, the axiom of ‘unproductivity’ comes with its own contradictions and serves merely as a consolation for shallow thinking.*

For instance:

How is it that cities provide engines for the economy (82 percent of Australia’s GDP) and yet the built environment that houses Australia is unproductive?
Why was more than 70 percent of the Treasury-designed GFC-busting stimulus package directed to the construction sector if buildings are such investment duds?
Why is the government targeting energy efficiency in buildings if the sector is a contused economic pimple?
Why is the affordability of housing stock so politically crucial?
How is investment in roads that reduce transport times and congestion a two thumbs up economy boosting activity, while investment in houses near jobs in non-residential buildings somehow misses the mark?
Why is it imperative that the proposed National Broadband Network connects directly to every one of those millions of theoretically unproductive homes?
Why do emerging nations (including their advisors in outfits such as the World Bank) champion urban development as a short cut to economic growth and living standards?
For that matter, why is urbanisation regarded as one of the most significant mega trends on the planet at the same time that the buildings which comprise urban shelter are considered economic zits?

The answers are obvious to the plain thinking.

Google Chris Joye “The Housing Productivity Myth” for an incisive and erudite critique of the issue.

Joye shows that buildings play an integral role in well-functioning communities and that housing investment correlates positively to economic productivity.

He also reminds us of the economic value of the construction spending multiplier – $2.90 of economy-wide output for every construction dollar expended.

Joye is also well worth reading for his quelling of incessant housing bubble babble.

For our part, we see a direct analogy between buildings and the technological acme of modern economies and societies – the microprocessor.

Buildings are the programmable, scaleable, power packs of the modern world. Buildings and precincts connect up and integrate community activities. They are society’s productivity platform and toolkit.

More than simply big, dumb power points for economic energy flows, buildings provide the integrated circuitry, the economic technology that enables greater social opportunity.

Given the potential to radically re-design urban spaces around emerging green technologies, new building and precinct prototypes might also help save the planet.

But there’s more: the income from commercial buildings generates retirement wealth for millions of Australians. These solid property investment returns minimise strain on the nation’s welfare safety net in an ageing society.

Home ownership also delivers security. For the ever-growing cohorts of older Australians it means not shuffling large slabs of their slim pensions into dead rent.

Home ownership also gives our kids a leg-up by offering a vehicle for safely transferring the value of your hard work to the next generation.

In short, buildings, precincts and cities are hugely productive.

Treasury economists have missed a truer target for their outbursts about unproductive economic investment.

They should examine the waste caused by poorly designed taxes and scratchy regulation, including dysfunctional planning systems.

Take developer charges and planning delays on new houses. Today’s first-time home buyers incur costs not borne by previous generations.

Stratospheric development charges and needless delays force developers to raise (borrow) extra money. Developers add these (artificial) costs (with a premium for risk) to the market price of new home packages.

Families, in turn, must then borrow more to meet the artificially inflated cost of homes, which they pay off over 20 or so years – that’s two decades of compound interest on a pointless policy-induced premium.

The same story applies to commercial property investment at even higher rates of interest on dead weight costs.

Now that’s unproductive.

It’s enough to induce involuntary twitching and fits of coprolalia+ in the most mild-mannered of us all.

*For instance:
“Better safe than sorry” “Nothing ventured, nothing gained” “Many hands make light work” “Too many cooks spoil the broth.”

+ Coprolalia is the spontaneous utterance of socially objectionable words and phrases common to sufferers of Tourette’s Syndrome.

Car parking equity part of sustainable transport solution

Catherine Carter — Mon, 19 Apr 2010 14:31:00 GMT

The Property Council of Australia fully endorses and supports action taken by ACT Chief Minister, Jon Stanhope, in lobbying his Federal colleagues to introduce paid parking in the Parliamentary zone.

The introduction of paid parking into Commonwealth-controlled areas, including at Barton/Parkes and at Russell Hill, will help to create a level playing field for all Canberrans who use their cars for transport.

As the Chief Minister says, existing arrangements are unfair to workers who are employed outside the Parliamentary zone, and inhibit sustainable transport policies.

If this initiative succeeds, it will not only make the parking situation more equitable all round – after all, commuters have to pay for all-day parking elsewhere in Canberra, including Civic and areas close to most of the town centres – it will also provide some incentive for Canberrans to look for alternative transport solutions, such as buses, riding a bike or car pooling.

Canberra is one of the most car-dependent cities in the nation, and we need a comprehensive re-think of transport options across the city, balanced with equitable private and public choice.

Parking needs to be evenly distributed through the city, and treated in an equitable manner, so it does not favour or cannibalise different parts of the city. Importantly, with rising fuel prices and the need to reduce our collective greenhouse gas emissions, we need several platforms to achieving sustainability, including reducing emissions from vehicles.

We would also encourage the ACT Government to further review and adjust car parking prices ahead of the forthcoming ACT Budget, to encourage people to use public transport.

Additional sites also need to be released for car parking and for park and ride facilities in key locations. If car park pricing is treated equitably across the Territory, this will make it viable for the private sector to provide additional car parking on a commercial basis.

Each of these steps will all contribute to the development of a genuinely integrated sustainable transport plan for Canberra, and provide real solutions and choice to enable Canberrans to work together to collectively reduce our carbon footprint.

Pulping the RIS fictions

Peter Verwer — Wed, 31 Mar 2010 14:31:00 GMT

There’s a vaccine for red tape – it’s called a regulatory impact statement: a RIS.

A RIS is meant to ensure new laws deliver net benefits to the community.

It’s a simple test – add up the virtues of a proposed law and subtract all compliance costs. The answer expressed in discounted financial terms should exceed at least one dollar.

Investors undertake similar assessments every day.

In Australia, this RIS vaccine can prove as toxic as the legislative disease it’s treating.

Let’s tour some recent RIS howlers:

A RIS for proposed changes to the building code that sampled less than five buildings and applied the results to the entire country
A RIS for residential property that totally ignored apartments
A RIS for building stock that forgot to include refurbishment projects
A RIS that produced the `wrong’ answer using a 7 percent discount rate (the government’s preferred value). Luckily, 5 percent did the trick
A RIS that blithely assumed there were no capital costs to upgrading building performance
A RIS that ignored the impact of reductions in net lettable area as a cost to owners
A RIS that underestimated Australia’s building stock by 50 percent – a handy technique for reducing the cost of regulation to investors
A RIS which calculated that additional regulatory burdens would reduce building costs.

RISs consistently fail to account for Australia’s size and diversity. They ignore climate differences, business culture, types of stock, as well as the impact of complementary or contradictory state legislation.

Many RISs don’t quantify costs and benefits in dollar terms at all.

Others fail to net off costs against benefits. They invent concepts like ‘break even points’ which relieve RIS consultants from the tedium of rigorous modeling.

Then there’s the recent flood of environmental legislation that consistently fails to quantify the ‘planet-saving’ value of proposed laws.

Take the new building code requirement to design to six stars instead of five stars.

Will the increase in one star performance abate 20 kilograms of CO2 equivalent per sqm or person? 30? 50? None? And how many megatonnes will be abated across the economy in aggregate?

It seems perverse to increase environmental performance stringencies without a target in mind. It’s willfully loopy to avoid quantifying the relative costs and benefits of proposed legislation.

A meticulous RIS would assess the environmental impact and cost of a new measure to produce a price per tonne of abatement.

Needless to say, very few RISs assess the virtues and vices of alternative approaches.

Another common RIS shortcoming is their failure to account for the behaviour of building occupants. Policy makers love to say our sector suffers from ‘split incentives’ and yet they rarely ask their RIS consultants to model them.

Let’s finish this exhausting list by noting that almost all RISs fail to account for the timing gap between the capital investment required by new laws and the return received by investors; particularly in relation to the refurbishment of existing stock.

Most RISs simply assume benefits flow from the minute legislation is proclaimed.

The Property Council has outlined a best practice RIS model on several occasions.

The key features of the model are:

A transparent RIS methodology that states assumptions clearly
An assessment of who pays costs and who receives benefits
A quantification and netting of costs and benefits, as well as other dividends (for instance, environmental benefits)
Rigorous modeling of impacts across the country
Good governance, including an independent RIS umpire.

One concrete proposal that could be implemented by governments is to establish a UK-style Better Regulation Executive, which has a mandate to cut administrative burdens by 25 percent by th end of 2010.

It’s desperately important that we move from RISs that would qualify for Arts Council creative writing grants to a ridgy didge test of net benefits.

We can then devote greater energy to slashing swathes of existing red tape and harmonising our laws to better reflect our national marketplace and a joined-up Federation.

Open doors for debate on growth

Catherine Carter — Mon, 29 Mar 2010 14:30:00 GMT

We need to have a serious debate on growth in the ACT, because this subject will not simply to away or stay static if we ignore it.

Rather than staying the same, the population here is more likely to grow if we remain economically stable or wither if we don’t.

In action is in itself a decision, and if the community want the population to stay the same (not a view held by the Property Council), we will need to take strenuous steps to prevent the growth and prosperity which will attract extra people.

We will need a migration policy, and possibly physical barriers to prevent people coming her and staying, and maybe even some sort of legislation limiting the number of children allowable per resident family.

In any case, addressing this issue is good for the ACT and will assist the Territory Government in its deliberations on housing, infrastructure, public transport and all the other issues which must be taken into account when planning for the future.

As Tanya Plibersek, Federal Minister for Housing and the Status of Women said recently when she quoted Jeb Brugmann at a conference on the subject: “If we can just learn how to design, govern, and manage the growth of our cities, we can also design solutions to many of the global problems that confront us.”

As she said in her speech, population growth in Australia is inevitable and likely to represent a demographic and a quantitative shift.

In Australia, the number of households is projected to increase by more than three million in 20 years. And the nature of those households will be different.

The average age of our population will rise and the number of single-person households is expected to increase by 64 percent by 2028, with the number of couples without children increasing by 37 percent.

That means different housing needs, transport requirements, and demand for health services. But whether the future holds demand for bigger or smaller homes, it will hold demand for homes if our population grows, and at present the ACT has a shortage of housing of all types.

So, let’s start talking about this subject, and working out how to plan for future population, whatever it ends up being.

The time is now for big ideas

Catherine Carter — Thu, 18 Mar 2010 03:43:14 GMT

The Property Council has launched its action plan for Canberra which outlines a vision that is diverse and sustainable and which counts in the eyes of the nation.

Three years away from its centenary, it’s time for Canberra to grow up and take the brave decisions about the city of tomorrow, the Property Council said at the launch of The Urgency is Now - Action Plan for Canberra’s Future.

“The decisions made now will make or break this city, so the need for big ideas and action is urgent,” Property Council ACT Executive Director, Catherine Carter said.

“Canberra should aim to be the hallmark city of Australia and a benchmark for best practice in sustainable planning, design and construction.

“This century, the big idea for Canberra should be to incorporate everything we have learned about building cities into creating the best capital and home in the world.

“The Property Council’s fear is that a continued ad hoc approach to planning, design and construction will see a diminished Federal Government presence and investment in Canberra, a larger carbon footprint and declining community services due to lack of growth.

“Growth is not an environmental threat as long as we grow intelligently. We need a genuine long-term vision for our city and we need it now,” she said.

The action plan outlines 15 steps to achieving the vision, which include:

An holistic approach to carbon-neutrality
Fast tracked green buildings
Integrated infrastructure and transport plans
A centralised strategic policy function
Complementary planning
An updated spatial plan
A renewed mid-city precinct
New plans for the city centres, and
A diversified economy.

“The Property Council is passionate about making Canberra the best city it can be for the community and the nation. We want to work with the ACT Government, its agencies and the community to achieve that,” she said.

Click here to view the Action Plan.

Sticking it to us with carrots

Peter Verwer — Sun, 28 Feb 2010 22:37:36 GMT

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.

Civic needs integrated planning

Catherine Carter — Thu, 25 Feb 2010 22:24:07 GMT

There has been much media comment in recent weeks about the draft Greater Canberra City Area Action Plan launched recently by the Chief Minister.

The draft Action Plan has been welcomed by industry in that it touches on a number of issues that will impact on the development of Civic as the heart and central hub of Canberra, including population forecasts, infrastructure and transport requirements, and includes a commitment by the ACT Government to providing and maintaining a high quality streetscape and public realm.

In particular, it is clear that the Government has made some efforts to identify and address some of the critical issues in terms of current bottlenecks in infrastructure, roadwork and transport services which are addressed in the draft paper.

However, the document is disappointing in that there is still little detail provided about government intentions in relation to future development in Civic.

The draft Action Plan includes parts of Braddon, Turner, Reid and the lake northern foreshore. Some of these areas include designated land under the control of the National Capital Authority, but it is not clear that there has been coordination between the two levels of government about future development of these areas.

The Property Council has strongly advocated for many years that there needs to be a fully integrated and settled master plan for Civic.

A master plan is urgently needed to provide certainty about future sequencing of development, so that the decisions can be made about future commercial investment opportunities, employment and accommodation options in Canberra’s central business district.

We should now be working towards a real vision and action plan for Civic, looking ahead to the shape of the city in 10, 20 and 50 years time.

A truly integrated master plan needs to include details about urban and social planning values and strategies, environmental sustainability, land use, density and transport strategies with relevant guidelines and an implementation plan.

The ACT Government has published its draft Action Plan on its community engagement website at http://www.communityengagement.act.gov.au/ with an initial public consultation period running up until the end of March. All Canberrans are invited to provide input. The Property Council will be providing its own submission.

Fighting the Land Tax Grab

Steve Greenwood — Thu, 18 Feb 2010 13:31:00 GMT

This is a fight that didn’t need to happen – but unfortunately the Government elected to try-on Queensland’s property investors in the misplaced belief they could get away with it.

The ill conceived Valuation of Land and Other Legislation Amendment Bill 2010 introduced into parliament last week by the Government is nothing short of a disgrace.

This is the third significant government policy announced in the last few months without adequate consultation - the others being the removal of covenants and the Koala SPP. The adverse results of the Government’s recent pigheaded approach are clear for all in industry to see – they are crippling investment in Queensland. The problem we have is that the Government just doesn’t seem to get it.

The evidence is readily available. It was only two weeks ago that the Property Council released our Office Market Report showing that Brisbane and the Gold Coast are experiencing the highest office vacancies in 15 years. This is not evidence of a region doing well.

We are in no doubt that the Government has not considered (or at best doesn’t understand) the full ramifications of the proposed changes to the valuations system – most alarmingly the Government doesn’t even see them as changes. In his speech to Parliament the Minister said that “the Government’s policy has always been to value land as developed”.

In the last week I have not come across a single valuer who agrees with that interpretation. In fact the directors of Queensland’s major valuation firms have come out strongly in condemning the Government’s unworkable legislation.

This Bill makes the ‘un’ in ‘unimproved value’ redundant. But instead of dropping the ‘un’ the State wants to re-write the dictionary so that the word unimproved actually means improved. It appears the people at the Macquarie Dictionary also have a battle on their hands.

We know the proposed changes will destroy property values and capital investment in Queensland, but the Government seems confused. Aspects of this Bill including the definition of ‘unimproved value’ and the appeals process appear removed from reality; but the Government thinks it can work.

So where do we go from here?

The first thing is that the fight is far from over. Over the years the Property Council has made a name for itself as an effective industry advocate. This is what we do.

We have launched a major campaign “Fighting the Land Tax Grab” and in conjunction with other key industry associations plan to continue the fight until we secure a win.

We have established a voluntary Fighting Fund to support the campaign – we are and will continue to be heard on this issue. As we have done, we will keep our members in the loop as to our activities.

I want to reiterate something that we have said to all of our members in recent member alerts. You can play an important part in this campaign. You can:

Write to the Premier and your local member expressing your strong opposition and point out the destructive effect this will have on investment and development in Queensland – and encourage all of your clients and networks to do the same.

Consider contributing to the voluntary Fighting Fund and support our campaign to raise media, community and parliamentary understanding of this issue. Much more is planned on the media front – contact me directly if you are able to contribute (sgreenwood@propertyoz.com.au or 0488 721 156).

I want to thank those members that have contributed time, energy and resources to the campaign so far. It has been invaluable. Let’s keep up the pressure.

People, productivity and place build a platform for prosperity

Nathan Paine — Sun, 14 Feb 2010 14:30:00 GMT

We've been saying for a long time that we want to see South Australia become the best place in the country to live, work and invest.

At the moment, with our great state leading the nation's economic recovery, we're approaching this rapidly, but it's no time to take our foot off the pedal.

In fact, it's the perfect time to get into reform mode.

That's why we've today launched our pre-election log of claims, called The ThreePs - People, Productivity and Place.

We believe continued actions under these broad policy umbrellas will be critical to transforming the state's potential into realised prosperity.

Much of this is about building on existing strengths.

In population, international migration continues to ride high, we're punching above our weight in attracting overseas students and, anecdotally, it appears our traditional net outflow of young people across the state's borders is slowing.

However, we need to ramp up our efforts to attract skilled migrants and to maximise benefits for the state from their talents and their contacts in their original homes.

We need to build the opportunities to attract and retain young people. And we need to stop seeing overseas students as a short-term gain for the state and focus on turning them into proud South Australians.

Productivity hasn't been high on the political agenda; understandably, because implementing can be tough. But boosting productivity is also widely considered one of the best ways of lifting living standards.

We can boost productivity in South Australia by continuing our drive towards new industries like defence, resources, clean tech and education exports. We can no longer rely on low-value manufacture as our economic platform.

In order to catalyse this change, we also need to give businesses the right environment in which to invest.

At the moment we're constrained by an oppressive land tax system that discourages business risks and limits the property transactions that allow business to grow.

Place is also another area where we can make huge advancements as a state.

Place is everything around us; it's where we live, where we work and where we go to relax and have fun. It's where we gather, it's where we feel proud and where we make our links with the community.

Done well, the art of making places can affect the way we interact, how we do business and influence many of our decisions.

In fact, place is a crucial factor in where people choose to live or work.

It's therefore critical we have in place the mechanisms that allow an adaptable approach to creating places for people.

The planning and development system is important, but it also takes in our approach to heritage, the design of our transport systems, the connectivity and functioning of our central city and to the links between our cities, towns and regions.

Combined, actions in these areas will have a powerful effect in driving the community we all want in the long run.

But the changes will take political will and political capital, as not all of the necessary changes will meet with parochial, narrow views of a minority.

So long as we agree on the whole that growth is better than stagnation and that prosperity is preferable to genteel decline, I have no doubt we can make it happen.

I ask you to throw your support behind the ThreePs.

2010: The year for policy bravery

Peter Verwer — Thu, 04 Feb 2010 21:30:00 GMT

A popular GFC tagline was that the financial crisis was “too good to waste”.

Australia navigated the downturn better than most; but, did we as a nation take the opportunity to position ourselves for a new era of high productivity prosperity, or did we squib it?

The optimistic school will say that structural change – the big, game-changing stuff – is a long journey.

The good news, they say, is we lit the fuse. There are no big bangs or quantum leaps. When it comes to cities and infrastructure investment, tax reform, financial and funds management regimes or red tape slashing, we’re cannily building the platform that will ace our global competitors (in time).

The skeptics will grumble that you don’t float the dollar one decimal point at a time; that our game-changing successes of the past, the big micro economic reform and competition policy agendas, were gutsy high profile contractual promises by governments, working with business and the community.

The critics don’t see their equivalent in the slews of consultant reports and 40-page COAG communiqués.
In short, they say, the problem isn’t the financial deficit, but a deficit of policy bravery and courageous ideas.
The balanced view is we need more energy injected into the big policy projects. Here are the Property Council game-changers for 2010.

Property tax cuts via the Henry Tax Review

Opportunities – eliminate all stamp duties, developer charge rip-offs and dopey levies by instituting a very broad-based, flat rate property tax. In short, you pay less tax and suffer less compliance hassle. We can also fix the quagmire of legacy tax issues (particularly the GST rules).

Threats – Henry could propose property owners pay for everyone else’s tax cuts (because property taxes are “less mobile”), and nix negative gearing and sensible CGT concessions.

The skinny – 2010 will decide the rules for determining your property tax bills for the next generation.

World class managed investment rules

Opportunities – a simpler, world-beating regime for listed and unlisted property vehicles, including the axing of archaic active/passive rules, greater flexibility over distribution levels and lower taxes on distributions. We can also attract more than three percent of the world’s savings.

Threats – greater bias toward companies over trusts, greater complexity.

The skinny – there’s an appetite for change, but we’ll need bipartisan support to get the new regime through the Senate.

Growth plans for our cities and regions

Opportunities – 30+ year smart planning strategies for all our cities with scheduled (and funded) infrastructure roll-out programs that service growth. We can also crank up the housing supply needed to improve affordability.

Threats – a new era of anti-growth zealotry gains the whip hand.

The skinny - the PM (Kevin “I like a Big Australia” Rudd) is our industry’s champion on this one. Politically, it doesn’t get better than this. 2010 provides our best chance to plan for growth and demonstrate its virtues to the community.

Supercharge the greening of buildings, precincts and cities

Opportunities – secure accelerated depreciation incentives to upgrade 330 million sqm of ageing non-residential stock, plus a bigger, more comprehensive Green Building Fund and tradeable energy efficiency certificates for smart property managers.

Threats – a new tax system that penalises property owners who don’t meet totally theoretical energy/carbon performance levels in addition to a dozen other measures that don’t join up.

The skinny – an even bigger strategic opportunity is to turn our urban precincts into their own power stations, water harvesters and electric car battery packs. Lots of ground work is required in 2010.

Faster, depoliticised development assessment

Opportunities – professionalise develop-ment assessment by transferring decision-making from politicised councils to independent expert panels working from very clear rules; plus, more ‘as of right’ development.

Threats – opposition parties playing the populist card and winding back gains already made.

The skinny – we’ve already made huge progress in several states. We need to close the deal in 2010.

Deeper, more liquid debt markets

Opportunities – diversify sources of debt and reduce our sector’s reliance on the big banks, starting with the re-booting of the CMBS market.

Threats – the charmed existence of the big four banks.

The skinny – some of our best friends are banks, but their interests don’t always align with ours. We need to engage better with the banking community, but also spur competition by encouraging new players (insurance and super funds) into the game.

One set of property rules for Australia

Opportunities – the holy grail of a common platform of property-related laws in ALL nine Australian jurisdictions.

Threats – the blame game and parochialism that typifies the Australian Federation.

Comments – OK, this will take a few years, but the OH&S rule changes show that common sense can prevail.

Of course, there’s plenty more on the agenda. Plus, there’s our industry’s own leadership programs that aim to craft a more informed, professional and respected property industry.

Bottom line: 2010 is the year for game-changing policy bravery.

Buildings in energy spotlight

Catherine Carter — Thu, 04 Feb 2010 05:31:00 GMT

2010 should start with an important New Year's resolution for all commercial property owners.

Last November the Federal Government announced its mandatory disclosure scheme to improve the energy efficiency of commercial office buildings. The scheme is due to start in the second half of this year and requires building owners with office space greater than 2000 sq m to provide an up-to-date report on their building's energy efficiency (as measured by the NABERS ratings tool and a Building Energy Efficiency Certificate (BEEC)) at the point of sale or lease. (more)

It takes time to achieve an assessed and accredited NABERS rating. So it is important for building owners and managers to start getting ready for the scheme now.

Owners who don't comply risk a fine or prosecution so the first step for any commercial building owner is to find out if your building is affected. Generally, current NABERS-Energy ratings must be provided when offering for sale, lease, or sub lease any net lettable area of more than 2000 sq m.

But there are some exemptions. For example, you will not have to comply if the part of the building you are offering is less than 2000 sq m, or the owner is not a corporation, but an individual, partnership of government department (though the last will probably participate voluntarily). Only office buildings are captured, so retail, hotel, storage, health care facilities or car parks are exempt. For the moment. You are also exempt if your building is less than a year old or if the lease is for less than a year (and non renewable). Further likely exempt categories will include temporary buildings, buildings to be demolished and places of worship.

Even if your building is exempt it is worth considering energy efficiency disclosure anyway. As it becomes common for office buildings, the market will come to expect such disclosure and use it when choosing premises. The Property Council website contains more detailed information as well as tips.

SA must abandon its colonial tax system

George Inglis — Tue, 02 Feb 2010 22:29:00 GMT

I'll be upfront. Nobody likes paying tax. But when tax systems work efficiently and direct government funding towards projects of economic, social and environmental benefit, the community as a whole grows.

Unfortunately, despite recent announcements on land tax, our current tax system still isn't right. It is riddled with inefficiencies, it's not terribly fair and in many ways it acts as a disincentive to increased investment.

The Treasurer's recently released Mid-Year Budget Review that showed the South Australian economy has been ticking along despite the global uncertainty is fantastic news. Even better, the announcement that, if re-elected, the Government will lift the base land tax threshold from $100,000 to $300,000 is a great start to property tax reform. This initiative was then mirrored by the Redmond-Liberal Opposition who had already committed to increasing the base threshold for land tax from $110,000 to $250,000.

Now, no matter what the result, small investors providing in South Australia, those providing places for people to live will benefit.

This is good news for mum and dad investors, but on a $300,000 threshold there's certainly no South Australian business getting out from under the land tax anvil, no to say anything about the $5 million or so invested in property on our behalf by our superannuation funds.

That the thresholds will be indexed in the future is good news as it will alleviate the voracious and fast-growing nature of bracket creep that we have all come to fear.

But again, with our maximum threshold at $1 million and at the highest rate in the nation at 3.7% The biggest issue is that it's still unfair.

Property tax receipts in South Australia account for over 40 per cent of own state revenue, meaning the sector pays an inordinate proportion of the state's tax burden. Further, investors with more than one property get caught by "aggregation". This is the practice under which the Government taxes the combined value of the properties, which invariably pushes all investors into higher taxes brackets.

Or to other states that offer better returns on their investments.

While the common refrain is that only the rich pay land tax, this is simply not true. When mum and dad investors pay land tax, it pushes up the cost of rents; when a commercial investor pays it, it pushes up the cost of rents, when a developer pays it, it pushes up the cost of new homes. At the end of the day, this is a tax that flows through into every wallet in the state.

The South Australian system is so out of whack that we are only bettered by Tasmania. Tasmania is due for a State Election on the same day as South Australia and their State Government has already committed to slashing land tax by introducing a flat rate of 1.5% at a threshold of $350,000 and the Opposition has just announced, that if elected, the scheduled abolition of land tax over ten years.

The Property Council is saying enough is enough. We understand the pressure on Government coffers from the GFC and other portfolios such as health, transport and so on. We understand the need to provide a range of services to the community. But it is now time to stop the rot and provide genuine relief to those that invest in our future.

It is high time for more significant reform.

Planning for a growing South Australia

Nathan Paine — Tue, 19 Jan 2010 04:30:00 GMT

The news that South Australia’s population is likely to grow by about 400,000 over the next 30 years and that nationally we are likely to grow by 13 million over the next 40 years has led to bulk orders of sackcloth and ashes.

Talk back radio and newspaper letter pages unleashed grim warnings along the lines of “each immigrant from a non-industrialised country will, on arrival in Australia, become a carbon dioxide polluting unit at a tenfold increase”.

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Others less inclined to abandon foreigners to poverty for the planet’s sake, called for “an ethical slowdown in population”.

Perhaps we should take a cue from the Voluntary Human Extinction Movement (motto: may we live long and die out), which exhorts humans to stop breeding and so restore the Earth’s biodiversity. As they say, “it’s going to take all of us going”.

Every time issues of growth, water, [insert preferred issue here] are raised in the media, a cacophony of voices rumbles into life calling for population caps and lower immigration levels, and occasionally the old catchcry of Maude Flanders: “Won’t somebody please think of the children?”

But such sentiments are not new; just three years after Federation, a Royal Commission was appointed to investigate population, fertility and immigration. This was to be the first of many official inquiries, including a National Population Inquiry in 1974, several reports by parliaments, the CSIRO and the Federal Government’s National Population Council in the 1990s.

Almost from the outset, environmental concerns were voiced by thoughtful scientists, academics and some business leaders.

Certainly by the 1920s, prominent commentators directly questioned the Australian continent’s capacity to carry a large population given environmental constraints, particularly the parched nation’s water supplies.

And yet, despite a century of inquiries, no national consensus on carrying capacity, immigration levels or Australia’s optimal population has ever been reached.

Of course, there are those who believe Australia has already exceeded its peak population level – Tim Flannery memorably cited a six million person figure, which he’s recently revised to 12 million.

Many see urbanisation as the slow burning fuse of the environmental time bomb.

For those who crave demons and the comforts of garment rending, cities offer an appropriate evil. “Cities account for 70 percent of greenhouse gases”, is a common refrain.

However, a recent article on the relationship between population growth, urbanisation and climate change by David Satterthwaite in Environment and Urbanisation magazine¹ ought to give pause.

Satterthwaite shows that many of the world’s fastest growing cities have the lowest GHG emissions.

It’s not population, but consumption that shapes environmental impacts. In fact, cities and urbanisation provide the technological answers to climate change.

Monster cities, such as New York, average emissions one half to a third of their lesser counterparts.

You’d think the Greens would be fans of population caps.

However, Lee Rhiannon, a NSW Greens politician and aspiring Senate candidate, recently remarked, “Now I’ll tell you something that I believe is not an answer, and that is to set a fixed number for Australia’s population and to set immigration accordingly.”

While Ms Rhiannon is against baby bonuses and high levels of business immigration, her main argument is that “Australia has a moral obligation to help fellow human beings”.

Her counsel echoes former Lord Mayor of London, Ken Livingstone, who at the recent Property Council Congress said anti-immigration policies were “simply bloody selfish”.

The Prime Minister Kevin Rudd has declared himself a proponent of a large population. In his recent “Building a Big Australia” speech, he declared, “I actually believe in a big Australia, I make no apology for that.”

He specifically called for Australia’s nine governments to plan for a large population by designing better urban strategies and outlined eight standards of good planning.

This is the approach the Property Council embraces and locally we have been pleased to see the delivery of the 30-Year Plan for Greater Adelaide, the adoption of principles of transit-oriented development and Zones of State Significance, and the overdue investment in our critical infrastructure.

This issue is not about a policy that sets population limits (or even growth rates) based on dismal maths or crude science, instead it is about embracing a culture of strategic planning.

If South Australia’s population is likely to reach two million by 2027, we need to have in place a bipartisan 30-Year Plan linked with infrastructure investment and an implementation plan - and pronto. Much of this work is already underway, but the time for talk is over and the time for delivery in now.

As Federal Finance Minister Linsday Tanner, speaking a Property Council lunch in Victoria, said “The primary source of stress on our urban and natural environments is bad management, not population growth.”

¹Satterthwaite, David, “The implications of population, growth and urbanisation for climate change”, Environment and Urbanisation 2009: 21 (pp 545-566)

Population policy? Perish the thought ...

Peter Verwer — Mon, 21 Dec 2009 13:31:00 GMT

The news that Australia’s population is likely to grow by 13 million over the next 40 years has led to bulk orders of sackcloth and ashes.

Talk back radio and newspaper letter pages unleashed grim warnings along the lines of “each immigrant from a nonindustrialised country will, on arrival in Australia, become a carbon dioxide polluting unit at a tenfold increase”.

Others less inclined to abandon foreigners to poverty for the planet’s sake, called for “an ethical slowdown in population”.

The call for a ‘population policy’ is not new to Australia and is generally code for population caps and lower immigration levels.

Just three years into the Australian Federation, a Royal Commission was appointed to investigate population, fertility and immigration.

This was to be the first of many official inquiries, including a National Population Inquiry in 1974, several reports by parliaments, the CSIRO and the Federal Government’s National Population Council in the 1990s.

Almost from the outset, environmental concerns were voiced by thoughtful scientists, academics and some business leaders.

And yet, despite a century of inquiries, no national consensus on carrying capacity, immigration levels or Australia’s optimal population has ever been reached.

Many see urbanisation as the slow burning fuse of the environmental time bomb.

For those who crave demons and the comforts of garment rending, cities offer an appropriate evil. “Cities account for 70 percent of greenhouse gases”, is a common refrain.

However, a recent article on the relationship between population growth, urbanisation and climate change by David Satterthwaite in Environment and Urbanisation magazine1 ought to give pause.

Satterthwaite shows that many of the world’s fastest growing cities have the lowest GHG emissions.

It’s not population, but consumption that shapes environmental impacts. In fact, cities and urbanisation provide the technological answers to climate change.

Monster cities, such as New York, average emissions one half to a third of their lesser counterparts.

You’d think the Greens would be fans of population caps.

While Ms Rhiannon is against baby bonuses and high levels of business immigration, her main argument is that “Australia has a moral obligation to help fellow human beings”.

Her counsel echoes former Lord Mayor of London, Ken Livingstone, who at the recent Property Council Congress said anti-immigration policies were “simply bloody selfish”.

He specifically called for Australia’s nine governments to plan for a large population by designing better urban strategies and outlined eight standards of good planning.

Backing the Prime Minister in a speech to the Property Council, Finance Minister Linsday Tanner said the Federal Government would consider “linking [state government] compliance with the [PM’s] criteria to all future infrastructure funding”.

This is the approach the Property Council has called for – a national competition policy-style model that ties carrots and sticks to strategic planning performance.

Australia does not need a population policy that sets limits (or even growth rates) based on dismal maths or crude science.

It needs to embrace a strategic planning culture. If Australia’s population is likely to reach 35 million by 2049, we need to
devise a 50-year infrastructure design and roll-out program pronto.

As Tanner said, “The primary source of stress on our urban and natural environments is bad management, not population growth.”

1 Satterthwaite, David, “The implications of population, growth and urbanisation for climate change”, Environment and Urbanisation 2009: 21 (pp 545-566)

Emphasis finally turns to planning

Catherine Carter — Mon, 14 Dec 2009 13:31:00 GMT

This month's COAG meeting agreed that all states and territories would by 2012 have capital city strategic plans that meet national criteria.

These criteria include planned, evidence-based land release to improve housing affordability, better transport planning to tackle urban congestion, and new urban development to be better linked to transport, jobs and services.

These plans will be for the next 30 years and include infrastructure and land use plans. Work is to start next year, and from 2012, Commonwealth infrastructure funding will be allocated according to whether they meet the agreed criteria. And the Prime Minister is already on the record with some fairly unequivocal statements about infrastructure funding which essentially mean ‘no plans, no money’.

To do this the plans will have to be integrated, across functions (such as land-use, transport planning, and environmental assessment) and the different government agencies. And although they to cover a 30-year, long-term time span, they will have to incorporate shorter-term goals or milestones, every few years as well as immediate infrastructure priorities.

The plans will also need to address nationally significant policy issues including population growth and demographic change, climate change, productivity, efficient development and use of existing and new infrastructure, housing affordability, social inclusion and the development of major urban corridors.

According to the COAG announcement, the plans would be assessed by the COAG Reform Council, because: "Capital city strategic plans are needed to lift economic productivity, respond to climate change and ensure the nation is geared up for 35 million people by 2049."

The announcement has important implications for Canberra. It is vital for the ACT, as home to Australia's national capital as well as home to its citizens, to produce a timely and effective 30 year plan.

The Property Council has been advocating such an integrated and strategic plan for some time now, and the COAG announcement replaces a generally haphazard and ad hoc approach across Australia with a more rigorous and disciplined model which should allow the Territory to anticipate issues, deal with them in a timely manner and even, in the right circumstances, prevent them from arising.

Employment creation the key to managing Queensland’s population growth

Steve Greenwood — Wed, 25 Nov 2009 13:31:00 GMT

It is no secret that the Property Council has strongly welcomed the Premier’s recent statements on the issue of population growth management for Queensland.

For too long the property industry has been on its own; pushing for government action to address the population challenge.

For too long the property industry has been the lone voice of sanity; opposing local politicians running the ridiculous argument on the need to ‘cap population growth’.

As recently as two weeks before the Premier’s announcement, the Property Council was again expressing its strong opposition to this crazy proposal being driven by a number of councils and ‘community groups’ – “Population Cap Calls Nonsensical: Property Council”

Well, the very good news is that our message has got through; our advocacy efforts have achieved real traction with the Government. This is no accident; this is what the Property Council does very well.

The Premier has now waded into the debate and stated unequivocally that capping population growth simply cannot be done. She is on the public record once and for all and the minority groups and local politicians opposing growth should clearly note this – they have run the race and lost.

However, while the Government’s entrance to the debate is welcome, it is clear that some of its ideas just won’t work. While the idea of attracting people to locate in other parts of the state has merit; a small handout to offset the cost of housing was never going to work.

I suspect the Premier knew this too; however there is no doubt that that the inclusion of this idea in the announcement guaranteed very strong media interest. If the controversy was planned, it was a good plan.

The real solution to managing Queensland’s future population is jobs – pure and simple. Ask anyone that has moved cities or towns recently, why have they moved, and 9 out of 10 times the answer will be that they ‘moved because of their job’.

Job creation and job location will be the critical factors in the future of managing Queensland’s population growth. Create them and they will come.

A big part of job creation is creating employment centres – industrial, commercial, retail and government – in places where we want people to move. If we want people to move to Toowoomba, Ipswich or Townsville – then we must create very significant employment opportunities in these areas. This means producing employment lands efficiently and affordably.

Unfortunately this is not what is happening at the moment – employment land supply is limited and it is expensive relative to most other States.

If we are serious about better managing our population growth, then employment land supply must be increased dramatically, regulatory hurdles and charges must be reduced.

The Property Council’s “The Great Growth Debate – a symposium on new ideas and solutions to managing Queensland’s burgeoning population” will be held on 5 March 2010 and will include discussion on the issues surrounding employment lands – and much more.

I look forward to seeing you there.

For event information on The Great Growth Debate, click here.

For sponsorship information for The Great Growth Debate, click here.

Rudd plan good news for capital

Catherine Carter — Sun, 15 Nov 2009 13:31:00 GMT

Official estimates show that Australia is headed for a 65 percent population increase by 2050 with most of the extra people living in and around major cities.

This means added strain on those cities' infrastructure resources – strain which will only be alleviated if we act now. Prime Minister Rudd noted recently that the density in major cities will have to change to accommodate the expected growth, and major emphasis needs to be made on public transport.

Road congestion already costs the nation more than $9 billion and will cost an estimated $18 billion over the next decade, he said. Indeed, bottlenecks in the national road and port system have been cited as a major constraint in economic recovery.

While public transport systems are experiencing growing use, they are also suffering from under-investment. So the Federal Government's announcement that it will take greater national responsibility for improving the long-term planning of our major cities is good news for Canberra as well as for the nation as a whole.

The proposal is to work through COAG next year to work in consultation with states and territories to develop national criteria for the future strategic planning of Australia's major cities.

Criteria, the government suggests, should focus on several important issues, including planned, sequenced, evidence-based land release to meet the housing needs of the growing population; a balance of infill and greenfield development; the reduction of greenhouse gas emissions and adaptation to climate change; world-class design; and nationally-significant infrastructure, such as transport corridors and communications and utilities networks.

There is also the most welcome suggestion that such a plan should also include an effective framework for private sector investment and innovation.

The Prime Minister proposes to link Federal Government infrastructure funding to national benchmarks.

This is where the opportunity for Canberra comes in.

As a designed city, we have a golden opportunity to intelligently plan for future growth and development by developing an overarching, long-term infrastructure plan, using federal benchmarks as a framework.

Certainly we are planning several infrastructure projects, some of them very big-ticket items, but they do not yet fit into a long term plan. It is time they did.

Re-wire and re-boot REIT rules

Peter Verwer — Sun, 01 Nov 2009 13:31:00 GMT

The World Economic Forum recently awarded Australia’s financial systems and capital markets their number two ranking.

Here’s a couple more interesting facts:

Our equities market is the eighth largest in the world.
We manage the fourth largest pool of investment funds – that’s in raw dollar terms, by the way, we’re usually number one on a per capita basis.

In other words, Australians are world-class fund managers.

So, here’s the strange bit ...

Only 4 percent of all our funds under management come from overseas, yet more than 50 percent of our debt is foreign sourced.

One lesson from the GFC must be to persuade the world to give us more equity to manage and maybe a little less debt to pay back.

To do this we need to:

Reform our investment taxes, including all property taxes
Modernise our fund management rules
Set a goal to make Australia the number one long-term capital markets player in the Asia Pacific – Singapore, Tokyo, Hong Kong and Shanghai can fight it out for number two
Improve the quality of Australia’s regulators
Further improve the quality of governance and of company performance reporting.

The Rudd Government has pledged to transform Australia into a global financial hub. In February this year it announced a review of managed investment trusts by the Board of Taxation (the BOT MIT Review).

The Government has also delivered reform down payments – radically reducing withholding tax from 30 percent to 7.5 percent and fixing some arcane controls (commonly known as the FIF and CFC rules).

The Government also agrees their reform program must include Australia’s globally successful real estate investment trusts (REITs).

Australia is renowned for its REITs, with about 70 percent of Australia’s investment grade property securitised through listed and wholesale trusts. However, our REIT rules are more than a quarter of a century old and looking ragged – particularly as 18 other countries are now nipping at our heels with their own REIT regimes (usually copied from ours).

REITS are meant to place ordinary Australians who invest in property collectively on the same footing as wealthy direct property owners. However, the current REIT rules were designed for a less complex era and often act more as anti-avoidance rules that block innovation.

Many of today’s commonplace property investment opportunities simply didn’t exist when the REIT rules were first drafted. This blocks ordinary Australians from the benefits of modern property investment opportunities.

In the future, green buildings will generate their own power and sell any surplus back into the traditional electricity grid. Today’s REIT rules would treat such earnings as active (bad) income.

Governments want investors to develop more retirement villages and affordable housing portfolios. In fact, society would benefit from socially-oriented investment asset classes. However, current REIT rules discourage this investment.

Here’s our plan for modernising managed fund and REIT regulations:

Establish a dedicated MIT tax regime. Include REITs within this regime. Exclude discretionary trusts.
Retain the classic features of a collective investment vehicles system, such as flow-through tax status, tax-deferred income and CGT concessions.
Allow MITs to undertake all forms of investment in property, thereby encouraging the birth of new property asset classes that will deliver social dividends, such as affordable housing, retirement and aged care facilities. Allow MITs to control taxable companies.
Scrap the outmoded ‘active/passive’ rules by clearly defining ineligible investment activities.
Create a statutory rule to tax gains or losses on disposals by MITs as capital rather than income.
Allow fund trustees to effectively manage capital by retaining a portion of earned income. Modernise the attribution rules to better serve the long-term interests of collective investors.
Enable Australian MITs to provide their unit holders with the tax treaty benefits applicable to inbound income.
Allow any widely held entity to elect into the proposed MIT regime.
Deem sovereign wealth funds to be widely held as they represent the collective wealth of nations.
Retain the current Division 6 trust income provisions as a fall-back regime for trusts that do not qualify (or elect not to enter) the MIT regime.

These proposals, along with our long-term strategy for the capital markets, are contained in the Property Council’s Blueprint for the Property Investment Industry.

The Government will announce its reform plans early next year.

Time to leave a legacy

Catherine Carter — Wed, 28 Oct 2009 13:31:00 GMT

Former Prime Minister Paul Keating has made no secret of his disdain for Canberra and he had another swipe recently, campaigning to move the national capital to Sydney or Melbourne.

So, the 300 industry and business representatives who attended the Property Council’s October ACT Division lunch were delighted to hear the Minister for Finance and Deregulation, Lindsay Tanner, extol its virtues as a capital city “of which Australians can be proud”.

He admitted to being fond of the city and added, “Rightly or wrongly, Canberra is now firmly established as a national capital”.

“Irrespective of debates about Canberra and Parliament House, the Government has no intention of changing that situation,” he said.

It was a light moment at the launch of the Federal Government’s new Commonwealth Property Management Guidelines, a document which gives welcome relief and certainty to building owners and managers.

The guidelines call for greater consistency in the way agencies manage government leased or owned properties in Australia and its external territories.

About 60 per cent of Canberra’s office market is occupied by Federal Government tenants and property costs are one of the Commonwealth’s largest recurrent expenses.

The guidelines are a valuable signal of the Federal Government’s intention to apply a principles-approach to achieve:

Value for money
Property management planning
Efficient and effective design
Appropriate accountability, and
Cooperative Commonwealth property management.

Significantly, agency heads will retain flexibility for individual office leasing decisions but there will be improved coordination, cooperation, efficiency and effectiveness in the way they manage properties.

Most importantly they sketch a clear picture of the Federal Government’s progress and priorities as a property owner and tenant in Canberra’s office market, which is the third largest in the country.

Unfortunately, the Minister was less clear about the Federal Government’s intentions for the National Capital Authority, despite the Prime Minister’s announcement the day before of the Commonwealth’s aim to take greater responsibility for improving the long-term planning of our major cities.

According to official estimates, Australia is headed for a 65 percent increase in population by 2050. That will drive the city-based population to 35 million and some of that growth will, inevitably, happen here.

But it can’t be sustained without a long-term strategic infrastructure plan.

While the ACT Government has recently announced a number of infrastructure projects, some very large, we still don’t have an holistic and integrated plan.

The Chief Minister says he wants one, the looming population boom demands one, but we still don’t have a plan that covers demographics, cross-border development and growth, environmental issues, land use patterns, maintenance and infrastructure renewal and priorities.

A plan would allow us to sustainably manage growth and change and it would establish processes that ensure implementation from the ground up, with relevant timeframes and budgets.

The Prime Minister’s cities plan represents a big and brave vision for national infrastructure.

The Property Council urges the ACT Government to do the same for Canberra.

Now is the time to work within a strategic, national and funded framework to develop a grand plan for Canberra.

Now is the time to make the brave decisions and lay the foundations for the sensible and sustainable legacy of a truly green and great city.

Adelaide 2036: Have your say!

Nathan Paine — Mon, 26 Oct 2009 13:31:00 GMT

The Property Council of Australia (South Australian Division) has made an audacious call for a revitalised and rejuvenated central business district in Adelaide, having released its visionary report "Adelaide 2036: Building on Light's Vision".

Adelaide 2036 is a goad to action in a city accustomed to much talk and little action, raising a challenge for change to Adelaide’s parochial and conservative history.

Video blog: Nathan Paine, Executive Director - Property Council of Australia

The same challenge has been taken to the state's political leaders; the report has been put to them with a request that, in the lead up to the 2010 election, they state how they will use the ideas within Adelaide 2036 to create the city all South Australians want.

In so doing we are forcing our political leaders to either take action or take responsibility for the lack of it.

In designing Adelaide, Colonel Light gave us one of the best urban fabrics on which to work – a framework of streets, squares and parks that has remained virtually unchanged through 150 years of global growth and change.

This framework remains invaluable, but we need to stop thinking about Adelaide in the 1800s and 1900s and instead focus on what our great city should be at our bicentenary in 2036.

As our emerging industries begin to draw global attention to our great economic potential and the unparalleled lifestyle opportunities Adelaide boasts, the central city will soon feel the impact of new demands and expectations and it must be prepared to evolve and adapt.

This process of adaptation does not mean casting aside the things that make Adelaide great; on the contrary we need to unleash the potential in our existing advantages. Our Park Lands must be viewed as active spaces for people that draw rather than repel the community; heritage in our built environment must provide mojo and verve to our city, but must not mean preserving our city in aspic.

We need to stop talking about ways of building on our potential and begin to deliver on these ideas. Our Park Lands, Victoria Square, the river front, our laneways have been political footballs for too long; it’s time for us to agree that good urban design can be a catalyst for community and economic development.

In Adelaide 2036, the Property Council sets out a vision and agenda that is squarely focused on redesigning how we manage and use our city.

We invite comment from all those with a stake in our city’s future – be it economic, social or environmental.

The document looks to the future and is grounded in the past. Just as Light showed vision in laying out a versatile, accessible and robust town plan, we need to show vision in ensuring that the plan is clothed with a city that meets the needs of all South Australians.

How do you want Adelaide to look in the year 2036?

Have your say below.

Not a second to lose

Peter Verwer — Wed, 30 Sep 2009 14:31:00 GMT

Last month we looked at the successes of Australia’s national competition policy (NCP).

We said that the modernisation of government business monopolies achieved by NCP offered a model for rebooting Australia’s urban planning and development control systems.

This month, we’ll connect this big picture policy approach to the basic needs of property businesses.

The property industry deserves fair and logical planning rules. That means less duplication, less uncertainty and petty politics removed from planning processes.

We also want to ditch poorly-designed taxes and usurious development charges.

Above all, we call for long-term thinking about population growth and community-building infrastructure.

Few of Australia’s strategic urban plans meet these basic criteria.

Consequently, we need to re-wire the current system and press the reset button.

That’s why the NCP model is an attractive idea. The NCP policy goals were ambitious and required governments to work together. NCP provided governments with incentives to perform and penalties that stopped backsliding.

The US urban planning system faces an equally gargantuan task as Australia.

The new Obama administration has set up a system that will require 50-year plans for US regions and cities.

The President has established an Office of Urban Affairs to facilitate this process.

He’ll redeploy an existing structure of metropolitan planning organisations (MPOs) to integrate planning schemes.

In the US, MPOs aren’t another level of government, they’re a co-ordinating mechanism.

The Obama rationale is simple: “unless you give me sound regional planning, I won’t give you any Federal Government money”.

This is the style of system that would be delivered by an NCP approach in Australia.

So how would it work? The NCP model has four critical elements packaged in an agreement between all Australian governments:

Reform principles
Performance targets
Incentives and penalties
Independent governance

The Allen Consulting Group had a crack at devising reform principles for the recent BEMP (Built Environment Meets Parliament) meeting in Canberra.

You can provide your thoughts on these principles by visiting www.bangthetable.com/bemp.

• Principle 1 – Establish a shared vision.

Strategic planning should shape prosperous, liveable and sustainable urban communities fostered by governments and their partners working in collaboration.

• Principle 2 – Forge a co-ordinated framework.

Planning must occur within a co-ordinated framework that links national, regional and local goals. These goals should be codified in intergovernmental agreements.

• Principle 3 – Maximise civic engagement.

Strategic planning must advance community participation and civic engagement.

• Principle 4 – Define targeted outcomes for specific places and times.

Plans should establish specific targets for economic prosperity, natural sustainability, liveability and governance.

• Principle 5 – Demonstrate the best use of collective resources (including existing resources) and clearly define how these resources are to be used.

Plans should reflect strategic choices that are evidence-based.

• Principle 6 – Anticipate and address financial requirements.

Plans should identify sustainable funding programs for all major elements of proposed strategies.

• Principle 7 – Strive for and enhance delivery efficiency.

Plans must incorporate programs for maximising implementation efficiency, by identifying and addressing barriers up front.

• Principle 8 – Adhere to and promote good governance.

Strategic plans must be guided by credible institutional arrangements that ensure the plans remain true to their goals and are implemented as promised.

The Property Council believes every region and urban area of Australia needs a strategic plan that ticks these eight boxes.

In order to make these plans meaningful, we need to establish targets that address the long-term (50 years) as well as more immediate goals.

These targets make planning real. They define progress and help assess if we are making any.

The next step is to co-ordinate the work of traditional government departments. This could be done with metropolitan planning commissions.

As is the case in the US, the commissions should act as silo smashers, not another level of government.

The commissions could also co-ordinate long-term funding programs for infrastructure.

Rather than a federal office of urban affairs, we prefer a body similar to the Competition Council that ran NCP. It should advise government, but be independent of it.

Its main role would be to ensure that plans conforming to the eight principles are developed for urban regions. It would also advise on NCP-style incentives and penalties.

Australia is now headed for a 65 percent increase in population by 2050. A population of 35 million will fuel growth and opportunity.

However, despite the inevitability of this demographic destiny, we’re still not designing our cities for the future.

With Australia growing by one person every 84 seconds (net), we need to deliver a new home every three minutes. Then there’s health, education, power, transport …

We need to get a move on.

We can lead in planning population

Catherine Carter — Wed, 23 Sep 2009 14:31:00 GMT

The 21st Century is set for Australia’s population to grow hugely according to KPMG demographer Bernard Salt.

And that growth will be around three major regions, Sydney, Melbourne and southeast Queensland with Sydney and Melbourne populations growing to at least seven million by 2056.

This makes recent concerns about Canberra’s projected population growth seem minor compared to the planning issues faced in these potential mega regions.

Salt says that, given 180,000 in migration a year, our population will grow from the current 22 million to around 35 million by mid century and this growth should be the impetus for Australia to develop its own excellence in urban planning, and that our planners must not limit their projections – especially as he believes our country will be a migration destination for at least another century.

These figures sound extraordinary, but with the right planning they should be manageable.

We need to integrate and consolidate plans for power and water supplies and prepare for extra demand on other infrastructure, but other cities already have much larger populations than those we are expected to experience.

New York, for example, is home to 23 million people – that’s a million more than the entire current population of Australia. Tokyo is 34 million strong, Los Angeles has 18 million residents and London, Paris and Chicago already have more than the seven million people forecast to inhabit Sydney and Melbourne.

We in Canberra have already been debating the topics that Salt recommends for discussion in these mega regions.

We have been considering not only our own projected population growth, but also our infrastructure and transport needs going into the future and we have been looking at ways to accommodate growth while reducing our impact on the environment.

We are in a wonderful position to set the pace for the rest of the nation. And leadership in providing integrated and intelligent urban planning is a fitting role for Australia’s capital to assume.

Land tax bills hitting Queensland when it’s down

Steve Greenwood — Wed, 09 Sep 2009 14:31:00 GMT

The thud of 2009 land tax bills hitting letterboxes throughout the State is now reverberating across the Queensland economy; property values are being depressed and jobs are being lost.

The short-sighted approach taken by the Queensland Government in increasing taxes in a falling market beggars belief.

Queensland is the only State that increased its land tax take by 30% in 2009. By comparison, New South Wales and Victoria have seen an increase of 3% and decrease of 2%, respectively.

The Property Council is well attuned to the seriousness the impact of the 2009 land tax bill is having, and has been flooded by calls from a variety of distressed property owners – some reporting increases of up to 43%.

The Property Council is in no doubt that the Government is fully aware of the implications of its actions; having worked hard throughout the first half of 2009 to explicitly detail the very significant impact that increases in land taxes would have on Queensland property owners and the jobs that the property industry provides.

We have made submissions on election priorities, on the Queensland budget, we have been in direct talks with the Treasurer, we have published a stream of articles through our e-news letter, through media releases and member alerts and through an advertisement in the Courier Mail.

We have made a submission to the Federal Government’s Henry Tax review – advocating for fundamental changes to the taxation system as currently the State Government is overly reliant on inefficient business taxes – including land tax – which jeopardises jobs and hold back the economy.

Despite all this, the Queensland Government announced record land tax increases.

The Property Council has had some wins on the land tax issues: we have seen the introduction of the land tax pass-through (for new leases as of 1 July 2009), which will do much to benefit Queensland land owners.

Other Property Council land tax lobbying wins in the Queensland State Budget 2009-10 include:

The 50% cap on annual increase in land values (for the purpose of calculating land tax liabilities) continues to apply in 2009-10
Introduction of quarterly billing of land tax liabilities in 2010-11
Extended payment period for land tax assessments in 2009-10 (from 30 to 90 days) as an interim measure

However, the combination of the failure by the Government not to revalue properties in late 2008, the three year averaging process and the impact of the $93 million dollar surcharge announced in December 2008, has pushed the total State land tax bill over the $1 billion dollar mark for the first time ever.

This issue is simply not about the big end of town whinging about increasing taxes. The issue is about jobs – pure and simple. The property industry accepts that it has a role in the Queensland economy and accepts that it should pay its fair share of taxes. But footing 34% of the State’s tax bill is by no means fair.

The Property Council has renewed its call for 2009 revaluations in South East Queensland and all regional growth areas – which should provide a degree of much needed relief in 2010.

What can you do in the meantime? You can make sure that the Government knows your views on the issue by writing to your local member.

The Property Council will continue its quest for fair property taxes on behalf of its membership.

Please feel free to make your comment on this issue below – make sure your voice is heard.

Olympian planning challenge

Peter Verwer — Thu, 03 Sep 2009 14:31:00 GMT

For a sneak preview and an opportunity to comment on the strategic planning framework principles, please visit www.bangthetable.com/BEMP

The Property Council has renewed its call to reform Australia’s strategic planning and development control systems.

As Prime Minister Kevin Rudd recently declared:

“Our cities must have the best planning possible for the long term, including for the provision of infrastructure.

“… better metropolitan planning arrangements will help ensure consistent decision making, improve the efficiency of infrastructure investment and further contribute to productivity and economic growth.”

The PM has challenged his colleagues in the states and territories.

He wants clearer long-term thinking about the shape of our cities, backed by measurable performance targets and first class metropolitan co-ordination.

The PM has established a Major Cities Unit and a working party of all Australian governments to formulate a model strategic planning framework for the nation’s cities, which he wants operational across the country by July 2010.

The Property Council has suggested the Federal Government adopt a national competition policy approach to achieving the PM’s ambitions.

National Competition Policy (NCP) moved into high gear under the Keating Government in the mid 1990s, following the Hilmer Review.

After a series of Special Premiers Conferences, the states and territories agreed to restructure their public sector monopolies, to compete with the private sector on a more even basis and reform anti-competitive regulations.

In return, they received ‘competition payments’ from the Federal Government.

Some cynics describe competition policy as a bribe to do the right thing.

Whatever. The NCP project lifted national productivity and household incomes, reduced the price of family staples such as electricity and milk, and increased consumer power.

Some say NCP has helped Australia better withstand the battering winds of the GFC compared to other advanced nations.

The PM’s gung-ho approach to planning reform stems from a frustration well understood by Property Council members.

Private and public sector investment programs, including the Rudd Government’s stimulus spending, do not deliver their full economic, social and environmental benefits to Australian communities for two key reasons:

States and territories lack comprehensive strategic planning, land use, infrastructure and transport frameworks
Australia’s development control systems are archaic.

Admittedly, we’ve seen several states and territories reverse their abhorrence of strategic planning over the past few years.

Nevertheless, most existing metropolitan and regional plans suffer major weaknesses. In particular, they are not fully funded, lack clear policy goals and co-ordinated implementation programs that join-up government action.

As the Prime Minster recently discovered, even when bucket loads of money are made available, most Australian governments struggle to identify shovel-ready, value-for-money projects.

Poor strategic planning frameworks deliver accidental cities. The result is social dislocation, wasted investment and environmental externalities.

Archaic development controls undermine the value of nation and community building initiatives that deliver critical social infrastructure – schools, hospitals, affordable housing, utilities, transport and the like.

Dysfunctional planning processes result in ad hoc decisions, time delays, cost blow-outs and uncertainty. This undermines efforts to synchronise new capital investment with future community needs.

An NCP approach offers a proven model for motivating state, territory and local governments.

It comprises five key elements packaged in an inter-governmental agreement (IGA):

A set of agreed framework principles
KPIs that summarise measurable performance targets based on agreed reform priority categories
A suite of incentives and penalties for implementing the agreed principles framework and KPIs
Institutional arrangements for governing the implementation of the IGA, including an independent commission
Assistance in shaping the policy content required to implement the principles framework and KPIs.

Under the Property Councils’ proposal, the non-Federal spheres of government would remain responsible and accountable for strategic planning and development control.

However, the NCP model allows the Federal Government to invigorate and guide much-needed reform.

In short, an NCP approach represents a classic methodology for modernising the Australian Federation.

The Property Council has helped develop several policy tools to support this proposal, which can be found on our website, www.propertyoz.com.au

Most recently, we reviewed development controls in all states and territories against the Development Assessment Forum’s (DAF) leading practice model.

As a result, we’ve proposed a reform action plan for states and territories that could be incorporated in an NCP-style incentive scheme.

In addition, the Property Council and our partners in the BEMP (Built Environment Meets Parliament) coalition have devised a draft set of strategic planning framework principles for urban Australian.

We believe these principles, which we’ll showcase in the October edition of Property Australia, provide the basis for reforming Australia’s planning and development systems.

For a sneak preview and an opportunity to comment on the strategic planning framework principles, please visit www.bangthetable.com/BEMP

On a recent trip to NSW, the PM asked why the smooth-running Sydney he witnessed during the 2000 Olympics couldn’t become the norm. His own answer was to call for smart strategic planning and better coordination. It’s an Olympian challenge that applies to all Australian governments.

It's time to take a stand against land tax

Mary Massina — Wed, 02 Sep 2009 14:31:00 GMT

Since 2000, land tax receipts have increased by 200 per cent in Tasmania and over the next three financial years is estimated to go up by a further 50 per cent. In contrast to this other state tax receipts are only predicted to increase by a relatively modest less than 20 per cent.

Land tax touches all aspects of Tasmanian life. It sees a decline in the real income for those that can least afford it – low income earners in private rental accommodation. It means the iconic Tasmanian family owned shack is rapidly becoming a thing of the past and, for mum and dad investors, it eats away at their nest egg.

This is not a tax for the rich, land tax is a tax on investment that adds to the costs of doing business in Tasmania and pushes down the net returns of investing in the property sector at a time when the state can least afford it.

In the past decade the State Government’s insatiable appetite for property taxes has continued to increase with over $2.44 billion paid into Treasury coffers. However, over that same period of time the Government has done nothing to make the tax burden more equitable in Tasmania.

With the impending state election set for March next year it is time to take a stand. It is time to tell all our political leaders that reforming land tax is not the wish of a minority of vested interest groups, it is the wish of all Tasmanians who seek to see the state grow and prosper for the benefit of all its residents.

In the following weeks, a survey will be sent to members regarding land tax, the information gained from the survey will allow us to highlight to all three parties the unnecessary burden that property taxes, land tax in particular are placing on Tasmanian property investors.

Where green’s all the go

Catherine Carter — Thu, 27 Aug 2009 14:31:00 GMT

The Property Council has been campaigning for several years for the ACT’s movement into a greener future, and the second annual “Switch to Green” expo and conference, to be held at the National Convention Centre, September 10-12, with its practical sessions and demonstrations, as well as expert advice and information, seems a positive step towards such a future.

“Switch to Green” not only provides an opportunity to monitor and consider Canberra’s movement towards a green and sustainable future, it also brings together a range of community representatives and stakeholders from government, community, business, and academia to work on the challenges that movement will create.

The expo will showcase the best in green products and services. The conference program will provide participants with a greater understanding of the environmental impact of our average lifestyle as well as practical information on how to reduce that impact.

The conference has four key themes: increasing the use of solar energy, making office buildings more energy efficient, retrofitting homes for greener performance, and improving and increasing the use of public transport.

The last item is particularly well timed in view of recent ACT Government initiatives to produce an integrated transport plan for Canberra.

Conference speakers include local experts, such as ANU’s Professor Will Steffen; Achmin Steiner, the executive director of the UN Environment Program and Professor Hubert Gijzen, who directs the UNESCO Regional Science Bureau for Asia and the Pacific.

Local and international environmental groups are represented, too. Paul Gilding, former CEO of Greenpeace International, for example, will be speaking.

Geoscientists and energy engineers will speak of renewable power options for homes and offices as well as vehicular transport, and the final day of the conference will be looking towards the future.

This event, presented by organisations that include the Property Council, the UN Association of Australia (ACT), the ACT Government, the ANU Climate Change Institute, the Conservation Council and See Change, is the perfect opportunity to address the progress Canberra has made in the past 12 months and to introduce the new initiatives needed for successful steps forward towards a cleaner, green future.

Securing future finance flow

Peter Verwer — Sun, 02 Aug 2009 14:31:00 GMT

“Show me the money” is a familiar refrain around property industry boardrooms.

There are few kind words for Australia’s big four banks which, despite the boon of the Federal Government’s bank guarantee, continue to ration capital, hike interest charges and tighten loan conditions.

Commercial property lending has been a huge and profitable business for banks for the past few years. These banks are now seen as fair weather friends.

In their own defence, the banks cite the high cost of securing international debt. They also point to their willingness (to date) to manage their property loan books rather than spark an early 1990s-style fire sale.

The strategic issue is the future of capital in Australia, which is why calls for a follow-up to the 1997 Wallis report into Australia’s financial system make sense.

Australia needs a plan to foster deeper and more diverse sources of long-term capital.

In a recent BRW article, Property Council national president, Daniel Grollo, noted that the Federal Government’s stimulus packages are delivering dividends.

Economic growth is stable, if patchy, and Australia’s jobs markets have skirted the meltdown that blights other countries.

Above all, Australia has avoided the spirit-sapping crisis of confidence that typifies most of our trading partners.

However, Grollo says we can’t continue to rely on publicly funded financial transfusions.

A more traditional balance between private business investment and government spending needs to be restored. This means increasing the credit supplied to businesses, including the property investment and development sector.

Despite talk of green shoots and significant equity raising activity over the past few months, new private business spending remains weak.

The rationing of fresh investment funds will dampen job growth as we enter a new phase of the global financial crisis, where listless economic fundamentals may lead to a second liquidity crisis.

Global capital markets remain dysfunctional and it’s clear that Australia’s big four banks don’t have the capacity to provide the credit growth required to sustain an economic recovery.

At the same time, we need to better rate the risks associated with debt. We need to inject more science into the capital adequacy risk assessments applied by the banks themselves and regulatory authorities to different categories of lending.

A top priority is to re-open Australia’s mortgage securitisation markets, following the example provided by the US and Canadian Governments.

These governments guarantee high quality, asset-backed securities as a supplement to guaranteeing banking institutions themselves.

In doing so, US schemes such as the Terms Asset Backed Securities Loan Facility (TALF) accelerate the velocity of capital available to the market.

A deep and stable mortgage securities market could also allow the staged unwinding of the bank guarantee that has frozen out smaller lending institutions.

Many see huge opportunities for institutional investment in real estate-backed debt. In North America, such debt vehicles are an asset class in their own right.

Whether Australia also needs its own version of a US-style Troubled Assets Relief Program (TARP), to package up poor performing commercial property assets, is open to debate.

In the interim, the Federal Government could level the funding playing field for the regional lenders and big four banks with a low, flat pricing of its guarantee – the fee for lending its AAA credit rating. Such a move would improve the competitiveness of smaller banks, building societies and credit unions without penalising the majors.

The Federal Parliament should also reconsider and pass the Government’s Australian Business Investment Partnership (ABIP) legislation.

ABIP was conceived as a contingency plan that could be mobilised should foreign banks exit Australian debt syndicates.

The ABIP proposal is like an IT back-up program that injects confidence even if it is never activated.

Given the increasing pressure on foreign banks by their new owners – foreign governments – to re-focus on their domestic markets, the rationale for ABIP is as powerful as ever.

Once passed, ABIP could evolve to address velocity of new capital issues in addition to rollover funding.

Don’t rush to reduce choices

Catherine Carter — Thu, 30 Jul 2009 14:31:00 GMT

Coping with an increasing population means providing extra housing and extra infrastructure as well as tackling the increased complications of getting people from their homes to their jobs, schools, community services and entertainment areas.

Generally this is easier and can be less of a strain on the environment if housing is provided in areas already supplied with infrastructure and located close to workplaces and entertainment precincts. For Canberra, looking forward, this means increasing infill development and urban density.

The Property Council has for a number of years supported such development for these well-established reasons. But support of infill development does not mean that suburban development – using greenfields, or previously unused land for residential sites – should be stopped or is somehow wrong. And it certainly doesn't mean, as some of the debaters on the subject over the last week have said, that all greenfields development should be discouraged by pricing it out of contention.

There is an assumption that greenfields development is environmentally unsound simply because it isn't in the urban heart. This assumption is wrong.

Certainly greenfields development has to be carefully carried out to maximise its environmental credentials, to meet contemporary requirements and community expectations.

If you want to build from scratch now, you have to meet a series of requirements for environmentally sustainable development. Those requirements did not exist when much of the existing urban development in Canberra was built. That means that existing buildings can require extensive green refits to match the energy-saving, pollution-reducing features of much of the new housing available.

That, in turn raises its price. And Canberra already has a housing affordability problem. Do we really want to exacerbate it by reducing opportunities for young families to find affordable homes in the suburbs?

Many believe there is a way for us to live in an environmentally and economically responsible manner without totally abdicating our right to a choice of lifestyle.

Let us by all means debate the issue, but let's also consider all the implications and their long-term effects before rushing to reduce Canberrans' choices.

Time for the vision

Catherine Carter — Sun, 19 Jul 2009 14:31:00 GMT

We’re now well into the 21st century and it’s high time stpes are taken to ensure that Australia’s capital will never again be seen as a “cemetery with lights” or the “ruin of a good sheep station”.

These were the sorts of comments Sir Robert Menzies faced when he took power in 1949 and, even today, they are not far from the view held by many Australians.

In a recent ABC radio interview, Professor George Williamson called for a vision for our capital. He said party policy has so far lacked the ambition to drive the next stage in Canberra’s development.

Our city is more than just a place that employs politicians and public servants. It is the symbol and heart of our nation, but to maintain that position with credibility and honour, it must embody the best our nation has to offer. Canberra should be a city for all Australians, not just those who live here.

That is more than a job for our local government. It needs federal commitment, too.

It is unfair to expect local taxpayers to carry the expense of providing infrastructure, just as vital to the national parliamentary sector and those offices which support it, as it is to the local residents. And it is also impractical to expect local politicians, elected to represent their local constituents, to also make decisions that benefit the nation, sometimes to the exclusion of local interests.

A vision for Canberra means creating a clear picture of what we want our capital to be in future, to clearly define what we want to achieve towards that vision at target dates, to quantify and qualify fuzzy, but comforting, goals, transforming them into defined, reachable targets.

We need to know what our ideal population will be by a given date (that needs demographic targets). We need to know where people will live and work (that needs land-use planning). We need to know how we will be educating them, caring for their health, providing them with transport options (that needs infrastructure planning).

Right now, there is an opportunity for the Rudd Government to work with the ACT to recapture the vision held by Prime Ministers Chifley and Menzies of a great capital for Australia.

30 year plan gives certainty to SA

Nathan Paine — Mon, 06 Jul 2009 23:56:44 GMT

The South Australian Government has released its 30-Year Plan for Greater Adelaide.

The Plan is a core component of the Government’s planning and development reforms, providing a spatial context to the housing, workforce and infrastructure consequences of a projected state population of two million, set to be achieved by 2027. The Property Council’s South Australian Division has welcomed the Plan for the certainty it will give home buyers, investors and employers in the medium to long term.

Please feel free to share your comments on the 30 year plan below.

Download the Property Council's media release here.

The Plan is available for download from www.plan4adelaide.sa.gov.au

Responsible reporting

Peter Verwer — Mon, 29 Jun 2009 14:31:00 GMT

Australian property professionals now have their own manual for reporting on corporate responsibility performance. A Guide to Corporate Responsibility Reporting in the Property Sector was recently launched by Senator Nick Sherry in Canberra.

Senator Sherry, who has recently been promoted from Minister for Superannuation and Corporate Law to Assistant Treasurer, commended the property industry for its leadership.

He noted the Australian Government had donated $2 million to the St James Ethics Centre, which will become a local hub for the Global Reporting Initiative, which he described as the “gold standard for reporting on sustainability”, and UN Global Compact activities.

Australian property companies are recognised as world leaders in the field of corporate responsibility reporting. However, many property firms, small and large, find transparent reporting on social, environmental and economic practices a mind boggling exercise.

That’s where the Property Council’s new guide comes in. It provides a voluntary template for corporate responsibility reporting that can be customised to the needs of individual corporations. The guide aims to:

1. Provide a simple, entry level reporting template for property companies
2. Standardise the metrics that property companies use to report corporate responsibility
3. Assist with crucial scoping issues, such as determining materiality in the property sector.

The Property Council guide:

1. Defines corporate responsibility
2. Sets out a conceptual framework for corporate responsibility reporting
3. Identifies the touchstones of a robust reporting framework
4. Relates the template to international reporting schemes
5. Explores the concept of materiality and its implications for reporting
6. Outlines basic reporting metrics.

Corporate responsibility reporting can be confusing for beginners and experts. A study of 10 leading property companies found their reports utilised numerous different metrics. In fact, these companies employed more than 360 metrics to report on a handful of common categories – more than 50 different reporting metrics were used for waste alone.

The Property Council’s National Sustainability Roundtable set to work to develop a core set of metrics relevant to myriad property activities.

Drawing on the best international thinking, including the Global Reporting Initiative’s G3 standard, the Dow Jones Sustainability Indexes, FTSE4Good and various United Nation’s financial initiatives, the National Sustainability Roundtable fashioned a set of core metrics for different property players.

Consequently, A Guide to Corporate Responsibility Reporting in the Property Sector can be applied by building owners, fund managers, facility managers, developers, construction contractors and the corporate real estate sector.

These final set of metrics fall into the following categories:

Economic Performance

Corporate philanthropy

Environmental Performance

Building ratings, materials, energy, water, biodiversity and land use, emissions and water

Social Performance

Employment, occupational health and safety, training and education, human rights, community and political donations
For instance, the key metrics for energy are:

Energy used – absolute consumption in megajoules
Average energy used – by sqm (divided by asset type), by gross revenue, by asset, by fuel source
Energy saved (compared to previous year) – absolute, by sqm, by gross revenue, by asset, by fuel type.

A Guide to Corporate Responsibility Reporting in the Property Sector has been issued as a discussion paper. Stakeholders can provide feedback on any aspect of the document at www.propertyoz.com.au/cr

The National Sustainability Roundtable will monitor comments and provide its responses at regular intervals.

The Guide is also being reviewed by the Property Council’s international allies in the Real Estate Equity Securitisation Alliance. We’ve also submitted the guide to the St James Ethics Centre and to the Global Reporting Initiative.

The latter is due to commence work on a real estate sector supplement to its GRI G3 standard; however, this won’t be available for a couple of years.

The Guide is part of the Property Council’s ongoing property toolbox series.

Recent releases include our fully updated guidelines for Managing Indoor Environmental Quality and the Property Council/ARUP Existing Buildings Survival Strategies: making it happen document, produced with the assistance of Davis Langdon and Colliers International.

Please check out the bookshop for all details.

Opposition to planning reform will halt development

Jennifer Cunich — Thu, 11 Jun 2009 00:01:14 GMT

The government is under attack from community groups, councillors and NIMBY’s rallying in Melbourne against proposed planning reform.

Around 300 local activists staged an anti-development rally against on the steps of Parliament House on Wednesday 10th June.

Campaigning on a range of planning issues, from the introduction of Development Assessment Committees through to green wedge politics, local community groups are trying to polarise the community.

The Property Council has been a vocal supporter of the government when it comes to making tough decisions that speed up our planning system.

While DACs do not go far enough, they are a step in the right direction and will go a long way to easing the planning bottlenecks our Victorians face daily.

The debate has been skewed toward a vocal minority, arguing all proposed planning reforms will take away residents democratic rights.

We do not understand why the DACs are being met with heavy opposition. DACs are independent panels, with representation from both levels of government, state and local, making decisions in line with local policy, how much more democratic can that be?

More and more councils are influenced by groups, such as Planning Backlash, that advocate the BANANA approach – building absolutely nothing anywhere near anyone.

Developers and the community seek certainty in the planning process. Councillors should work with their local communities to develop sound policy, ensuring everyone knows what the rules are from day one.

The rally also attacked the governments plan to expand the Urban Growth Boundary (UGB).

The Property Council has consistently argued the UGB needs to be flexible to ensure Victoria continues to deliver an affordable housing product and maintains its competitive advantage.

The Property Council has however expressed concern about the new Growth Areas Infrastructure Contribution (GAIC) and its implementation. The GAIC appears to be intrinsically linked to the expansion of the UGB. The Property Council gave in principle support for the levy in 2005 and whilst the amount is not in question, the implementation is.

The development community and the community at large are sick of waiting for major infrastructure projects to be delivered.

As stated, we have growing concerns around the implementation of the new Growth Areas Infrastructure Contribution and are eager to make sure that the infrastructure delivery meets the needs of local communities but does not cripple the residential development sector.

The Property Council is urging the government and the Growth Areas Authority to work closely with the the Property Council in determining how the funds from this charge will be delivered directly to those communities in the Growth Areas.

Growth is not a dirty word. Growth means more employment opportunities, more revenue to provide much needed community infrastructure, and more choices for Victorians. However, growth must be managed in a sustainable manner and be shared by all Victorians. It is time the community supported the government in its attempts to keep Victoria moving and encouraged

Unit life gets complex

Catherine Carter — Thu, 04 Jun 2009 14:31:00 GMT

Compliance with many of the provisions of the amended Unit Titles Amendment Act will be labour intensive and difficult for unit owners and sellers, as well as developers.

While the amended Act embodies improvements – including a clear and timely dispute resolution mechanism, the creation of a communications officer to help owners’ corporations, greater protection for buyers and guidelines for service contracts and legal matters – it also represents significant changes and requirements.

For example, unit owners face issues over the statutory right to cancel a contract for sale and implied warranties in sales contracts. Developers need to understand new disclosure obligations and limits on proxy voting as well as the “developer control period”.

Owners’ corporations face new conditions for dispute resolution by the ACT Civil and Administrative Tribunal and new obligations on body corporate management. There are new conditions governing the voting and passing of resolutions in body corporate meetings. Consent for keeping a pet is also covered. And there’s the 1-year sinking fund plan.

There are changed provisions on owners’ corporations’ borrowing powers. There are provisions for dealing with structural defects, entry rights into a unit in the case of an emergency, the appointment of managers along with their rights, powers and obligations.

It seems likely that those who build, own, live in, buy or sell home units will need help navigating the tricky new course laid in by these amendments. The Property Council has gathered a team of experts to present at a forum titled: “New changes to the Unit Titles Act: more risk, more uncertainty, on Wednesday, 10 June.

Guest speakers include Chris Miller, strata management specialist from Canberra Units Plan Services; Jure Domazet, director with the DOMA Group and legal experts from Mallesons Stephen Jaques.

To register for this Property Council event, click here.

Putting a price on value

Peter Verwer — Wed, 03 Jun 2009 14:31:00 GMT

The politicians at the April G20 meeting may have heeded Oscar Wilde’s dictum that a cynic is someone who knows the price of everything and the value of nothing.

Amongst debate on global stimulus packages and the shape of a new world financial order, the G20 corridor talk was about the role of ‘mark to market’ valuations.

Coincidentally, the US Financial Accounting Standards Board (FASB) relaxed the ‘mark to market’ element of their valuation rules.

This decision means the US financial markets can now apply “significant” judgment when assessing the value of assets sitting on balance sheets, rather than using current market prices as an absolute guide.

FASB argued that the traditional price discovery mechanisms needed by ‘mark to market’ approaches were temporarily failing as the GFC had ruptured the alignment between economic value and transaction value.

FASB’S move raises questions about the purpose of ‘fair’ investment valuation and the role of the ‘mark to market’ regime.
In Australia, some fund managers and property investors are asking why they should value their investments in terms of a theoretical selling price.

They say, “I don’t value my property in terms of today’s sale price. I value it because of its future economic benefit, with the appropriate discounts for risk.”

Gerry Harvey bluntly declared he won’t be seeking independent valuations.

“I’m not going to revalue or devalue anything. I have taken the view that nobody knows what properties are worth at the moment,” he told The Australian Financial Review.

The counter argument is that without ‘mark to market’, we are headed to Enron-style creativity.

In the absence of ‘mark to market’ discipline, industry players will be quick to recognise improvements in value, while dragging the reporting chain on losses.

Or as Warren Buffet recently said, “I’d be worried to give a CEO a pen and tell [them] it’s the honour system.”

Are some proponents of the ‘mark to market’ regime missing the point by confusing price with value, by conflating an exit/liquidation price with investment value?

Is the price at which a market theoretically clears the most reliable metric of the future economic value – worth – of a property asset?

In Australia, the value of property is still determined by principles set out 103 years ago in the Spencer case (Spencer versus Commonwealth of Australia).

The “willing buyer, willing seller” dictum clearly assumes an exchange will take place.

Although many valuers employ quite sophisticated techniques, the most common approach used by valuation professionals is to seek out ‘sales comparables’ that signify predictive capitalisation rates.

Some might argue that relying on Spencer in 2009 is like using the landmark Harvester decision to set the terms of today’s enterprise wage agreements.

The 1907 Harvester case established Australia’s basic wage approach and led to our unique arbitration system. The difference is that Spencer is even older than Harvester – by one year – and the collective wage bargaining system has been radically modernised.

There were no globalised real estate securities markets in 1906, when Spencer was decided, so maybe there’s an argument for a clearer statutory definition of ‘valuation’ for the purposes of investment performance reporting.

Maybe there is a case for several valuation metrics that can be employed for different market and statutory reporting purposes.

For the sake of debate, let’s posit three metrics:

Most probable selling price (proposed by academics Ratcliff and Kinnard) – which forecasts a transaction price most likely to occur
Sustainable economic value – the amount an investor is willing to pay for the right to receive the (present value) of income-producing ownership benefits within specified risk criteria
Valuation risk – a measure of the uncertainty attached to each of the proposed value metrics.

The G20 told the International Accounting Standards Board (IASB) to speed up the finalisation of its relevant standards – IAS 39 Financial Instruments: Recognition and Measurement and fair value measurement.

In early May, the famously uppity IASB conceded that discounted cash flows and amortised costs might prove equally valid methods of determining ‘fair value’ as an alternative to transaction price.

Clearly, the Australian property sector needs to debate the opportunities for modernising the theory and methodological approaches to property investment valuation.

After all, the ‘comparables system’ is a legacy of our British antecedents that is ignored by many other advanced economies.

The Property Council has joined with several of Australia’s leading valuers to establish a Valuers Roundtable that will progress a debate about the modernisation of valuation practices.

The Roundtable is chaired by Brad Piltz of LandMark White. We invite the API, RICS and academics to participate in these discussions with property industry leaders.

Feedback

Property Council — Sun, 31 May 2009 15:54:00 GMT

Please review each page and either post your comments via the blog or send your comments via the link provided on each page.

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Feedback

These are draft guidelines and the Property Council of Australia seeks feedback.

An electronic copy of the publication is available at:

www.propertyoz.com.au/cr

Please separate your responses into:

general statements relevant to philosophy, scope etc.; and
specific alterations to the draft text.

Please send all comments to the Property Council by 28 May, 2010.

CORPORATE RESPONSIBILITY WORKING GROUP

Shauna Coffey – Mirvac Group
Wayne Ford
Marcus Gibson – Lend Lease
Caroline Noller – The GPT Group
Craig Roussac – Investa Property Group
Siobhan Toohill – Stockland

The Property Council sincerely thanks members for their ongoing contribution to the drafting of A Guide to Corporate Responsibility Reporting in the Property Sector.

The Property Council also gratefully acknowledges the valuable work of the project’s working group.

Please contact the following for more information:

Paul Waterhouse
Email: pwaterhouse@propertyoz.com.au
Phone: (02) 9033 1956
Level 1, 11 Barrack Street
Sydney, NSW 2000
Australia

Jane Macnamara
Email: jmacnamara@propertyoz.com.au
Phone: (02) 9033 1983
Level 1, 11 Barrack Street
Sydney, NSW 2000
Australia

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Appendix B: Materiality Summary

Property Council — Sun, 31 May 2009 15:53:00 GMT

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Appendix B: Materiality Summary

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Appendix A: GRI Profile Disclosures

Property Council — Sun, 31 May 2009 15:52:00 GMT

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Appendix A – GRI Profile Disclosures

This appendix reprints the Profile Disclosures provided by the GRI G3 Guidelines[1].

This section specifies the base content that should appear in a sustainability report, subject to the guidance on materiality.

Profile disclosures set the overall context for understanding organizational performance such as its strategy, profile, and governance.

Reporting organizations are encouraged to follow this structure in compiling their reports, however, other formats may be chosen.

Strategy and Analysis

This section is intended to provide a high-level, strategic view of the organization’s relationship to sustainability in order to provide context for subsequent and more detailed reporting against other sections of the Guidelines. It may draw on information provided in other parts of the report, but this section is intended to produce insight on strategic topics rather than simply summarize the contents of the report. The strategy and analysis should consist of the statement outlined in 1.1 and a concise narrative outlined in 1.2.

1.1 Statement from the most senior decision-maker of the organization (e.g., CEO, chair, or equivalent senior position) about the relevance of sustainability to the organization and its strategy.

The statement should present the overall vision and strategy for the short-term, medium-term (e.g., 3-5 years), and long-term, particularly with regard to managing the key challenges associated with economic, environmental, and social performance. The statement should include:

Strategic priorities and key topics for the short/medium-term with regard to sustainability, including respect for internationally agreed standards and how they relate to long-term organizational strategy and success;
Broader trends (e.g., macroeconomic or political) affecting the organization and influencing sustainability priorities;
Key events, achievements, and failures during the reporting period;
Views on performance with respect to targets;
Outlook on the organization’s main challenges and targets for the next year and goals for the coming 3-5 years; and
Other items pertaining to the organization’s strategic approach.

1.2 Description of key impacts, risks, and opportunities.

The reporting organization should provide two concise narrative sections on key impacts, risks, and opportunities.

Section One should focus on the organization’s key impacts on sustainability and effects on stakeholders, including rights as defined by national laws and relevant internationally agreed standards. This should take into account the range of reasonable expectations and interests of the organization’s stakeholders. This section should include:

A description of the significant impacts the organization has on sustainability and associated challenges and opportunities. This includes the effect on stakeholders’ rights as defined by national laws and the expectations in internationally-agreed standards and norms;
An explanation of the approach to prioritizing these challenges and opportunities;
Key conclusions about progress in addressing these topics and related performance in the reporting period. This includes an assessment of reasons for underperformance or over-performance; and
A description of the main processes in place to address performance and/or relevant changes.

Section Two should focus on the impact of sustainability trends, risks, and opportunities on the long-term prospects and financial performance of the organization. This should concentrate specifically on information relevant to financial stakeholders or that could become so in the future. Section Two should include the following:

A description of the most important risks and opportunities for the organization arising from sustainability trends;
Prioritization of key sustainability topics as risks and opportunities according to their relevance for long-term organizational strategy, competitive position, qualitative, and (if possible) quantitative financial value drivers;
Table(s) summarizing:

Targets, performance against targets, and lessons-learned for the current reporting period; and
Targets for the next reporting period and mid-term objectives and goals (i.e., 3-5 years) related to key risks and opportunities.

Concise description of governance mechanisms in place to specifically manage these risks and opportunities, and identification of other related risks and opportunities.

Organizational Profile

2.1 Name of the organization.

2.2 Primary brands, products, and/or services.

The reporting organization should indicate the nature of its role in providing these products and services, and the degree to which it utilizes outsourcing

2.3 Operational structure of the organization, including main divisions, operating companies, subsidiaries, and joint ventures.

2.4 Location of organization’s headquarters.

2.5 Number of countries where the organization operates, and names of countries with either major operations or that are specifically relevant to the sustainability issues covered in the report.

2.6 Nature of ownership and legal form.

2.7 Markets served (including geographic breakdown, sectors served, and types of customers/beneficiaries).

2.8 Scale of the reporting organization, including:

Number of employees;
Net sales (for private sector organizations) or net revenues (for public sector organizations);
Total capitalization broken down in terms of debt and equity (for private sector organizations); and
Quantity of products or services provided.

In addition to the above, reporting organizations are encouraged to provide additional information, as appropriate, such as:

Total assets;
Beneficial ownership (including identity and percentage of ownership of largest shareholders); and
Breakdowns by country/region of the following:
Sales/revenues by countries/regions that make up 5 percent or more of total revenues;
Costs by countries/regions that make up 5 percent or more of total revenues; and
Employees.

2.9 Significant changes during the reporting period regarding size, structure, or ownership including:

The location of, or changes in operations, including facility openings, closings, and expansions; and
Changes in the share capital structure and other capital formation, maintenance, and alteration operations (for private sector organizations).

2.10 Awards received in the reporting period.

Report Parameters

Report Profile

3.1 Reporting period (e.g., fiscal/calendar year) for information provided.

3.2 Date of most recent previous report (if any).

3.3 Reporting cycle (annual, biennial, etc.)

3.4 Contact point for questions regarding the report or its contents.

Report Scope and Boundary

3.5 Process for defining report content, including:

Determining materiality;
Prioritizing topics within the report; and
Identifying stakeholders the organization expects to use the report.

Include an explanation of how the organization has applied the ‘Guidance on Defining Report Content’ and the associated Principles.

3.6 Boundary of the report (e.g., countries, divisions, subsidiaries, leased facilities, joint ventures, suppliers). See GRI Boundary Protocol for further guidance.

3.7 State any specific limitations on the scope or boundary of the report.

If boundary and scope do not address the full range of material economic, environmental, and social impacts of the organization, state the strategy and projected timeline for providing complete coverage.

3.8 Basis for reporting on joint ventures, subsidiaries, leased facilities, outsourced operations, and other entities that can significantly affect comparability from period to period and/or between organizations.

3.9 Data measurement techniques and the bases of calculations, including assumptions and techniques underlying estimations applied to the compilation of the Indicators and other information in the report.

Explain any decisions not to apply, or to substantially diverge from, the GRI Indicator Protocols.

3.10 Explanation of the effect of any re-statements of information provided in earlier reports, and the reasons for such re-statement (e.g., mergers/acquisitions, change of base years/periods, nature of business, measurement methods).

3.11 Significant changes from previous reporting periods in the scope, boundary, or measurement methods applied in the report.

GRI Content Index

3.12 Table identifying the location of the Standard Disclosures in the report.

Identify the page numbers or web links where the following can be found:

Strategy and Analysis 1.1 – 1.2;
Organizational Profile 2.1 – 2.10;
Report Parameters 3.1 – 3.13; and
Governance, Commitments, and Engagement 4.1 – 4.17.
Disclosure of Management Approach, per category;
Core Performance Indicators;
Any GRI Additional Indicators that were included; and
Any GRI Sector Supplement Indicators included in the report.

Assurance

3.13 Policy and current practice with regard to seeking external assurance for the report. If not included in the assurance report accompanying the sustainability report, explain the scope and basis of any external assurance provided. Also explain the relationship between the reporting organization and the assurance provider(s).

Governance

4.1 Governance structure of the organization, including committees under the highest governance body responsible for specific tasks, such as setting strategy or organizational oversight.

Describe the mandate and composition (including number of independent members and/or non-executive members) of such committees and indicate any direct responsibility for economic, social, and environmental performance.

4.2 Indicate whether the Chair of the highest governance body is also an executive officer (and, if so, their function within the organization’s management and the reasons for this arrangement).

4.3 For organizations that have a unitary board structure, state the number of members of the highest governance body that are independent and/or non-executive members.

State how the organization defines ‘independent’ and ‘non-executive’. This element applies only for organizations that have unitary board structures. See the glossary for a definition of ‘independent’.

4.4 Mechanisms for shareholders and employees to provide recommendations or direction to the highest governance body.

Include reference to processes regarding:

The use of shareholder resolutions or other mechanisms for enabling minority shareholders to express opinions to the highest governance body; and
Informing and consulting employees about the working relationships with formal representation bodies such as organization level ‘work councils’, and representation of employees in the highest governance body.

Identify topics related to economic, environmental, and social performance raised through these mechanisms during the reporting period.

4.5 Linkage between compensation for members of the highest governance body, senior managers, and executives (including departure arrangements), and the organization’s performance (including social and environmental performance).

4.6 Processes in place for the highest governance body to ensure conflicts of interest are avoided.

4.7 Process for determining the qualifications and expertise of the members of the highest governance body for guiding the organization’s strategy on economic, environmental, and social topics.

4.8 Internally developed statements of mission or values, codes of conduct, and principles relevant to economic, environmental, and social performance and the status of their implementation.

Explain the degree to which these:

Are applied across the organization in different regions and department/units; and
Relate to internationally agreed standards.

4.9 Procedures of the highest governance body for overseeing the organization’s identification and management of economic, environmental, and social performance, including relevant risks and opportunities, and adherence or compliance with internationally agreed standards, codes of conduct, and principles.

Include frequency with which the highest governance body assesses sustainability performance.

4.10 Processes for evaluating the highest governance body’s own performance, particularly with respect to economic, environmental, and social performance.

Commitments to External Initiatives

4.11 Explanation of whether and how the precautionary approach or principle is addressed by the organization.

Article 15 of the Rio Principles introduced the precautionary approach. A response to 4.11 could address the organization’s approach to risk management in operational planning or the development and introduction of new products.

4.12 Externally developed economic, environmental, and social charters, principles, or other initiatives to which the organization subscribes or endorses.

Include date of adoption, countries/operations where applied, and the range of stakeholders involved in the development and governance of these initiatives (e.g., multi-stakeholder, etc.). Differentiate between non-binding, voluntary initiatives and those with which the organization has an obligation to comply.

4.13 Memberships in associations (such as industry associations) and/or national/international advocacy organizations in which the organization:

Has positions in governance bodies;
Participates in projects or committees;
Provides substantive funding beyond routine membership dues; or
Views membership as strategic.

This refers primarily to memberships maintained at the organizational level.

Stakeholder Engagement

The following Disclosure Items refer to general stakeholder engagement conducted by the organization over the course of the reporting period. These Disclosures are not limited to stakeholder engagement implemented for the purposes of preparing a sustainability report.

4.14 List of stakeholder groups engaged by the organization.

Examples of stakeholder groups are:

Communities;
Civil society;
Customers;
Shareholders and providers of capital;
Suppliers; and
Employees, other workers, and their trade unions.

4.15 Basis for identification and selection of stakeholders with whom to engage.

This includes the organization’s process for defining its stakeholder groups, and for determining the groups with which to engage and not to engage.

4.16 Approaches to stakeholder engagement, including frequency of engagement by type and by stakeholder group.

This could include surveys, focus groups, community panels, corporate advisory panels, written communication, management/union structures, and other vehicles. The organization should indicate whether any of the engagement was undertaken specifically as part of the report preparation process.

4.17 Key topics and concerns that have been raised through stakeholder engagement, and how the organization has responded to those key topics and concerns, including through its reporting.

[1] Global Reporting Initiative. 2007. G3 Online: Product Disclosures. Stichting Global Reporting Initiative (GRI), www.globalreporting.org

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SOC6: Political Donations

Property Council — Sun, 31 May 2009 15:51:00 GMT

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SOC6: Political Donations

Property companies, like any other corporation, should be free to participate in, and contribute to, the democratic process.

However, in the interests of transparency, any donations made by a company to political entities should be declared.

Such declarations should extend to the funding of special purpose campaigns or organisations.

Note:

This report should comply with the requirements of the Australian Electoral Commission’s declarations/records.

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SOC5: Community

Property Council — Sun, 31 May 2009 15:50:00 GMT

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SOC5: Community

It is important that the success of a company’s activities is reflected in their acceptance by the wider community.

Any potential impacts of these projects should be identified, resolved and reported.

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SOC4: Human Rights

Property Council — Sun, 31 May 2009 15:49:00 GMT

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SOC4: Human Rights

A company’s human rights obligations extend to practices explored by its supplier.

Investment and procurement practices should screen contractors and suppliers for their exposure to human rights violations including:

discrimination;
child labour;
forced or compulsory labour;
worker representation (freedom of association).

This is particularly important if a company is sourcing materials from outside Australia.

Corporations should employ strategies to prevent racial, sex or disability discrimination and to report any incidents that may occur.

Notes:

Where a corporation has multinational operations human rights violations and discrimination incidents should be reported.

Those violations and incidents should be reported by country.

If a company has obtained assurance from suppliers or contractors this should be reported.

Definitions:

Incident categories can include: age, gender, full-time/part-time/casual/contractor

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SOC3: Training and Education

Property Council — Sun, 31 May 2009 15:48:00 GMT

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SOC3: Education & Training

Employee training rates demonstrate a corporation investment in its staff.

A corporation that spends more on education and training for staff beyond compliance responsibilities is sending a message that its employees are valuable to it.

Companies reporting against this metric should only outline workplace relevant training that is not related to their statutory responsibilities.

Definition:

“Employment band” relates to the different level of employee within a company.

For example:

Executive Management;
Senior Management;
Management;
Professional/technical; and
Employee

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SOC2: Occupational Health and Safety

Property Council — Sun, 31 May 2009 15:47:00 GMT

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SOC2: Occupational Health & Safety

Worker injury and fatality rates are snapshots of the duty of care exercised by a corporation in relation to its employees.

Proactive mitigation strategies should be identified and reported.

Notes:

Where a company has multinational operations occupational health and safety data should be split by country

Definition:

“Employment band” relates to the different level of employee within a company.

For example:

Executive Management;
Senior Management;
Management;
Professional/technical;
Employee;
Contractor; and
Non-employees (eg. customers)

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SOC1: Employment

Property Council — Sun, 31 May 2009 15:46:00 GMT

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SOC1: Employment

This indicator aims to provide a record of the demographic makeup of a corporation.

Notes:
Where a company has multinational operations employment data should be split by country

Corporations might also consider whether other categories of employees should be measured, such as:

ethnic diversity,
indigenous workforce, or
employees with disabilities.

Definition:

“Employment band” relates to the different level of employee within a company.

For example:

Executive Management;
Senior Management;
Management;
Professional/technical; and
Employee.

Turnover categories include age, gender, full-time/part-time/casual/contractor, voluntary/involuntary.

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ENV7: Waste

Property Council — Sun, 31 May 2009 15:45:00 GMT

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ENV7: Waste

This indicator aims to record the amount of total tenant, occupant, and construction waste that is sent to landfills and, by extension, the amount that is recycled.

Notes:

‘Construction materials’ as a category of waste should be divided into:

Active (eg. timber, textiles) which result in methane emissions; or
Inert (eg. steel, concrete) which have no emissions

These metrics should be used where there is a large quantity of waste being measured.

Waste can also be broken down by source.

It is important to note that hazardous waste not permitted to be sent to landfill should be reported as a separate item.

Soil removed should be included and broken into contaminated and non-contaminated soil.

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ENV6: Emissions

Property Council — Sun, 31 May 2009 15:44:00 GMT

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ENV6: Emissions

Climate change is widely recognised as the most significant environmental issue facing the globe.

The built environment and its occupants account for 23% of Australia’s total greenhouse gas emissions.

To ensure that the property sector is contributing to greenhouse gas abatement, companies should identify and record their carbon footprints and footprint reduction.

Notes:

If a company wishes to report on their own tenant emissions, this should be recorded separately.

Where a company has multinational operations emissions should be split by country.

Reporting boundaries for greenhouse gas emissions should be highlighted from the outset.

Definition:

tCO2-e - tonnes of CO₂-equivalent emissions
NOx - nitrous oxides
SOx - sulphur oxides

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ENV5: Biodiversity and Land Use

Property Council — Sun, 31 May 2009 15:43:00 GMT

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ENV5: Biodiversity and Land Use

The impact of the built environment on nature and threatened species can be significant.

Company should report on any effect their activities have on high value biodiversity or on places of particular indigenous or other heritage significance.

Notes:

Where a company has multinational operations biodiversity and land use should be split by country.

An area of land may be identified as having high biodiversity conservation values because of:

(a) the type of vegetation in the area, the extent to which it is cleared or the condition of the vegetation (or any combination of these factors), or

(b) the type of species, populations or ecological communities found in the area.²

²Threatened Species Conservation (Biodiversity Banking) Regulation 2008, New South Wales Government

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ENV4: Water

Property Council — Sun, 31 May 2009 15:42:00 GMT

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ENV4: Water

This indicator seeks to measure a corporation’s use and conservation of water.

Notes:

If a company wishes to report on their own tenant water use, this should be recorded separately.

Where a company has multinational operations water use should be split by country.

Definitions:
Measuring “by source” relates to the amount of water drawn from:

potable municipal water;
rainwater collection;
bore water;
grey water recycling (onsite and/or offsite);
black water recycling (onsite and/or offsite); or
desalinated.

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ENV3: Energy

Property Council — Sun, 31 May 2009 15:41:00 GMT

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ENV3: Energy

This indicator seeks to measure a corporation’s use and conservation of energy.

Notes:

Only the energy used in a corporation’s activities or in base buildings should be recorded for these metrics.

If a company wishes to report on their own tenant energy use, this should be recorded separately.

If you operate over differing spheres of materiality you should considered splitting the reporting for each sphere.

Where a company has multinational operations energy use should be split by country.
Definition:

MJ-e Equivalent energy in megajoules for each fuel source

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ENV2: Materials

Property Council — Sun, 31 May 2009 15:40:00 GMT

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ENV2: Materials

A building’s impact on the environment extends beyond its operation and includes the materials from which it was constructed.

This indicator measures new, recycled and environmentally responsible material utilised in development projects.

Notes:

It is up to each company to determine whether they measure material use by weight or by volume, but this decision should be recorded.

Corporations should consider breaking down their report further into the type of material being measured.

Where a company has multinational operations materials should be split by country.

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ENV1: Building Ratings

Property Council — Sun, 31 May 2009 15:39:00 GMT

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ENV1: Building Ratings

The property sector is increasingly using rating tools to measure the environmental performance of buildings.

These allow owners to compare their buildings and measure improvements in performance.

Note:

Where property owners have gone to the trouble to rate their buildings, they should report the results.

Building ratings should be third-party certified and achieved versus registered.

Where a company has multinational operations building ratings should be split by country.

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ECO1: Corporate Philanthropy

Property Council — Sun, 31 May 2009 15:38:00 GMT

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ECO1: Corporate Philanthropy

A company’s economic performance covers more than its statement of financial accounts.

Corporate responsibility requires a company to identify its economic contribution on a broader community basis.

This is largely achieved by recording the services and investments provided primarily for public benefit through commercial, in-kind, or pro bono engagement.

Note:

Companies that report against the London Benchmarking Group guidelines could provide that summary as an alternative to the above metrics.

In-kind and employee time contributions should be at-cost and during company time.

Many economic performance indicators are currently covered by the requirements of the Australian Securities Exchange (ASX), and as a result are not included in this template.

Companies should provide guidance to locating ASX economic indicators (eg. annual reports and websites).

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Performance Indicators

Property Council — Sun, 31 May 2009 15:37:00 GMT

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Performance Indicators

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How to use these Guidelines

Property Council — Sun, 31 May 2009 15:36:00 GMT

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How to use these Guidelines

1. This guide applies to all property assets, except infrastructure (eg. rail/road, energy, exclusions may occur where these projects include built environment eg. transport hubs).

2. This guide is voluntary. It is not a rating tool and the Property Council will not publicly state whether companies comply with the performance indicators or provide advice on the use of the template in individual circumstances.

3. The guide provides indicators for different spheres of company operations – it does not attempt to cover every performance criteria nominated by other international reporting standards.

4. Companies choosing to report on any of the indicators are advised to use the metrics provided.

5. When applying the metrics users need to exercise their judgement rather than rely on hard rules or ‘tick the box’ rating systems.

6. Companies are encouraged to extend their corporate responsibility reporting to include international reporting standards, using the Property Council guide as a basic starting point for this exercise.

7. This guide does not cover economic metrics covered by international financial reporting standards.

8. This guide does not identify the legal obligations and reporting responsibilities of a company, the document assumes that all companies comply with Australian law.

9. Users of this document should note:

a. the materiality of the indicators is identified at the top right hand corner of each page;
b. companies should decide which of the metrics they wish to report against – there is no expectation that all must be used;
c. additional guidance or interpretation is provided at the bottom of the page; and
d. for those who wish to apply their results to other reporting schemes, equivalent indicators are listed on the bottom left of each page.

10. Reporting organizations are encouraged to follow the GRI Profile Disclosures provided in Appendix A as structure for compiling their reports, however, other formats may be chosen.

11. Companies should consider seeking independent assurance before making statements about their performance.

12. Appendix B: Materiality Summary has been provided so that companies can quickly identify which performance indicators are relevant to their areas of operation.

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Materiality

Property Council — Sun, 31 May 2009 15:35:00 GMT

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Materiality

How do we define the property sector and the scope of corporate responsibility reporting activities?

In short, how do we identify the material metrics that meaningfully account for corporate responsibility performance?

The Concept of Materiality

The Global Reporting Initiative (GRI) provides the following perspective on the concept of materiality:

The information in a report should cover topics and indicators that reflect the organisation’s significant economic, environmental, and social impacts, or that would substantively influence the assessments and decisions of stakeholders.

Give the complex nature of this exercise, that materiality can be assessed in terms of the following criteria:

generic issues/impacts – those that have been recognised as important to society but do not affect, or aren’t affected directly, by a company’s operations;
value chains issues/impacts – those that are significantly affected by the company’s operations in the ordinary course of business; and
competitive context issues/impacts – those that significantly affect the underlying drivers of competitiveness in the places the company operates.

It is important to note that boundaries for materiality will differ for individual companies.

Companies should also consider engaging with stakeholders to determine their thresholds.

The Property Universe

The property universe is divided into five spheres of activity that may operate within a corporation: ownership, funds management, facility management, development and construction contracting.

Many Australian companies operate across all five spheres. Consequently, this guide proposes an integrated set of corporate responsibility reporting accounts and metrics that covers each area of activity.

It notes those cases where reporting metrics relate to a discrete sphere of activity.

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International Reporting Standards

Property Council — Sun, 31 May 2009 15:34:00 GMT

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International Reporting Standards

There are many other international programs relevant to the property arena.

Australian property companies, particularly those that operate across all spheres of the sector, have signed up to many of these programs, even though few specifically address the unique features of the industry.

The leading schemes are:

Dow Jones Sustainability Indexes (DJSI) – these indices provide asset managers with benchmarks to manage sustainability portfolios.
FTSE4Good – this series measures the performance of companies that meet globally recognised corporate responsibility standards, to facilitate investment in them. It focuses primarily on the creation of responsible investment products.
Global Reporting Initiative (GRI) – the GRI proposes to develop a real estate sector supplement. GRI has conducted a preliminary analysis of corporate responsibility reporting metrics and practices.
UNEP Finance Initiative (UNEP FI) – to date, the UNEP FI (and its property working group) has focussed on socially responsible investment. It recently produced a set of case studies on responsible property investing divided into 10 elements:

o energy conservation;
o environmental protection;
o voluntary certifications;
o public transport oriented developments;
o urban revitalisation and adaptability;
o health and safety;
o worker well being;
o corporate citizenship;
o social equity and community development; and
o local citizenship.

UNEP Sustainable Building and Construction Initiative (UNEP SBCI) – a new item in the SBCI business plan is to “develop global benchmarks for sustainable buildings and construction.”

This voluntary guide draws on the thinking contained in these global standards.

The metrics outlined in this guide refer to specific elements of international standards, where relevant.

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Corporate Responsibility and Sustainability

Property Council — Sun, 31 May 2009 15:33:00 GMT

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Corporate Responsibility & Sustainability

Corporate responsibility is the view that a corporation ought to deliver social and environmental dividends while pursuing its primary economic interests.

This should be done within a governance framework that legitimises and renews a company’s rights and licenses to operate.

Corporate responsibility reporting is the accounting and disclosure of a corporation’s performance in relation to these activities.

In a sustainable society, corporations optimise the development of economic, social, environmental and governance capital to produce diverse community dividends.

Crucially, the process of creating these dividends does not deplete non economic forms of capital.

This guide provides a template for measuring and disclosing a property company’s performance in the course of delivering sustainable outcomes.

A simple portrayal of the links between a corporation’s public activities and its reporting obligations is shown below.

Community Value Chain

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Setting the Scene

Property Council — Sun, 31 May 2009 15:32:00 GMT

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Setting the Scene

Australian property companies are recognised as world leaders in the field of corporate responsibility reporting.

However, many property companies, small and large, are yet to take on the challenge of providing greater transparency in their social, environmental and economic practices.

This guide will help property companies report their corporate responsibility performance in a more meaningful and comparable manner.

It provides a voluntary template for corporate responsibility reporting that can be customised to the needs of individual corporations.

The purpose of this guide is to:

provide a simple, entry level reporting template for property companies;
standardise the metrics that property companies use to report corporate responsibility; and
provide guidance on materiality in the property sector.

The guide:

defines corporate responsibility;
sets out a conceptual framework for corporate responsibility reporting;
identifies the touchstones of a robust reporting framework;
relates the template to international reporting schemes;
explores the concept of materiality and its implications for reporting; and
outlines basic reporting metrics.

A study of ten leading property companies found that while many of them were providing information on the same performance indicators they were doing so using numerous different metrics.

The metrics provided in this guide deliver a standardised approach for corporate responsibility reporting in the property sector.

The guide helps property organisations to disclose meaningful accounts of their performance on a comparable basis.

The template covers:

owners;
fund managers;
facility managers;
developers;
construction contractors; and
corporations with property assets.

It is the individual company’s responsibility to determine their relevant areas of materiality.

The template does not provide performance indicators for occupiers or tenants.

Reporting organizations are encouraged to follow the GRI Profile Disclosures provided in Appendix A as structure for compiling their reports, however, other formats may be chosen.

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Concerns of ACT fiscal slide

Catherine Carter — Tue, 26 May 2009 04:01:43 GMT

Investment, job creation and thriftiness is crucial

In its budget handed down earlier this month, the ACT Government clearly focused on projects providing direct economic stimulus to the Territory as well as potential environmental benefit.

The Tune Up Canberra initiative, proposed by the Property Council, is an example. It offers incentives for commercial property owners to improve energy efficiency in existing buildings. We are delighted that the ACT Government supports it and keen to work with government to roll it out as quickly as possible.

This budget also simplifies and clarifies the Change of Use charge and reduces rates.

Commercial developments, delayed by difficulties arranging finance, are now free of the fees such delays normally incur, thanks to a moratorium. Our hope is that these fees – which present such a significant deterrent to investment in the Territory – will ultimately be abolished altogether.

The ACT Budget also increased funding to ACTPLA to provide professional and timely service, and for a range of infrastructure works supporting the land release program, and to support projects which deliver direct economic stimulus into the Territory.

The ACT Government, through this Budget, also moved towards developing a sustainable transport plan for Canberra by providing $1 million for the pilot of new rapid transit buses, increasing parking fees across government parking areas, and increasing ACTION bus fares. These three initiatives encourage people to use public transport, by removing the price advantage in driving and parking; by assisting to make much-needed private investment in parking facilities economically viable and helping to reduce the burden on the Canberra community (around $74 million in 2009-10) from subsidising ACTION.

In spite of these many good initiatives, the Property Council has serious concerns about the Territory’s deteriorating financial position.

There is no doubt that the ACT is having to deal with the unprecedented triple whammy of the impact of the global financial crisis, the downturn in the property market, and spending cuts by the Commonwealth Government.

GST payments to the Territory will be reduced by $186 million over four years, a loss partially offset by general revenue grants and special purpose payments ($141 million greater than forecast in the ACT Budget). So even with all Commonwealth payments taken into account, Canberra is worse off than expected by $45 million over the next four years.

Before this was known the ACT Government expected to accumulate operating deficits of over $1 billion by 2012-13, with the budget not balancing again until 2015-16. The Government will now be forced to find further savings in coming budgets because of reduced GST income. The savings and revenue required are daunting.

Considering the Government’s track record on spending, it will need much greater commitment and discipline to achieve its budget targets. Since 2002-03 actual expenditure has exceeded planned expenditure by $735 million – an average of $105 million each year. This record must improve to avoid crippling taxes or prolonged debt.

From 2002-03 to 2008-09 the average annual rate of increase in government expenditure was 8.8 per cent. If this rate continues, expenditure in 2012-13 will be $4278 million, or $180 million more than estimated in the budget. That would bring the operating loss to $476 million by 2012-13.

However, the budget assumes that government spending will only increase by 4.2 per cent. It is difficult to see how that will be possible without cutting programs and services, when from 2002-03 the annual increase in spending has been more than double that rate.

Worryingly, the ACT economy still relies too heavily on a very narrow tax base. The ACT Government currently depends on Federal Government grants (mainly GST) and taxes on ACT property for some 60 percent of its total revenue, and that weakness is getting worse.

In 2009-10 property taxes account for 50 per cent of all ACT tax revenue, with that burden projected to increase to 52 per cent by 2012-13. And property taxes, already very high, are also increasing much faster than other revenue sources. Over the five years to 2007-08 conveyancing taxes increased by 57 percent more, and total property taxes by 54 percent more, than total government revenue.

At present the ACT Government shows little appreciation of the longer-term consequences of such a creeping reliance on property taxes, and has announced no plans to broaden the tax base or reform the tax system.

This trend clearly cannot continue without eventually losing investment in property, which will reduce the tax take and, inevitably, further impact publicly-funded services.

One thing governments can do to bolster economies is provide support and injections of capital for infrastructure works. Infrastructure is important, not only because of the jobs involved in delivering it in the short term, but because it provides community assets in the longer term.

Regrettably, the Federal Budget provided almost nothing for ACT infrastructure projects. One reason for this may be the lack of a long-term infrastructure plan – a project which has ACT Government commitment but, as yet, no action. On the plus side however, the ACT Government has committed $762 million for new and current capital works. The ACT Government has also taken a sensible approach in terms of funding for delivery of some of these works, using government debt to invest in infrastructure – an innovative and practical approach which will ensure that future generations who benefit also share the bill.

The Government has made a public commitment to consult with the community over the coming year on Budget decisions and management of the Territory’s economy. The task is to live within our means and, at the same time, foster an environment favourable to investment and job creation.

For the love of Civic

Catherine Carter — Mon, 11 May 2009 08:08:17 GMT

CANBERRA got some welcome news when the ACT Government promised $12 million over four years for upgrades to the mid-city precinct.

This funding includes allocations for improved paving and street furniture around the iconic, but ageing Sydney and Melbourne buildings.

When making the announcement, Chief Minister Jon Stanhope said: “This targeted investment will help restore these much-loved buildings to their historic place as the heart of the city’s commercial district. Further works in the city centre will be determined through a detailed planning analysis.”

The shift in retail focus in recent years to the northern part of the city has left these landmarks sadly dilapidated, perhaps with the notable exception of West Row.

The buildings themselves were originally inspired by some of the best from Europe, including Bruneleschi’s Ospedale degli Innocenti and the cloisters of the 15th century Basilica di San Lorenzo di Firenze – an auspicious start. But, according to the attendees at a Property Council public forum on the subject, in late 2007, they need help to avoid an ignominious finish.

There was also a strong call for any refurbishment to include sustainable development principles and intense interest in the possibility that the central courtyards of those buildings could be upgraded from their current apparent use as rubbish dumps and unofficial latrines.

The participants also strongly endorsed a comment that Canberra, while rich in wide-open spaces, was short on public, but intimate areas such as those that could be enclosed by the courtyards in both buildings.

The response at that meeting showed strong and widespread support for a strategic design framework and the sensitive redevelopment of the area, particularly in time for the Centenary of Canberra celebrations in 2013.

The planning study and the funding for paving and street furniture are the first steps in such a renewal process.

In summary, what’s needed is an approach similar to that which has occurred in Sydney in and around areas such as the Queen Victoria Building and along Kent and Sussex Streets, to provide effective and workable solutions for the area.

The two buildings, flanking Northbourne Avenue on the approach from the north towards City Hill, often form the first city scene for visitors driving to Canberra. They are the gateway to our city and they should be one we can all be proud of.

Have your say.

Foot to the floor on depreciation

Peter Verwer — Sun, 03 May 2009 20:30:00 GMT

Australia last introduced accelerated depreciation on 26 February, 1992 as part of Paul Keating’s One Nation package.

Keating’s goal was to kick-start private investment activity during the early 1990s recession.

Accelerated depreciation was scrapped as part of the tax changes that followed the 1999 Ralph review.

There are five big reasons for re-introducing accelerated depreciation:

1. It worked last time – spectacularly!
2. It unlocks private investment
3. It supercharges the construction sector’s huge economic multiplier
4. It can link to a green “New Deal”
5. It proves and pays for itself.

1. It worked last time – spectacularly!

Accelerated depreciation lifted private investment within a few months of its introduction.

Prior to One Nation, private gross fixed capital formation (GFCF) had declined for 11 quarters – it dropped by 20 percent in real terms.

After One Nation, GFCF immediately turned the corner. Twelve quarters later it had risen by 37 percent in real terms … and kept rising.

The graph below shows historical GFCF as a percentage of GDP. The turn around is stark.

2. Unlocks private investment

The private sector accounts for 70 percent of building construction and engineering activity.

The Rudd Government stimulus programs and the Building Australia Fund will provide a significant investment boost.

However, most construction activity and plant investment will remain funded by the private sector.

Accelerated depreciation will unlock private capital and get it back to work.

3. Supercharges the construction sector’s huge economic multiplier

Construction investment links to most economic sectors. The construction sector’s economic multiplier is 2.8.

Every unlocked dollar flows through the community almost three times over.

Some 15,000 construction jobs were lost during the past six months. 75,000 more workers will meet the same fate according to the Construction Forecasting Council’s latest report.

Accelerated depreciation will help reverse this trend. More investment equals more jobs.

4. Links to a green “New Deal”

The Property Council’s well-known green depreciation proposal ties accelerated depreciation rates to higher environmental performance.

Existing tax laws distinguish capital allowances that deal with plant from building amortisation rates. Therefore, it’s easy to provide both an incentive that boosts economic activity AND an incentive to retro-green Australia’s 330 million sqm of existing commercial property stock, most of which is more than 25 years old.

5. Proves and pays for itself

Accelerated depreciation benefits can’t be hoarded. Accelerated depreciation can only be claimed once real dollars are invested. Consequently, it proves itself as an economic stimulus measure.

Accelerated depreciation also pays for itself. Over time, there is no loss to government revenue, as taxpayers must stop depreciating an asset for tax purposes before it reaches the end of its economic life.

And here’s another dividend – accelerated depreciation massively simplifies Australia’s complex capital allowances system.

In short, accelerated depreciation can deliver an economic boost, maximise green dividends and slash red tape.

[Source: ABS - 5204.0]

[Source: ABS/Construction Forecasting Council]

Transport plan needs more work

Catherine Carter — Wed, 22 Apr 2009 20:30:00 GMT

Light rail can be a pleasant and effective mode of transport if it is properly integrated with existing transport modes and, provided it is adaptable enough to grow and change with the community it services, it can be a vital part of an integrated transport solution.

Chief Minister Jon Stanhope has released a Pricewaterhouse Coopers report presenting the business case for light rail in Canberra.

The report was commissioned by the Commonwealth Government after the ACT listed light rail as a project for co-funding through the Commonwealth’s Business Australia Fund.

The report found light rail would cost around $2 billion and could reduce traffic congestion and greenhouse gas emissions with a benefit-to-cost ratio of 1.62.

The report says that a high-frequency service between the town centres and Civic could encourage a shift for peak-hour traffic from car to rail.

The central and most important part of any transport initiatives for Canberra should be an integrated, sustainable transport strategy, linked with other infrastructure planning and incorporating future growth and demographic changes in the ACT.

And it would receive stronger support if the actual cost to Canberrans, for both building and maintaining the service were provided in more detail.

This proposal needs further scrutiny: For the business case to be compelling, it needs to answer some questions relating to Canberra’s overall transport situation. For example, how would light rail on its own support the development of a future sustainable transport plan?

Why is it a better solution environmentally, economically and strategically than other transport options, such as a rapid bus system on current roads?

Importantly, its success hinges on its acceptance and use by all Canberrans. There would have to be safe and reliable parking for bikes and cars at the various stations (this is not included in the proposal’s cost estimates); the location of the destination stations close to workplaces and residential areas; and linkages between service modes – not discussed in the report.

The Property Council will continue to work with Government to ensure that transport strategy remains on the agenda and that real solutions are found to address Canberra’s transport problems.

Countdown to the ACT Budget

Catherine Carter — Wed, 08 Apr 2009 20:30:00 GMT

THE focus of the upcoming ACT Budget, due on May 5, needs to be sharp, clear and responsive to protect the Territory from the current economic downturn. It should deal not only with the here-and-now, but also our long-term prosperity.

It should show that the ACT Government is serious about keeping the economy going by prioritising the attraction of investment and the retention and creation of jobs. It should provide incentives for projects that do that.

Challenges that should be given clear priority in the Budget include planning, tax reform, completing the long-awaited infrastructure plan and providing incentives for converting existing buildings to make them less energy and water hungry.

Some basic themes could be “jobs”, “incentives”, “economic stimulus” and “environmental responsibility”. A basic priority for all initiatives could be “integrated and strategic planning”. A central proviso for considering initiatives could be “the long-term implications for the Territory”.

The Budget should provide incentives for projects that reduce greenhouse gas emissions by, say, improving the green credentials of existing buildings.

The Government needs to set an agenda that shows a vision for Canberra, for the next 20 years as well as the immediate future. It needs to show it has the fundamentals right – taxes, incentives, and priorities for major works.

Preparing an effective Budget in times like these is a big task for any government, and for the ACT it also represents an opportunity to address outstanding issues and build on current achievements.

For example, Planning Minister Andrew Barr’s recent announcement to increase urban density in the town centres over the next five to 10 years and to restructure ACTPLA to ease planning approval bottlenecks should ultimately remove hindrances to those projects which create jobs and keep the economy viable, as well as reducing the Territory’s commuting carbon emissions.

However, what we need is something more definite than a statement. We need specific deadline dates for these initiatives, and the Budget is the opportunity to do this.

More planning reform on the way

Ken Morrison — Wed, 08 Apr 2009 02:37:54 GMT

Perhaps the NSW Government is finally beginning to understand how much the state’s bloated planning system needs to change.

Planning was undoubtedly the biggest reform area in the Premier’s Jobs Summit response last week. The Government has now committed itself to creating Australia’s best planning system from what most would acknowledge to be the country’s worst.

To do this the Government has accepted the Property Council’s argument that it has to go further than Frank Sartor’s reforms last year (large parts of which are still being implemented).

The big new reform areas Premier Rees announced were:

‘go to’ project coordinators to cut through state government red tape
a rationalisation of state agency concurrences
rapid rezoning for strategic centres
an audit of existing unresolved projects now with state government.

Of course talk has to be converted to walk, and the shape of the state concurrences and centres rezoning reforms are yet to be determined. But these are clearly the right areas to target.

There is now a substantial planning reform agenda being designed and implemented in NSW. Joint Regional Planning Panels will commence in July to depoliticise decision making. Complying codes are being developed to give a ten day turn around for routine projects. The much rorted ‘stop the clock’ provisions for never-ending requests for new studies will be switched off. Levies have been lowered.

Now these further reforms are on the agenda.

Will it all work? It’s certainly worth a shot.

For more information on the planning reforms, click here.

Have your say!

Parliamentary pandemonium

Peter Verwer — Wed, 01 Apr 2009 19:30:00 GMT

Parliamentary debates that spotlight the commercial property sector are as rare as Midnight Oil reunions.

Politicians got their chance to rhapsodise on our sector’s collective strengths and weaknesses during the recent debate on the Australian Business Investment Partnership, known to most as ‘Ruddbank’.

A mass episode of RSI ensued as our political representatives repeatedly reached for the stereotypes.

Try these on for size:

There’s the spiv angle: “why should we be allowing the white shoe brigade … the opportunity to buy more white shoes.”
Others conceived a new economic theory that lower capital values would lead to lower rents – “the tenant might actually pay lower rent because the new owner has less capital to service.”

That’s because tenants are “paying artificially high rents to prop up artificially high values,” observed another.

Incredibly, one politician declared there’s no link between the commercial property sector and employment: “there are not a lot of jobs in … development projects.”

According to some, there’s also no link between commercial property and mainstream Australia: “this is about the big end of town … this has nothing to do with small or medium size business.”

Property owners lie about capital values: owners are “carrying these deceitful asset values into the future …”

Another pollie noted that the sector relies on “friendly valuations”.

Many ventured that the commercial property sector is over-geared and caused the economic downturn: “I seem to recall that highly geared, highly leveraged activity is what brought us to where we are now.”

Many others hammered away on the theme that the sector was untamed and speculative: “… you roll the dice when you invest in areas such as speculative commercial property.”

Commercial property players have been “speculating for over a decade and have been living high on the hog over the good times.”

“[it’s time] … the high risk, highly geared speculative arm [of commercial property development was} brought into line – as it should have been some time ago.”

Finally, we heard the rusty refrain about the commercial property sector’s lack of value adding: “we have seen … profits being made by people who were really doing very little in terms of productive activity …”

Weirdly, most of these utterings spilled from Coalition members, which might cause a few to scratch their heads while pondering whether a befuddled technician had switched the political DNA in the lab.

That would be ignoring the lesson.

I think it was Neville Wran who said that when you’ve made your point a thousand times and you’re heartily sick of your message, you know you’re only just starting to cut through.

Taking a leaf from the Johnny Mercer public affairs playbook, we need to “accentuate the positive, eliminate the negative, latch onto the affirmative.” *

As its stands, Mr In-Between has been messing with our image.

Just when we thought we’d consigned the white shoes to the political footlocker, a gaggle of pollies have flung them onto the power lines to dangle like spectral reminders of past sins.

They say we’re a tax-avoiding, over-leveraged, unproductive industry, nursing botoxed asset prices that disfigure the economy.

Public relations firms would probably suggest the property sector adopt the Paula Yates gambit.

The late Ms Yates took offence at accusations that Michael Hutchence had committed suicide. In order to protect the INXS front man’s image for posterity and shield the sensibilities of her daughters, Paula argued that Michael had, in fact, expired from autoerotic asphyxiation.

Should we white wash the white shoes with a similarly inventive re-branding strategy?

Ms Yates might again provide clues to an innovative branding program. She was certainly adept at proper nouns.

While her daughters’ names - Heavenly Hiraani Tiger Lily, Little Pixie, Peaches Honeyblossom and Fifi Trixibelle – might sound like monikers pinned to the doors of resort bungalows, they highlight the value of startling boldness.

Then again, the lesson might be to stick with simple, factual messages.

The property industry has great stories to tell about its roles in community-building, in creating retirement security for millions of Australians, in forging a competitive economy and in providing the nation’s collateral.

The recent ‘Ruddbank’ debate highlights the destructive power of negative stereotypes.

We’ve run plenty of branding campaigns in the past. A new campaign woven around positive messages starts in April. We need to run it a thousand times.

Or, as the great Mr Mercer counselled:

You’ve got to spread joy up
to the maximum
Bring gloom down to the minimum
Have faith otherwise pandemonium’s
Liable to walk upon the scene

*Ac-Cent-Tchu-Ate the Positive – Published 1944, lyrics by Johnny Mercer, music by Harold Arlen

Property sector wants planning certainty

Catherine Carter — Sun, 22 Mar 2009 22:30:00 GMT

Commentators sometimes assert that property developers want a free-for all with respect to planning, or even no planning system at all. This proposition is clearly nonsense.

What the property development industry does want is certainty in the planning system, both in terms of what is permitted and what is not permitted, and timely responses from the relevant planning agencies.

This becomes particularly important in an environment where funding for private sector projects is provided by financiers on a “use it or lose it” basis – approvals for finance can lapse if the work is not approved quickly because of delays in the planning system. In an economic downturn, the potential loss of investment into the Territory is something we can all ill afford.

The property sector has welcomed a range of initiatives which have been put in place by the ACT Government in recent months, including the establishment of an industry monitoring group to work together with the ACT Planning and Land Authority to oversight the implementation of an agreed industry action plan, including working on positive actions to address delays and bottlenecks in the system.

However, there are still some areas where significant improvements can be achieved, in particular the length of time it takes to get acknowledgement of development applications, and the frequency of contact that is required with planning authorities to achieve an outcome.

Property industry groups, including the Property Council, MBA and HIA and others, have been working together to identify key enhancements to the existing planning system, and have together developed a paper that was presented at the most recent Economic Stimulus Roundtable held this month.

Towards the end of last year, Chief Minister Jon Stanhope and the ACT Government conducted a series of roundtables with industry and community groups on the local impacts of the global financial crisis, and to develop ideas and steps that government can take to mitigate locally the effects of the global recession.

The property industry paper includes the establishment of a major projects unit to co-ordinate the processing of projects with a construction value of more than $20 million, and a methodology to ensure that all development assessments are dealt with in a timely manner.

The ACT Government is to be applauded for taking early decisive steps to listen to industry and the community, and to work through the issues and barriers to achieving a strong economy.

Land tax increases and job losses still planned for 2009

Steve Greenwood — Wed, 11 Mar 2009 22:30:00 GMT

The single issue that has surrounded much of the Queensland election debate to date has been the issue of jobs – or rather Queenslanders losing their jobs.

The Queensland property industry is well attuned to the seriousness of the job situation, with the majority of companies over the last 10 months either having had to let staff go, significantly reduce staff hours, or cut back salaries. All companies have significantly cut overheads, are the leanest they have been for years and are keenly focused on strategies to survive these tough economic times.

It is therefore with great deal of disbelief that Queensland’s business community views the current stance by all sides of politics in refusing to rule out tax increases over the next year.

All political parties know that State taxes are planned to increase later this year; however, at this stage in the election they are trying to ignore this ‘elephant in the room’. However, the elephant is starting to smell and they ignore it at their peril.

One of the most regressive of all the State’s taxes, land tax, will increase by over 30% or $253 million dollars in September 2009 if action is not taken.

The combination of the failure by the Government not to revalue properties late in 2008, the 3 year averaging process and the impact of the $93 million surcharge announced in December 2008, will push the total State land tax bill over the $1 billion mark for the first time ever.

This is not a record that any Government should be proud of. And the major political parties are kidding themselves if they think that this tax increase is not going to badly impact on business and the Queensland economy.

ALL Queensland businesses are operating close to the edge – there is no ‘fat’ remaining and they have few reserves to call upon. Further, as we all well know, the banks are not readily doling out money – indeed many are very aggressively clawing back their money.

The $253 million land tax increase will have to be funded from somewhere and for many companies the only way they will be able to do this is by saving on staffing costs. Jobs will be lost if the land tax increase proceeds.

Let’s be very clear – the issue is simply not about the big end of town whinging about increasing taxes. The issue is about jobs pure and simple.

The property industry accepts that it has a role in the Queensland economy and accepts that it should pay its fair share of taxes. Last year we paid $800 million in land tax alone. Indeed we currently pay far more than our share of total State taxes, paying around 43% of the total State tax bill.

In a statement issued on the 12 February 2009 in relation to land valuations, the Premier stated that “now is not the time for tax increases” – and the Property Industry couldn’t agree more.

In a statement issued on 3 March 2009, LNP Leader, Lawrence Springborg stated that “an LNP Government would not raise taxes” – again, the property industry strongly supports this position.

The proposed land tax increase cannot and should not proceed if the political parties are genuinely concerned about job losses. We await their responses.

Have your say

On what planet does higher tax equal affordability?

Ken Morrison — Tue, 10 Mar 2009 19:30:00 GMT

It seems March is ‘tax thy neighbour’ month, with new proposals for affordable housing levies coming thick and fast.

The idea that you make housing more affordable by taxing it more has always been a bizarre one. In the current economic times and with continued weakness in new housing construction, it’s downright dangerous.

Last week the NSW Government and Opposition took the sensible approach and voted down a Greens Bill which would have allowed councils to mandate up to 25 per cent (yes you read it right – 25 per cent) of dwellings in a development be set aside as affordable housing.

This week, the City of Sydney Council approved for public exhibition its own plan to mandate that four per cent of every new development’s dwellings be affordable, or pay a levy of $185.77 per square metre of the project’s GFA. This policy would apply to both residential and non-residential projects, with the flat tax applying equally to warehouse sheds and new premium high rises.

The NSW Government has also briefly flirted with such proposals in the past, but has always seen sense in time.

Housing affordability is a significant problem in Australia’s cities. The Property Council, through our Residential Development Council, has played a key role in putting this issue on the national agenda.

Targeted incentives to help create key worker housing are a good idea and the Federal Government’s National Rental Affordability Scheme is sensible.

But the key affordability responsibility for state and local governments is to facilitate an adequate supply of new housing free of excessive taxes and levies, and without ridiculous requirements on unit mixes and sizes which also drive up costs. This is the point the Property Council made to the City’s Planning Committee on Monday night.

Last month’s NSW Jobs Summit expressed strong support for a cut through approach to housing supply. We’ve seen a new Coordinator General appointed to push through federal stimulus package spending, supported by streamlined planning. But where is the accompanying arrangements for private sector investment in housing around transport nodes?

More supply means lower prices. Less taxes on the supply of housing mean cheaper housing. No affordability own goals please.

Have your say.

Re-use pays dividends in the long run

Catherine Carter — Thu, 05 Mar 2009 19:30:00 GMT

Growing office vacancies in Canberra, which have in part occurred because of the ‘flight to quality’ as major Commonwealth tenants look to move to energy efficient A Grade office space, raises the question about what to do with some of the older B and C grade buildings.

Much the same issue arose here about a decade ago, and the then Chief Minister introduced policies which allowed adaptive re-use of redundant existing buildings, such as the Jolimont Centre, which is now the Novotel, the Wales Centre which is now the Waldorf Apartments, and other sites, which became serviced apartments.

The adaptive re-use policies introduced included a waiver of the development application fees, remission on the change of use charge and stamp duty concessions on lower-prices apartments.

The benefit was that otherwise under-utilised buildings provided housing and other much-needed facilities in the city, increasing inner-urban population density, offering greater diversity in housing choice and relieving transport pressures because people lived closer to their workplaces.

The environmental benefits in recycling, rather than demolishing existing redundant buildings are obvious. An added environmental gain was in reduced energy costs for these renewed buildings (air conditioning in residential apartments was no longer left on all day, as it had been when they were offices, for example).

Canberra will gain if our redundant B and C grade buildings can be adapted – especially if they will provide affordable housing alternatives. But the current situation is more complicated for owners who might want to change the use of their office buildings than it was before. Upfront costs can be prohibitive, unnecessarily so, when you consider that relaxing these charges will not reduce government revenue. The experience of ten years ago shows that.

Last time, the ACT Treasury found that short-term, foregone revenue, lost when the upfront charges on changing use were reduced, was paid back within a couple of years, because of the extra rates from apartments, and the duties paid when they changed hands. So, the Territory's revenue continued to grow from these adapted buildings over time.

The Property Council would like to work with the Government, before vacancies rise too high, to identify initiatives which encourage adaptive re-use and redevelopment of ageing buildings, for a variety of purposes including residential, hotels or student accommodation.

Have your say.

Close the loopholes but not the door on our economy

Jennifer Cunich — Wed, 04 Mar 2009 19:30:00 GMT

In 2008, with little fanfare, the State Government passed a bill that will affect every rental agreement you sign and has the potential to make Victoria the most unaffordable state in Australia to rent a property.

The Duties Act Amendment Bill received little attention at the time. The state government said it was designed to close loopholes in our system which meant certain people could avoid paying stamp duty on the purchase of a property.

Let me clearly state that the Property Council does not support tax avoidance. That is not the issue.

Upon closer inspection of the Bill the devil in the detail revealed an alarming oversight by the government.

The government’s original press release talked about “complex long-term lease arrangements” and specified proposed changes would not affect anyone entering into an ordinary lease.

But nowhere in the Bill are long-term leases mentioned.

That means every tenant in Victoria could, regardless of the value of the property, pay stamp duty on the underlying value of the land.

I have met with government and opposition members to raise the alarm about the disaster this bill could unleash on our economy if allowed to pass in its current form.

All of us understand that the economy is going through a tough time. We are all worried about ours and our children’s jobs and paying the bills.

No one at this time should be talking about slugging an unfair and unaffordable tax on the Victorian community when what we actually need is a boost to keep our economy strong and growing. No one that is, except the Victorian State Revenue Office.

The impact of this poorly thought out legislation on the retirement sector has already hit the headlines.

Retirees faced the prospect of paying upward of $25,000 each on their units regardless of their circumstances. Rightly, after pressure from the Property Council, the Government caved on this issue announcing that retirement villages will now be exempt.

Whilst this was a step in the right direction, more needs to be done to make sure more innocent Victorians are not caught up in the government’s tax slug web.

And there are plenty of potential victims out there. From university students looking for cheap, affordable accommodation to any business entering into a commercial, retail or industrial lease through to small business owners – all of them could be liable to pay stamp duty on their leases.

Let’s take the example of a young family looking for cheap rental accommodation. The lease specifies the carpets must be steamed cleaned when the lease is up. This simple but common clause will trigger duty, to be paid by the tenants. On a house worth $400,000 the tenant will be liable for over $19,000 in duty. Everyone knows we already have a rental crisis in Melbourne!

The proposed law also could have a catastrophic impact on businesses in metropolitan and regional Victoria costing jobs and investment making Victoria the place not to do business.

These problems could have been avoided if the Government undertook a comprehensive, open and transparent consultation process. The Bill is due to be debated this week. The logical solutions to fix this mess is for the Bill to be pulled or the Opposition, with the assistance of the minor parties should step up to the mark and oppose the Bill.

The logic is simple. Slugging a slowing economy means jobs will go and our quality of life will suffer.

At a time when we are looking to governments across the country to stimulate the economy, unintentionally increasing taxes on the community at large will have disastrous consequences.

The Property Council supports the State Government in its attempt to close a loophole to stop genuine tax avoidance. We do not agree with a blatant tax grab by the State Revenue Office under the guise of anti-avoidance measures.

I implore the Treasurer to rethink the Governments position and withdraw or amend this legislation from Parliament or all Victorians will pay the price for this policy bungle.

Click here for the Duties Amendment Bill reading

Have your say.

Ruddbank – The facts

Peter Verwer — Mon, 02 Mar 2009 19:30:00 GMT

The Australian property sector faces the mass exodus of foreign banking credit. The consequent risk of a needless fire sale of commercially viable residential and non-residential property assets is clear and quantifiable.

A fire sale of property assets would harm the rest of the economy, as it would inevitably constrain general bank lending to home buyers and SMEs.

The Rudd Government plans to establish a contingency fund to address this risk, called the Australian Business Investment Partnership (ABIP).

The fund could bridge gaps left where banks, particularly foreign banks, withdraw from syndicated loan facilities.
The $4 billion fund (which can expand to $30 billion):

Targets roll-over finance for existing buildings and projects already under construction
Is limited to re-financing loans on commercial terms where the withdrawal by a syndicate participant threatens the refinancing of the loan
Is limited to commercially sound projects and companies.

The case for ABIP – in brief

1. The property sector has a huge exposure to foreign financiers – there is more than $30 billion of foreign credit in the property market and more than 70 percent of syndicated loans are controlled by foreign banks.

2. Several foreign banks have already refused to rollover existing credit lines for commercially viable projects and assets.

3. Foreign banks are under massive political pressure to re-focus on their domestic markets – most of them are partially nationalised and are controlled by foreign politicians.

4. Where foreign banks refuse to refresh existing credit lines, many property owners and developers will be forced to unnecessarily liquidate commercially sound assets.

5. The retreat of foreign banks increases the risk of an artificial fire sale that could engulf all property asset prices.

6. A meltdown would also harm the general business community, which relies on property as a security for both operating and investment finance.

7. An artificial collapse of commercial property values would also squeeze the credit available to home buyers. \

8. Credit rationing would also needlessly delay the cyclical recovery of residential and non-residential property investment activity.

9. The bottom line would be less new investment, slower economic growth and higher job losses.

10. A contingency fund is needed to address the exit of foreign funds caused by factors totally extraneous to the fundamentals of the Australian economy and its property markets.

ABIP won’t artificially prop up property values. It is designed to stop a free-falling over-correction of values. The Australian property market is already re-pricing itself. Capital values should find their new level in terms of market fundamentals, not a liquidity shock caused by political forces and priorities in other countries.

As ABIP loans will be made against new valuations and as commercial rates of interest will be charged, there is no free ride or bail out. This also means there is no reason for taxpayers to be “out of pocket”.

ABIP will safeguard existing construction projects and jobs in both the residential and commercial property sectors, which are already under major stress. The exodus of foreign banks would break the back of the construction industry.

15,000 construction jobs have already been lost since August last year.
More than 90 percent of these construction workers are employed by small businesses.
Property companies are shedding around 10 percent of their staff. The trades and professions, such as architects, are heading for job losses of 20 percent.
$109 billion of construction projects were shelved in 2008 – nearly eight times the historical average.
Development approvals are down 37 percent for new residential projects and 44 percent for non-residential projects (compared to December 2007 levels).
Failing to implement ABIP risks decimating the nation’s property and construction skills base – a re-run of the early 1990s.

Property owners and financiers are keen to invest in new development activity (and to create jobs). However, they cannot do so unless finance for their existing projects and existing assets is safeguarded.

There is a direct link between the availability of ABIP gap-funding and the uninterrupted supply of new homes. That's because institutional developers – the fastest growing segment of the quality residential market and of master-planned communities – face the greatest exposure to foreign lenders.

Real estate also provides the collateral for the broader Australian economy. The Australian Chamber of Commerce and Industry has said that the withdrawal of foreign bank lending would cause instability and undermine confidence that would spread to small businesses that borrow against their property holdings. An artificial property fire sale would further tighten the screws on lending to SMEs and could tip Australia into a recession as deep as the UK and US markets.

The time to act is now. Some foreign banks have already fled for the exit gates. In a recent example, four out of 13 banks withdrew from a syndicate re-financing of an ASX-listed property company.

This exodus is likely to accelerate over the coming months, which is why it’s strategically smart to establish a contingency fund now, rather than wait until it’s too late.

Have your say.

Pre-Budget Submission: Delivering a brighter future for South Australia

Nathan Paine — Sun, 01 Mar 2009 19:30:00 GMT

South Australia, like the rest of the world, is reeling from the Global Financial Crisis. The GFC is hurting balance sheets and denting grand plans, not only for businesses but also for governments.

While we acknowledge Treasury coffers in South Australia have taken a hit, in these tough times we still need tough answers. That is why the Property Council is calling on the Government to deliver a platform for growth in its 2009/2010 State Budget set to be handed down by Treasurer Foley on 04 June this year.

While the Government has done much to set the State on the path to prosperity through infrastructure investment, planning reforms and business tax cuts over the past seven years, more must be done.

South Australia’s medium term outlook continues to be positive with resources set to come back on stream as China picks up steam and the defence sector is not going into retreat any time soon. The Government must deliver a budget that builds the foundations of future dividends for the state.

To do this, the Property Council believes there are three key areas that the Government needs to reform.

1. Property Taxes
South Australia continues to labour under on of the most punitive property tax regimes in the nation where we pay more in land tax than anywhere else in the nation. The Property Council is calling on the government to raise the exemption threshold from a measly $110,000 to $250,000 and the maximum threshold from $1m to $2.5m with a top rate of 2.5 cents per dollar. This reform will not make us the most competitive but it will bring us closer to our major competitors and while it will be hard to deliver, deliver the Government must.

2. Sustainability
The built environment is responsible for 23 per cent of greenhouse gas emissions and it is well known that the easiest and cheapest way to cut emissions is by action in the built environment. The Government is to be congratulated for the work it is doing with the Property Council in delivering the Green Buildings Tune-Up Program, but more funds must be committed to this program. Water is also a touchstone issue in South Australia and all levels of Government are delivering the Glenelg to Adelaide Parklands Recycled Water Pipeline. For a $5m investment, this pipeline can be run into the CBD to feed recycled water to commercial buildings saving the State more than one BILLION litres of water per year.

3. Governance Reform
The issue of local governance reform is always tinged with local politics. The Property Council nationally is calling for a constitutional commission to investigate establishing local governments as local parliaments. In addition, at a State level we need to undertake a review of the optimal size of local governments and putting in place the appropriate probity mechanisms. This should not be about protecting one’s patch of dirt but rather about what is best for all South Australians, current and future generations.

These are just three of the key recommendations contained in the Property Council’s budget submission. None of our recommendations are easy; the job of governing a great state like South Australia should never be easy.

We have prosperity on our doorstep and while the Government has done much to unlock the door, we now need to put in place the final actions to get us over the threshold.

Have your say below on what YOU want from the State Government in the upcoming South Australian budget.

View our log of claims on video here.

Click on one of these links to read our media release and pre-budget submission.

Land tax increases: Reason to be VERY fearful …

Steve Greenwood — Thu, 19 Feb 2009 00:58:00 GMT

Despite recent announcements by the Queensland Government that it is very concerned about land tax and the implications for property owners, the fact is that the 2009 land tax bills issued in July 2009 will RISE – and they will rise very significantly.

The last 8 years has seen land tax in Queensland rise from $225 million in 00/01 to a forecast 08/09 of $797 million in the 08/09 budget. In the December 2008 mini-budget, the Government announced another land tax surcharge that will net it another $93 million in the 09/10 year.

Queensland land tax has increased on average over $70 million each year, for the last 8 years – and even more is planned for 09/10.

In the growth times of recent years, the impact of these increases have been absorbed and consumed by the overall increase in property values across Queensland. However the growth times are well and truly over.

Let’s get down to some basic facts on the impacts of land tax. On an 8% yield, every dollar increase in land tax equates to $12.50 decrease in capital value. In other words, every time the Government elects to collect another $1.00 via land tax, it effectively wipes $12.50 of value off Queensland property values.

The surcharge in the mini-budget of $93 million when it takes effect later this year will reduce the value of the Queensland property market by over $1.1 billion.

However, the story gets worse. Due to the failure by the Government to revalue most properties in Queensland in 2008 and the impact of the 3 year averaging process upon which land tax is calculated, land values for taxation purposes in 2009 will be based on the values of properties in 2006, 2007 and 2007 again.

The peak of the property market was, you guessed it, close to the end of 2007/ early 2008. By not revaluing in 2008, the Government has effectively ensured that the peak property values have been locked in for another year.

The decision taken by the Government in not revaluing in 2008 and putting in place a surcharge means that land tax bills issued in 2009 will go up and they will go up significantly – this is a FACT.

However, while property owners should be extremely alarmed, it is the Government itself that should be a near panic. And this is the reason.

Anyone with a property loan at the moment will be very familiar with the fact that the banks are very, very keen to get their money back. They are very concerned at the impact that falling property prices is having on loan to value ratios.

We have a scenario of reducing property values and banks which are aggressively clawing back loans as soon as LVR’s are compromised. The situation would be a very concerning one on its own if that was all that was happening.

However, we now have a State Government that is pushing and pulling its policy levers to make the situation worse. By increasing land tax at a time of decreasing property values, it is effectively throwing petrol onto the fire.

What could this mean in the future if the Government continues down this path?

Well, it is quite possible that we will see a significant increase in the number of properties for sale across the State – further depressing property values – and further delaying a recovery by the property sector.

The Government should be very concerned at this. The Queensland property industry employs over 300,000 people; generates 14% of gross state product and pays around 43% of the State’s taxes. To put it simply, a failing property industry means a failing Queensland.

Perhaps it is time to put water on the fire, not petrol. A reduction in land tax rates would be a great start.

The secret is in the message

Bob Hawes — Mon, 16 Feb 2009 03:57:56 GMT

My economics degree is making only a small contribution in equipping me to digest the deluge of information now pouring out about where the world and Australian economy are headed in 2009 and beyond. It’s like using an umbrella in a blizzard.

There is a range of different takes on the global meltdown. The social, economic and governance outcomes always feature, but now psychology is alleged to be playing a part. Regardless, reality says the proverbial economic flywheel has, at best, slowed considerably and, at worst, ground to a halt and is looking for reverse gear.

In the good times, the literature is filled with stories of ambition and success with uplifting anecdotes that can leave you feeling like an under-achiever.

Reports now focus on how bad things are and why they’re going to get worse. The anecdotes look at the battlers, losers and the culprits and you feel overwhelmed and powerless. We’re in a bad space from which there seems to be no escape.

Well, I don’t believe we have checked into the likes of Hotel California. The iconic Eagles song of the same name was a take on the hedonism and excess in America in the late 1970s. It describes an inviting and luxurious hotel, but once you check in, there is a twist. The patron’s struggle to find “the passage back to the place I was before” culminates with the despair of "you can check out anytime you like, but you can never leave". It’s an entrapment from which the ‘guest’ is not able to escape.

Certainly the Hotel California parallels are there – the excess of the sub-prime circus; the gluttony in share markets that paralleled; the eventual crisis and a sense of hopelessness that pervaded for both the players and spectators all caught up in the mess.

But a path back is being pioneered. Rescue packages, big doses of capital injection, government expenditure and retention of employment now have the spotlight in the political landscape. Policy structured to manage inflation and interest rates have taken back seats as governments strive to shore up the economy and arguably their political survival.

And yes, psychology is part of the escape plan and it’s a real battle. In early 2008, Governments were shouting at us to reduce spending and debt and save, save, save. We were on a precipice as our household debt ballooned.

Alas, this advice was neither attractive nor conducive to the population accumulating the spoils of our modern lifestyle. Consumption was good. Money was no use in a bank account.

Twelve months later governments are crowing it’s now time to spend, spend and spend some more. But alarmingly, we are using our money boxes and are saving again. We’re told household savings rates have now hit levels last seen in Australia in the late 1990s and still climbing. Our behaviour is at odds with where the Government would like us to be – living in shopping centres and consuming our way out of trouble.

So how do we get alignment in the psychology, practice and outcomes? How can we make sure we all check out of the Hotel California?

In the late 1950s, they banned subliminal messaging in the media and advertising. It was potentially too powerful and manipulative to leave unchecked and unregulated. At its most trivial, the unscrupulous could have us all eating bananas when ordinarily we may have chosen apples.

Despite the ban, courses today that help you build your self-esteem, lose weight, improve relationships and even your sex life are said to incorporate subliminal messaging techniques.

So is this the answer as the Government seeks to shift our gaze away from a hemorrhaging financial system, a share market akin to a roulette table and the wallowing property sector?

Apparently there is no body of solid empirical evidence to verify the claims about subliminal messaging. Yet arguably it’s similar behaviour that got us here in the first place. The lemming-like behaviour that became a practice to look past the facts to discern a dud as a good investment opportunity that was sub-prime. What proof do we need?

Well, assuming my subliminal message has worked, you should all feel like having a Coke Zero about now. So get with the message, get with the program and make the best of the spending spree.

Note: this column was not sponsored by Coke Zero.

Bob Hawes is development partner at Buildev.