Home Page Opinion

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”.

Have your say at the comment box below

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.

	Download the entire draft Corporate Responsibility Reporting document.
	Provide email feedback here.

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

« Return to Home Page »

Appendix B: Materiality Summary

Property Council — Sun, 31 May 2009 15:53:00 GMT

Review content for the page 'Appendix B: GRI Materiality Summary' and either post your comments via the blog or send your comments via the link provided below.

	Download the entire draft Corporate Responsibility Reporting document.
	Provide email feedback here.

Appendix B: Materiality Summary

« Return to Home Page »

Appendix A: GRI Profile Disclosures

Property Council — Sun, 31 May 2009 15:52:00 GMT

Review content for the page 'Appendix A: GRI Profile Disclosures' and either post your comments via the blog or send your comments via the link provided below.

	Download the entire draft Corporate Responsibility Reporting document
	Provide email feedback here

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

« Return to Home Page »

SOC6: Political Donations

Property Council — Sun, 31 May 2009 15:51:00 GMT

Review content for the page 'SOC6: Political Donations' and either post your comments via the blog or send your comments via the link provided below.

	Download the entire draft Corporate Responsibility Reporting document.
	Provide email feedback here.

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.

« Return to Home Page »

SOC5: Community

Property Council — Sun, 31 May 2009 15:50:00 GMT

Review content for the page 'SOC5: Community' and either post your comments via the blog or send your comments via the link provided below.

	Download the entire draft Corporate Responsibility Reporting document.
	Provide email feedback here.

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.

« Return to Home Page »

SOC4: Human Rights

Property Council — Sun, 31 May 2009 15:49:00 GMT

Review content for the page 'SOC4: Human Rights' and either post your comments via the blog or send your comments via the link provided below.

	Download the entire draft Corporate Responsibility Reporting document.
	Provide email feedback here.

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

« Return to Home Page »

SOC3: Training and Education

Property Council — Sun, 31 May 2009 15:48:00 GMT

Review content for the page 'SOC3: Training and Education' and either post your comments via the blog or send your comments via the link provided below.

	Download the entire draft Corporate Responsibility Reporting document.
	Provide email feedback here.

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

« Return to Home Page »

SOC2: Occupational Health and Safety

Property Council — Sun, 31 May 2009 15:47:00 GMT

Review content for the page 'SOC2: Occupational Health and Safety' and either post your comments via the blog or send your comments via the link provided below.

	Download the entire draft Corporate Responsibility Reporting document.
	Provide email feedback here.

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)

« Return to Home Page »

SOC1: Employment

Property Council — Sun, 31 May 2009 15:46:00 GMT

Review content for the page 'SOC1: Employment' and either post your comments via the blog or send your comments via the link provided below.

	Download the entire draft Corporate Responsibility Reporting document.
	Provide email feedback here.

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.

« Return to Home Page »

ENV7: Waste

Property Council — Sun, 31 May 2009 15:45:00 GMT

Review content for the page 'ENV7: Waste' and either post your comments via the blog or send your comments via the link provided below.

	Download the entire draft Corporate Responsibility Reporting document.
	Provide email feedback here.

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.

« Return to Home Page »

ENV6: Emissions

Property Council — Sun, 31 May 2009 15:44:00 GMT

Review content for the page 'ENV6: Emissions' and either post your comments via the blog or send your comments via the link provided below.

	Download the entire draft Corporate Responsibility Reporting document.
	Provide email feedback here

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

« Return to Home Page »

ENV5: Biodiversity and Land Use

Property Council — Sun, 31 May 2009 15:43:00 GMT

Review content for the page 'ENV5: Biodiversity and Land Use' and either post your comments via the blog or send your comments via the link provided below.

	Download the entire draft Corporate Responsibility Reporting document.
	Provide email feedback here.

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

« Return to Home Page »

ENV4: Water

Property Council — Sun, 31 May 2009 15:42:00 GMT

Review content for the page 'ENV4: Water' and either post your comments via the blog or send your comments via the link provided below.

	Download the entire draft Corporate Responsibility Reporting document.
	Provide email feedback here.

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.

« Return to Home Page »

ENV3: Energy

Property Council — Sun, 31 May 2009 15:41:00 GMT

Review content for the page 'Materiality' and either post your comments via the blog or send your comments via the link provided below.

	Download the entire draft Corporate Responsibility Reporting document.
	Please email feedback here.

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

« Return to Home Page »

ENV2: Materials

Property Council — Sun, 31 May 2009 15:40:00 GMT

Review content for the page 'ENV2: Materials' and either post your comments via the blog or send your comments via the link provided below.

	Download the entire draft Corporate Responsibility Reporting document.
	Provide email feedback here.

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.

« Return to Home Page »

ENV1: Building Ratings

Property Council — Sun, 31 May 2009 15:39:00 GMT

Review content for the page 'ENV1: Building Ratings' and either post your comments via the blog or send your comments via the link provided below.

	Download the entire draft Corporate Responsibility Reporting document.
	Provide email feedback here.

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.

« Return to Home Page »

ECO1: Corporate Philanthropy

Property Council — Sun, 31 May 2009 15:38:00 GMT

Review content for the page 'ECO1: Corporate Philanthropy' and either post your comments via the blog or send your comments via the link provided below.

	Download the entire draft Corporate Responsibility Reporting document.
	Provide email feedback here.

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).

« Return to Home Page »

Performance Indicators

Property Council — Sun, 31 May 2009 15:37:00 GMT

Review content for the page 'Performance Indicators' and either post your comments via the blog or send your comments via the link provided below.

	Download the entire draft Corporate Responsibility Reporting document.
	Provide email feedback here.

Performance Indicators

« Return to Home Page »

How to use these Guidelines

Property Council — Sun, 31 May 2009 15:36:00 GMT

Review content for the page 'How to use these Guidelines' and either post your comments via the blog or send your comments via the link provided below.

	Download the entire draft Corporate Responsibility Reporting document.
	Provide email feedback here.

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.

« Return to Home Page »

Materiality

Property Council — Sun, 31 May 2009 15:35:00 GMT

Review content for the page 'Materiality' and either post your comments via the blog or send your comments via the link provided below.

	Download the entire draft Corporate Responsibility Reporting document.
	Provide email feedback here.

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.

« Return to Home Page »

International Reporting Standards

Property Council — Sun, 31 May 2009 15:34:00 GMT

Review content for the page 'International Reporting Standards' and either post your comments via the blog or send your comments via the link provided below.

	Download the entire draft Corporate Responsibility Reporting document.
	Provide email feedback here.

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.

« Return to Home Page »

Corporate Responsibility and Sustainability

Property Council — Sun, 31 May 2009 15:33:00 GMT

Review content for the page 'Corporate Responsibility and Sustainability' and either post your comments via the blog or send your comments via the link provided below.

	Download the entire draft Corporate Responsibility Reporting document.
	Provide email feedback here.

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

« Return to Home Page »

Setting the Scene

Property Council — Sun, 31 May 2009 15:32:00 GMT

Review content for the page 'Setting the Scene' and either post your comments via the blog or send your comments via the link provided below.

	Download the entire draft Corporate Responsibility Reporting document.
	Provide email feedback here.

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.

« Return to Home Page »

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.

Smarter, not harder

Peter Verwer — Wed, 11 Feb 2009 21:58:00 GMT

Australians pay 125 different types of tax. 115 of these raise less than 10 percent of total government revenue.

By OECD standards, Australia's company tax rate is about average.

Our reliance on property taxes is far greater – almost twice the OECD average.

The tax take on labour and consumption (GST) is considerably lower than the international average.

And the tax burden on capital is very high - the fourth highest in the OECD.

These stats come from the consultation papers produced by treasury head Ken Henry as part of his “root and branch” tax review.

Henry says Australia is a low tax and low government expenditure country, compared to our international competitors.

The big problem is the number, design and mix of inefficient taxes that generate revenue across Australia’s nine governments (and 700 local councils).

An allied problem is the tax transfer system. That is, the revenue handed back to targeted groups in the economy.

There are around 40 different tax transfers paid to Australians.

As Henry notes:

”The Australian tax and transfer systems are separate systems that combine to affect the disposable income of individuals and families, and their incentives to work, save and invest (including in skills). There are different bases of assessment between and within the two systems, including the definition of income, the unit of assessment, the period of assessment and the basis of eligibility.”

Australia is noted for the churn between its tax and transfer systems. All of which creates complexity and reduces transparency, equity and efficiency.

Rationalising and simplifying our lopsided tax system is a high priority.

The Rudd government says it’s keen to champion landmark reforms. Meanwhile, Opposition leader Malcolm Turnbull has commissioned his own research into tax modernisation options.

A tax reform race is a good result for Australians in 2009.

For our part, the Property Council (in league with the Business Coalition for Tax Reform) has developed costed scenarios for redesigning the tax system, which will be released publicly in April this year.

Each scenario involves a radical reduction in inefficient property and business taxes (primarily at the state government level).

We show that a $10 billion cut in archaic taxes adds close to percent to annual economic growth.

Ultimately, the reforms pay dividends by helping forge a more competitive and productive economy.

Of course, the tax debate also unleashes hobby horses.

Negative gearing naysayers are having a field day and there are persistent rumours that the Henry review has negative gearing in its sights.

There is no shortage of negative gearing critics. They argue that negative gearing is a gift to the wealthy, distorts investment decision-making and creates housing investment bubbles that reduce affordability.

Paul Keating’s two-year experiment with negative gearing should alert anyone to the dangers of tinkering. In 1985 Keating quarantined interest cost deductions for a specific asset to the income from that asset. Traditionally, Australia’s negative gearing system allows taxpayers to offset interest costs against any source of income.

The received wisdom is that carnage ensued and in 1987 the traditional system was re-instated.

However, there’s a growing school of revisionists that say Keating’s nobbling of negative gearing didn’t really impact on house prices or rents.

The revisionists miss several points.

Housing affordability is governed by a simple equation – the supply of housing (for ownership and rent) must match demand.

What happened to housing construction following the snarfing of negative gearing rights in 1985?

Housing construction fell to its lowest ever level of activity as a percentage of GDP since the advent of official statistics in the late 1950s.

Here’s another fact: the bulk of taxpayers who utilise negative gearing earn between $55,000 and $90,000 – it’s not the wealthy.

Negative gearing costs the government $2. billion each year. That’s a fraction of the $29 billion paid in property taxes annually.

In return, every negatively geared house is leased into a market desperately short of rented accommodation.

With housing finance down 27 percent, house development approvals down 37 percent and rental vacancies at record low levels, it doesn’t make sense to conduct another social experiment – especially when we already know the answer.

Ditching 115 legacy taxes and modernising the other ten is a smarter place to start.

Land Tax relief welcomed – but what about the rest of Queensland?

Steve Greenwood — Tue, 10 Feb 2009 20:30:00 GMT

The Property Council of Australia has welcomed today’s announcement by the Queensland Government of the cancellation on the revaluation process for 17 local government areas in Queensland.

The 17 regions presented with a much-needed tax break are Balonne, Banana, Bundaberg Regional, Cassowary Coast regional, Charter Towers Regional, Croydon, Dalby, Etheridge, Lockyer Valley, Moreton Bay, Mount Isa, Rockhampton, Redlands, South Burnett, Southern Downs, Townsville and Whitsunday.

Property Council Queensland Executive Director, Steve Greenwood, said that the government’s announcement was a responsible decision, particularly in the current economic climate.

“Basing land tax payments on 2005 values will help prevent job losses in these 17 local government areas,” Mr Greenwood said.

“Although this move by the Government is welcome, and will provide a degree of much-needed relief, more needs to be done to address the land tax increases that will occur across other parts of Queensland.

“The failure of the government to revalue properties in other parts of South East Queensland in 2008 will result in 2009 tax bills being far in excess of what they should be (if the 2008 valuations were undertaken).

“This is simply due to the fact that property values are now significantly below what they were in late 2007 – particularly in the commercial sector.

“Add to that the 0.5% land tax surcharge for the portion of property value exceeding $5 million, and many Queensland companies, including superannuation investment funds, will be facing a land tax bill that is much more than the current take.

“Due to the complexities of the current valuation system, the failure of timely revaluations and the 0.5% mini-budget hike, South East Queensland property owners are facing an inequitable and unpalatable situation.

“An increase in land tax will put further pressure on already falling property prices in South East Queensland, and Queenslanders will see a further drop in the value of their superannuation funds which are heavily invested in property.

“Raising the state’s land tax revenues is at odds with the Governments stated intention of protecting jobs, and retirement savings.” Mr Greenwood said.

Please feel free to make your comment on this issue below.

Three R's: Restoring confidence

Peter Verwer — Wed, 10 Dec 2008 14:30:00 GMT

The Australian economy is slowing from 100 to around 40 kilometres an hour.

It’s premature to organise a wake for the marketplace that has delivered Australians a record run of prosperity. Nevertheless, the property sector is sustained by growth. In fact, our sector exists to service growth.

Forty kilometres an hour for the rest of the economy is pretty much neutral for property investors, and negative for the construction sector. No one doubts the tough times ahead.

The Property Council has developed a 3R’s Strategy in response to the current market turbulence:

Restore trust
Rev-up reform
Re-connect the marketplace

Restore trust

Markets are based on trust and confidence. That’s why the property sector needs a code of practice that sets out voluntary principles of corporate practice and standards for performance reporting.

A code of itself won’t restore trust, but it is an essential first step. The property sector brand has taken plenty of hits over the past year.

And while we can point to property investments that have delivered on the core promise of stable wealth creation, there have been notable and high profile failures. The collateral brand damage is sector wide.

Consequently, we need a strategy that will restore the confidence of a diverse mix of stakeholders, including investors, asset consultants, bankers, the media, and mums and dads. While that confidence will inevitably return as the market reprices itself, we can speed up the recovery of trust by improving market transparency.

At present there are dozens of ways to measure everything from gearing levels, to environmental and social performance, to the corporate bottom line itself.

A code of practice would create a common language of reporting based on best practice principles. One model for a code is the ASX corporate governance guidelines. Another is the UK-based Association of Real Estate Funds’ code of practice, which is endorsed by the 60 largest British property firms.

In the UK, the property funds provide quarterly data on industry dynamics using the standards outlined in their code. For instance, data on redemptions, new money, net capital flows, bid-offer spreads, rolling income, capital and total returns, and risk-return profiles.

The data is collected by an independent third party and published at an industry wide (aggregate) level, thereby preserving total confidentiality.

As the data is collected on the basis of an agreed standard (a common language), it is more meaningful.
The proposed Australian code could comprise:

A model financial reporting standard that is both compliant with the evolving IFRS standard and the Real Estate Equities Securitisation Alliance – a global network of property industry advocates
A model net operating income definition, similar to a US-style funds from operation (FFO) concept
A model corporate responsibility reporting template consistent with the Global Reporting Institute G3
Leading practice principles and standard approaches to distribution arrangements, gearing, valuations, unit turnover and the like.

The Property Council also proposes to update and launch an online version of Build Your Wealth, our own mum-and-dad guide to property investment.

Rev-up reform

Tough times make a case for government reform better than the years of easy growth.

Governments need to cut taxes, slash red tape and invest in growth.

This is the Property Council’s core agenda. The NSW Government mini budget did its best to lock in higher business and community costs, with its massive increases in business taxes and new charges masquerading as environmental measures.

According to the NSW Government, it seems euthanasia is the cure for all ailments from the common cold to cancer.

However, it also makes the short-term challenge clear. Lower the land tax rate back to 1.6 percent and slash unnecessary levies. Lower taxes stimulate the economy. Smart governments understand this argument, just as they did when scrapping the NSW vendor duty, halving the Victorian land tax rate over the past four years, and trimming Western Australian land tax by 10 percent last month.

Re-connect the marketplace

The market has become more specialised and disconnected over the past decade.

There is an urgent need to persuade market movers and makers to talk to each other in a common language.

Bankers, asset consultants, the super industry and property securities people are important candidates for closer dialogue.

Already, at the request of the nation’s biggest valuation companies, we have established a home within the Property Council to explore opportunities to modernise valuation practices. A similar frank dialogue is underway with other key stakeholders.

The 3R’s Strategy is not a game plan for the big end of town.

In working to restore trust, the Property Council is pursuing its core business – helping members make the most of their own talents and opportunities.

Sustaining the soul

Tina Tang — Sun, 07 Dec 2008 14:30:00 GMT

Now that ESD and in fact the even newer acronym ESG (Environment, Social and Governance) is all important, what does that mean for aesthetics?

Is it possible to have inspired and inspiring buildings that look excellent and which are also great examples of sustainable design? Certainly we would like to think that with advances in spatial planning software, technology and even manufacturers catching on, it should be relatively easy.

Generally any conversation or debate that covers the greening of the built environment is often in terms of what boxes are ticked rather than how the spaces uplift or sustain the soul.

Even when houses are displayed in newspapers, green points are presented in a checklist. Cross ventilation? Tick. Thermal mass? Tick. Rainwater tank? Tick.

A house’s appearance though is described with loving words: beautiful materials, flowing spaces, warm cabinetry, luscious colours, elegant furnishings. Similarly, commercial buildings have the tag line promoting the number of Green Stars and efficiency without too much emphasis on the workspace itself.

Would the Opera House or many other great iconic buildings of the world have been built if sustainability was the main criteria for the design competition? Could it have been built sustainably? Surely with the increased knowledge and skills in our industry we can now have both.

It’s about time the property industry cast off its ‘tick the box’ approach to sustainability. Focusing on measurement of everything takes the whimsy and imagination out of the development process. To create something special you need to do more than just jump over the hurdles.

If we change the way we talk about sustainability, we might be better able to achieve beautiful design hand-in-hand with environmental, social and economic outcomes. Social sustainability is as important as environmental.

What we, the property industry, leave as a legacy can facilitate social capital or can be a barrier to it. Beautiful cities are socially sustainable and the best of them were never built with responding to the threat of climate change in mind.

They were however, planned for utilising and responding to the local climate and supported the wellbeing and connectivity of their residents and visitors.

I don’t mean to say sustainability is for tree-huggers or social activists, merely to seek to make sustainability more integral to the pleasure we take in great design.

I’m suggesting that we should take the opportunity to integrate environmental and social needs into the development process and lifecycle of a building generally, and surely we can save the world and have a good time doing it.

Tina Tang is general manager of commercial developments at Investa Property Group.

Land tax, the new stamp duty

Joe Lenzo — Tue, 02 Dec 2008 14:30:00 GMT

Within hours of the latest land tax assessments hitting the desks of property owners and managers around Western Australia, my phone started ringing.

I have heard of leaps - some bigger then 100% increases. All are hitting members as we brace for a down turn in the market, all are up on last year and all are an unwelcome increase in costs at an inopportune time.

We identified Land Tax as the next big bite of the apple at the May Budget. Estimates were for a 74% increase in land tax over the next four years. Unfortunately the latest individual assessments that I have heard about mean that this is likely to be a conservative assessment. Land Tax will take the mantle from Stamp Duty as the major revenue earner.

In anticipation of this spike in revenue the new government made some modest cuts in land tax scales. However, it has done very little to stem the revenue flood, we need a new dam wall, by way of a cap on land tax increases to control the damage.

The aggregation rules are putting the sting in Land Tax assessments, with entities that own multiple properties for assessment purpose being stung for the combined tax total. An inequitable situation, especially considering the current absence of a limit on the total revenues that can be squeezed from anyone individual or company.

We are currently working on a submission to the new Government to make sure that positive changes occur in the 2009 State Budget. We are also meeting with the Hon Troy Buswell soon on the effects of Land Tax and what can be done to reduce the pain in member’s budget lines.

In the next instalment of the blog I will report on the outcomes of that meeting.

Please feel free to share your tales of woe or add further comment on this issue below.

Global architecture begins at home - part 1

Peter Verwer — Wed, 29 Oct 2008 23:53:00 GMT

It makes perfect sense to perform emergency repairs to a rickety house.

By all means re-pin dubious foundations, plug leaky roofs, patch the plumbing and replace failing fuses.

Of course the smarter strategy is to re-establish the long-term integrity of the entire structure.

The economic turbulence caused by the asset price bust and the collapse of the global banking system calls for a similar response.

There is currently little confidence about the true value of the collateral that underpins the credit system.

As a result, the world’s financial system is in crisis.

Compounding this problem, the real economy – the marketplace of labour and commodities – is in strife.

So far, we’ve seen three government-led responses to this turbulence.

Governments have applied a fiscal triage to the banking system. While allowing some institutions to fail, they’ve guaranteed deposits. They’ve also attempted to staunch poisonous debt by allowing banks to swap their risky assets for government securities and partially nationalising bigger banks.

The aim is to defibrillate the credit system by getting banks to trust each other enough to start lending again. These actions should increase the quantum of money in the economy.

Second, central banks have lowered interest rates. This should decrease the cost of money in the economy.

Third, governments are pump priming their economies.

In Australia, the Rudd Government has administered an adrenaline shot with its $10.4 billion ‘economic security’ package.

The package front-loads the economy with cash while we wait for interest rate cuts to kick in.

The package also deals with the community’s rational reaction to uncertainty, which is to stop spending. It’s what John Maynard Keynes called the “paradox of thrift”, which is where individuals and companies rebuild their balance sheets just when the broader economy needs their money.

For many, these measures are designed to ‘normalise’ the economy.

In fact, ‘normalisation’ is the last thing we need.

It’s now time to move our thinking beyond short-term emergency repairs to the economy.

Two big strategies are required.

First, world governments need to develop new global governance mechanisms that address the structure of international capital markets.

Thomas Friedman, author of The World is Flat, says the current crisis highlights the central truth of globalisation, “we’re all connected and nobody is in charge”.

World leaders talk about the need for a new “global financial architecture”. Many leaders seem attracted to the idea of a revamped Bretton Woods agreement – the 1944 deal that established the world’s first international financial system.

The serious danger is that governments will lurch from a system of enterprise to one of control, which is unlikely to cope with the massive complexities and interdependence of the global marketplace.

Nevertheless, a new governance model is needed given the recent re-nationalising of financial institutions.

The second strategic thrust is to embark on a massive program to supercharge Australia’s competitiveness.

This country has experienced five major shocks in the post - WWII period – the 1961 credit crunch, the recessions of 1974, 1982 and 1990 and the tech wreck engendered slow down of 2001.

Successive federal governments forged policy tools that gave them greater influence over economic cycles.

Their goal was stable growth using four turnkey policy tools:

Monetary levers – the active management of interest rates through an independent central bank charged with curbing inflation
Productivity and competitiveness booster programs – cutting tariff/quota protection, financial deregulation, increased labour market flexibility through workplace reform, competition policy and privatisation
Demand management – restructuring the tax system and recalibrating immigration levels
Higher national savings levels secured through compulsory superannuation.

While these tools were innovative and highly successful in their time, a new era of domestic reform is urgently needed to lock in potential globalisation dividends.

In brief, the Australian Government needs to:

Speed up tax reform – slash 54 taxes to, say, three
Speed up Australia’s transformation into a common market with a single common set of efficient rules
Speed up competition policy mark II and focus on urban renewal as a platform for achieving competitiveness
Speed up hard and soft infrastructure investment

As stewards of the built environment and a large chunk of the community achieving retirement savings, the property industry will play a huge role in this policy renaissance.

We can vigorously push the policy reform agenda.

We can also voluntarily fashion a more transparent industry that is a model of accountability. In doing, so we will restore trust in our sector.

I’ll discuss these specific policy reform programs, along with the Property Council’s response to the economic crisis, in Property Australia’s December/January editorial.

Thinking locally

Bob Hawes — Fri, 24 Oct 2008 05:44:32 GMT

After a typically low-key lead up, the NSW Local Government elections took place in September. But is this low-key approach right? Shouldn’t local council elections be subjected to in-depth policy analysis and candidate profiles? After all, the “local” in this form of government means their decisions have great personal and community impact.

In reality, you could be forgiven for not being aware there was an election on until just days before the event. The media doesn’t give council elections much billing. There are too many candidates spread across 152 local government areas. Then there are the issues. They’re not hip-pocket headlines and mostly very local, very parochial and often trivial.

This time around in NSW there was plenty of sideshows for the media, voters, councillor and mayoral candidates to ponder. State Government shenanigans not only dominated the media, but also provided fertile ground for a voter backlash against the Labor Party. And they copped it big time.

So much so that the shiny new Premier felt the need to apologise to the faithful before the vote counting was completed.

The ballot papers included the usual contingent of independents motivated by a determination to make a difference, self-hypnotised into a robust “can do will do” attitude. You wonder if they have done their homework on what’s ahead of them if they are voted in.

Of course they’ll be allowed to say their piece; of course the debate will be informed and objective; of course there’s money to fund their ideas; of course the community will recognise the outcomes and be thankful for their contribution and of course they won’t be late home for tea on meeting nights.

The politically savvy and somewhat paradoxically well organised Greens survive and prosper by somehow side-stepping the “trust me I’m a politician” tag. They aptly conjure up conspiracy theories out of a range of issues and plonk others on the table over which councils have little or no control. However they struck a chord with a diverse range of voters and the results reflect this.

The Liberals, at least in my part of the world, re-galvanised to make mileage from the Labor Party turmoil at state level. They seized the chance to break free of other brands they have masqueraded behind at other times and ‘came out’ as it were. This could be the start of something big – or at least the Libs hope so.

And of course there are the celebrities. Move over schoolteachers. Maybe they will draw media attention to local government. It’s just that ‘Picture/People’ style publications are not what most of us have in mind despite our passion for drama.

So what can the new councillors expect? Well, they will have studied up on the Local Government Act and many other statutes that influence their domain to clearly understand the role of the council officers and the respective responsibilities to the community – easy stuff.

Then there’s the councillor workload: inspections, committee meetings, budget reviews, regular council meetings and the business papers, sometimes hundreds of pages. Of course, all councillors closely review the business papers in detail before they debate and offer their considered opinion on the broad range of matters (and there are plenty) that councils deal with. History speaks for itself.

In fact, as a community we think it’s going so well we appear to be burdening local councils with far more responsibility than I suspect was intended when the boundary riders set the pegs back at the time of Federation.

We have allowed Federal and State Governments to do a wonderful job of letting stuff fall off the back of their budgets and programs and into the laps of local government, drawing them into realms they never anticipated, without the benefit of income to fund the demands.

Perversely, local government is not recognised under the Australian Constitution.

It’s in a hollow space. Yet both the Federal and State Governments have funded ministries, departments and bureaucracies to help ‘administer and regulate’ local government. What a great gig that is.

The councillors give their time for relatively little payment – no perky allowances, no car fleets and, worst of all, no ‘parliamentary’ pension. I reckon it would make the ABC’s old $1 a day look expensive.

As they settle in until 2012, there will be certainties – drama, scandal, rumour, gossip, inaction, blame, funding crises and planning nightmares. And that’s just on Mondays. More deeply, there are cracks in the system. We’re relying on our governments to fix it. There’s talk of major reform. Hmm … politicians fixing government – how smart are we?

Bob Hawes is development partner at Buildev and chairs the Property Council of Australia’s Hunter Chapter.

Time to frag planning zombies

Peter Verwer — Wed, 08 Oct 2008 23:53:00 GMT

There’s more technological smarts in one teenager’s PlayStation than Australia’s entire planning system.

The nation’s paper-based patchwork of planning and building rules is smoked by the visual punch and sensational immediacy of gaming software and even DIY animations on YouTube.

How is it that Resident Evil 4 is smarter than the systems that shape our buildings, precincts and cities?

The Rudd Government’s $42 million commitment to online development assessment and conveyancing is news to cheer.

However, a quantum leap in policy imagination is possible.

That’s where the D_City project comes in.

D_City aims to map the spatial genome of Australian communities.

It’s Sim City meets Google Earth meets econometric modelling hot wired into real time socio-demographic, ecological and economic databases.

D_City’s standard accessory will be building information modelling (BIM) software. Think computer aided design (CAD) on crack with a steroid booster.

Imagine opening up Google Maps and clicking on the Australia Square building in Sydney. Touch the icon and every planning instrument relevant to the property and the surrounding precinct is revealed.

Click again and there’s the sales history of the asset along with its vital statistics, including the building‘s eco footprint.

Now, expand out to the locality and view key demographic stats, transport data, energy, water and IT capacity.

A side menu might provide a snapshot of major precinct assets (such as people and their earning power) or deficits (such as congestion ratios).

Imagine you’re redeveloping the building. You submit your development application electronically based on clear rules and objectives, after choosing the assessment track relevant to your project.

The DA includes a multi-dimensional building model that slots into the Google Earth-like frame. Old development gone, new one appears.

The BIM drawings allow planning assessors to easily understand every aspect of the proposed building, which they can ‘unfold’ to their hearts content.

Building aspect, shadows, massing, all are automatically available in four dimensions (including time).

Any necessary community consultation is now a lot easier, especially as D_City deals with the fact that most people can’t read maps, plans or diagrams. The community can see what they’re getting.

Now gravitate D_City to strategic planning.

The current planning system is flying blind and so it's little wonder we end up with accidental cities.

It’s not just a question of better databases that map population distributions, transport routes, congestion, urban density, well being indicators and eco systems.

It’s about linking these elements to better understand and shape urban hierarchies.

Econometrics is an effective problem solving tool because it looks at the complex interplay of multiple factors to better grasp impacts on economic growth, competitiveness, even welfare outcomes.

We need equivalent intelligent modelling systems for the spatial arena in which the economy and social opportunity are played out.

D_City will facilitate true strategic planning for the first time.

For instance, D_City will allow a rigorous analysis of employment land requirements and transport modes, better test residential densities as well as synchronise the roll out of infrastructure with future community needs.

D_City could even test ecological scenarios.

Surely it would be better to model hypothetical sea level rises and their impact on development rather than play the spatially blind guessing game that currently masquerades as policy thinking?

Cities are metabolisms. Like the human genome project, our efforts to crack the spatial genome should focus on the interplay of factors that deliver economic, social and environmental dividends.

In doing so, we can move from the legions of dry words and squint-inducing diagrams used to communicate policy to the content rich world of sensory law.

The community deserves access to policy objectives and planning rules that are as clear and easy to fathom as any movie or computer game.

Last month Sony released the latest app for PlayStation.

It’s called ‘Life’. We need a national effort to catch up to the gamers.

For more information on D_City, please click here.

What happens in Vegas…

Tina Tang — Wed, 08 Oct 2008 23:21:04 GMT

Hotels – we all love them but somehow because the promise is so high, often we are left feeling just a little disappointed.

What are the small moments that bring the experience down? Expectations are in direct proportion to the room rate. A bargain room in Tokyo only needs a comfortable futon and the wonderful Japanese cleanliness to deliver happiness, but a pricey room in Europe will disappoint if it doesn’t have all the bells and whistles including soft bathrobes and a room with a view.

So following a quick survey with well travelled colleagues over a couple of nice chilled wines (on the travel account no less) and drawing on my own mixed experiences, here’s a list of what seems to hit the mark with corporate travellers in hotels.

Firstly, a quirky/smart/grand building, something that makes an impact when you first happen upon it. Whether it is a stylish boutique hotel or a famous pile, a good statement lifts the heart even before you walk in the door.

But then, nothing is worse than waiting… no matter how lovely the lobby. After a long trip or a long day, most of us want to be attended to and want to be seen immediately. A slow check-in or check-out is unnecessary in these days of electronic surveillance. Surely we could just swipe our credit cards walking in the door and all would be sweet.

Sparkling clean should go without saying, but a friend once pulled back the curtains on a US$750 per night New York hotel to find a half eaten sandwich sitting on the windowsill. Housekeeping was so slow to respond that she could only conclude they were no longer hungry!

Being able to open a window or at least control the air is important. Centrally controlled climates with only an off/on switch can be disconcerting when travelling, making for a pretty uncomfortable nights’ sleep. It must be more energy efficient, not to mention satisfying, for the guests to allow them to fully manage their own room temperature.

Bathrooms; I personally don’t need an over-elaborate bathroom and would prefer the space allocated to the sleeping or sitting area, but a decent hairdryer and soaps that don’t smell like paint stripper are the minimum.

Have you ever wondered what happens to all those left over half-used soaps and shampoos? With the current green agenda, I’m sure it won’t be long now before we see recyled soaps; or perhaps that is taking the green initiative too far?

Also, whilst I don’t need to have a party in the shower, there is nothing worse than standing in there with walls that are too close, a vaguely mildewy shower curtain flapping against your legs and a low pressure dribble passing as an energy efficient showerhead.

And, whilst it is good to be kind to the environment by not using too many towels, spare ones (large and fluffy of course) shouldn’t be too far away.

For business travel, the mini-bar and room service becomes important. We’ve all eaten a Mars Bar and a bag of cashews for dinner at the end of a long day when we can’t be bothered waiting for room service, but wouldn’t it be great to have more options.

I must say I have always found it amusing that some hotels manage to charge extortionate rates for the basic mini bar items including water, even where the tap water is undrinkable!

I’ve often wondered if hotels could improve their bottom lines by reducing the margins on the mini bar items and getting higher turnover; perhaps though, they bank on the mini bars being totally emptied (and I’ve heard even in some cases souvenired) simply because it is on the corporate account.

Finally, what happens when you leave? The more you travel, the more you leave behind. A hotel that can reunite you with your clothes, electronic gadgets, jewellery and notebooks as quickly as possible will always get my repeat business.
That’s a pretty small list of wants, so it shouldn’t be too hard to find should it?

But around the world I have had few hotel experiences that tick all those boxes. In Singapore and Hong Kong there are some fine examples, but the relaxed holiday mode when I have visited those cities makes everything more enjoyable.

Las Vegas hotels are in a category of their own but one favourite that meets most of the basics and has more is the Hard Rock Hotel. Relatively small, the music theme keeps any old rocker smiling – and I think that covers most of us!
The lifts are called “love in the elevator”, fire exits are branded “stairway to heaven” and the do not disturb signs say “I hear you knocking but you can’t come in”.

A different crowd frequents the Hard Rock Hotel bars too. One of my friends drank vodka gimlets there with Richard Branson during a “what happens on tour stays on tour” kind of night.

Tina Tang is general manager of commercial developments at Investa Property Group.

Path hogs

Maureen Jackson — Sun, 21 Sep 2008 14:31:00 GMT

The Premier of Victoria recently announced that the State Government would deliver $13 million per year for cycling and walking facilities across Victoria.

Funding has been provided for further bike lanes on main roads – great idea – and local councils have been encouraged to undertake the provision of shared pathways.

This funding seems quite significant given it is an increase from the current spend of $7 million.

This includes an increase to VicRoads funding for cycling and walking facilities from $4 million per year to over $10.4 million for the next 10 years, which equates to $64 million dollars in new funding.

Recently I visited Tokyo and was struck – but not literally – by the Japanese bike riders who actually use the footpath rather than the street and ride in a very casual, polite and respectful manner, paying careful attention to other users of the footpath.

This was in the Ginza district, which is one of the most urbanised areas of Tokyo.

Not only did I witness this in the main streets but the back streets as well.

The Japanese seem to encourage bike riding by strategically locating bike rental shops at train and bus stations and at tourist precincts.

Some ‘ryokan’, which are the traditional Japanese inns, even loan or rent out bikes to their guests.

I frankly love the idea that the bikes for hire are called ‘mama chari’ which translates to ‘mama’s bicycles’.

The bikes cannot by any stretch of the imagination be described as performance machines and appear to be two-speed shopping bikes.

I cannot imagine the bike riders of Melbourne riding on these and I defy whoever is on these bikes to even contemplate speeding.

Given the type of bikes for hire I would imagine a subsequent loss of sales for lycra sportswear which is so prevalent in Melbourne.

The Japanese bike riders may be showing us that life is a journey and not a race.

I believe that both walking and riding a bike should be encouraged and this move towards encouraging alternative transport modes is a national initiative that is shared by all State Governments.

However, in terms of implementation, I would encourage recreation planners and engineers to consider ‘super sizing’ the pathways or, better still, completely separating walkers from bike riders.

As a self-declared walker, my allegiances are out in the open and, frankly, so are my grievances. As I step onto the shared paths of Melbourne, ‘sharing’ takes on a totally different concept, which I refer to as defensive sharing.

The narrow pathways in Melbourne only allow someone to walk single-file in one direction, so the concept of a walk with a friend means you need to form a queue and hope the wind is blowing in a favourable direction to allow your conversation to carry back to your partner on the walk.

As a walker you need to be extremely careful of not to make any rash movements like adjusting a backpack or reaching for an object because you need to look right, left and behind you for the flash of lycra.

The bicycle brigade that flash by me on the track along the Yarra seem extremely keen to end their working day imagining they are on the last leg of the Tour de France.

How these narrow shared pathways of Melbourne bear any resemblance to the French Alps is beyond me, but imagination is clearly helped by assuming the disguise, or in marketing terms ‘dressing the part’.

The narrowness of the shared pathways and the stream of walkers would certainly inhibit breaking any potential speed records.

So I plead with all the riders to ring your bells and indicate your whereabouts to your fellow travellers of the track or at least yell the word, “Passing”.

In the past, I have lost my own voice shouting after them in the wake of their G-force such complimentary terms as, “Idiot” or something slightly more colourful, robust and meaningful.

But can you do this 50 times in a matter of 30 minutes? It is exhausting and so now when I hear the rare, “Passing” or the tinkle of the bells, I yell after these rare and noble riders, “Thank you!”

Maureen Jackson is director – urban planning at Davis Langdon

Recovery time

Bob Hawes — Sun, 14 Sep 2008 14:31:00 GMT

There are many drivers of consumer spending.

A term that fascinates me is that theorised by the economist Thorstein Veblen over a century ago.

He referred to the phenomenon of “conspicuous consumption” in his publication delightfully titled The Theory of the Leisure Class.

Veblen was describing a pattern of behaviour whereby societal upper classes were adopting lavish consumption habits, spending on goods and services as an outward display to demonstrate income or wealth and a measure of social status.

Veblen further described conspicuous consumption as the waste of money and/or resources in this pursuit of a display of higher status – it had a dark side.

Economist Paul Nystrom extended Veblen’s concept. Nystrom was observing the hedonistic behaviour of the industrialising world in the 1920s and suggested that lifestyle changes were inducing a "philosophy of futility", which would increase fashionable consumption.

The wheels fell off in the 1930s and through the Second World War, but the template was already forged and ready to be adopted as economic circumstances improved.

We have moved on somewhat from the concept of the beautifully coined “leisure class” where “gentlemen” studied philosophy and fine arts for no other purpose than status.

Contemporary economists and sociologists argue the conspicuous consumption affliction is now a pillar for particular consumer spending habits in the developed and developing world alike.

Terms used more recently like “material world”, “keeping up with the Joneses” and the negatively connotated “affluenza” reflect the persistence in society of the notion of conspicuous consumption.

Affluenza portrays circumstances of an illness inflicting society.

The more you earn, the more you shop, the sicker you become. Kath and Kim clarified things by noting their “effluence” in reference to their endowment of riches.

Social commentators have been quick to point out the extent of the affluenza epidemic.

They quote traits typifying conspicuous consumption and measures of consumerism within our society. The four wheel drive (Toorak tractor), the giant barbeque, the plasma TV are a few.

At the high end, the burgeoning size of dwellings materialising in massive house extensions and bigger new homes occurs at a time when household density is declining.

Economists suggest this phenomenon partly explains the recent decrease in home affordability. At its peak, entire suburbs across the country have looked like construction sites and they’re just the ones experiencing extensions.

Perhaps the ultimate symbol of the affliction of conspicuous consumption is Dubai. We’re frequently reminded, however, that the motives for development over there are far deeper.

Economists cite logic such as delving into the pursuits of architectural excellence and building the foundation for the transformation of an economy as the oil runs out. Justification based on rampant population growth or a current grave shortage of floor space or dwellings appears to be lacking.

However, despite where the truth may lie, the stuff keeps selling so they keep building and in a Las Vegas sort of style, the next will always be better than the last – it’s quite bizarre really.

Back home, the uncertain and volatile economic circumstances in recent times provide a window for society to “get well” and recover from the affluenza virus, for a short time at least.

We’re told consumer spending at the top end usually slows when times get tough. The discretionary items are no longer discretionary – they’re off the shopping list altogether.

Likewise, the volume of development applications slows and the talk is of hunkering down, rationalising and consolidating.

It’s a matter of keeping what we have and appreciating the intrinsic value of goods and services in our purchasing choices rather than bowing to the pressures of consumerism – what a novel outlook. Social status and social climbing go on hold.

Sociologists also point to the dark side of conspicuous consumption – the compulsive spending, extension of credit and the inevitable bankruptcies and dislocation that follows. The government also suffers as taxation income declines.

So as consumers recover and get well, other things get sick.

“For every action there is an equal and opposite reaction”.

Conspicuous consumption is ingrained. Scary as it may seem, there are elements within the property and retail industry waiting for the next bout of flu to hit and as you get “sick” they can get well again. Enjoy the respite, and then take the medicine.

Bow Hawes is development partner at Buildev and chairs the Property Council of Australia’s Hunter Chapter.

Kerplunk economics no plank for action

Peter Verwer — Thu, 04 Sep 2008 20:30:00 GMT

Let’s talk economics.

No, not the economics of the marketplace driven by instinct, enterprise and a deep understanding of customers – the
economics of a Gerry Harvey.

I’m talking about the thinking boxes of academically trained professional economists looking at our sector from the outside.

Let’s start with chapter 18 of Professor Garnaut’s recent report on climate change, which examines barriers to energy efficiency in buildings.

OK, get out your note books and write down these phrases:

Principal-agent problems/split incentives
Information asymmetries
Bounded rationality.

According to many economists, these factors inhibit a greater commitment to energy efficiency in the property sector.

Principal-agent issues describe a mismatch between those who make investments (and take the risks) versus those who get
the benefits.

Information asymmetries occur when stakeholders don’t have access to the information needed to make decisions outside their familiar mode of operation. Business as usual is the comfortable response in the face of alternatives that might seem riskier.

Bounded rationality is all about having too much (generally confusing) information.

These concepts underpin Professor Garnaut’s analysis of the property sector. Admittedly, he also talks about the benefits of more focused R&D and the importance of building skills.

Nevertheless, his fundamental conviction is that if market players are better informed about the implications of their
decisions they are more likely to change their behaviour and ‘do the right thing’.

For instance, if a tenant knows how much energy a building consumes then they’ll choose more efficient buildings.

There are two problems with this approach.

First, there are many other forces that drive a tenant’s behaviour, such as rental levels, the quality and availability of
space, location, lease structures and the like. These factors tend to wash out small ticket items, such as energy costs.

The second problem is that an information fix offers a modest complement to the big idea of a carbon emissions trading scheme.

One criticism of Professor Garnaut’s approach is that he expects the price signals from carbon trading to do the heavy lifting.

When it comes to buildings, it seems the main backstop to the trading scheme is an information program.

If the goal is to transform market behaviour then economics, or this particular version of it, is a woefully inadequate tool for designing policy. It is a crutch rather than a lever.

Another problem with many economists is their naivety about the way decisions are made by investors.

Take the much quoted McKinsey & Co findings that investment in building energy efficiency provides the fastest and most economical gateway to major carbon abatement.

According to McKinsey, the community can achieve big blocks of abatement by improving the energy efficiency of buildings.

Quite true. But then it goes on to say that most investment in building energy efficiency comes at ‘negative cost’. That is, the investment will pay for itself as it costs less to run energy efficient buildings.

This is a very popular idea. Many people talk about 3-4 year paybacks on energy efficient investments. In short, they say it’s a no brainer and you’re nuts not to make hefty investments in energy efficiency.

Once again, this so-called economic analysis arises from a textbook approach to the sector.

A quick, cool-headed peek into the real world of decisionmaking reveals a different story.

In all the commentary on barriers to energy efficiency, few mention that it may be rational not to invest in energy efficient technologies.

The quantity surveyors, Davis Langdon, recently investigated the cost of upgrading a building by a couple of energy star ratings. They examined the issue from the perspective of the investor rather than neat textbook diagrams.

Their analysis showed that retrofitting is an expensive business.

Even without touching the building structure, it costs around $900 a sqm to achieve a four-star NABERS-Energy rating.

The payback period stretches to 20-plus years, even assuming compounding increases in energy costs.

In other words, the market often behaves rationally where it chooses to forgo expensive upgrades in preference to other investments.

Let’s make it clear, the Property Council is not defending inaction. More information is virtuous. Investment in efficiency is desirable.

However, the crutch of simplistic analysis leads to policy solutions that aren’t radical enough.

We need policies that will massively lift the eco efficiency of buildings.

That’s why incentives are needed to get the paybacks into the sort of territory the economists are talking about.

The Prime Minister is in closer touch with reality than his advisors. He recently said that energy efficiency was the second plank to his carbon pollution reduction scheme.

The Property Council’s existing building initiative, which calls for the incentives that will help drive an enormous building tune-up and retro greening program, will underpin and brace the PM’s second plank.

Check out the latest version of our policy at: www.propertycouncil.com.au/environment

Black to basics

Peter Verwer — Mon, 04 Aug 2008 00:06:54 GMT

Parts of the property industry have been in a darker mood of late and chat around town can dwell on black times, as in ‘management is the new black’, or ‘fundamentals are the new black’, or even ‘boring is the new black’.

What is common to the discussion is a back-to-basics attitude and a determination to make existing assets work harder.

There’s around 330 million sqm of existing space in Australia’s non-residential markets. Most of it is more than 20 years old.

The Property Council’s recent solutions summit for existing buildings developed a draft 10-point strategy that aims to revitalise the performance of existing assets.

We asked internationally renowned consultants Arup to research successful strategies for older buildings.

Arup scoured the globe and developed Existing Buildings Survival Strategies: a toolbox for re-energising tired assets.

Arup’s toolbox outlines a six-step program and includes more than 200 tested upgrade initiatives.

We’ve also worked with the Cooperative Research Centre for Construction Innovation (CRC-CI), which has developed design and construction solutions for existing buildings.

The CRC-CI’s work on re-lifing buildings can be found on the www.yourbuilding.org website.

Here is a summary of the Property Council’s plan to breath new life into the sector’s tired assets:

1. Improve performance measurement:

Identify key performance metrics that go beyond financial parameters to include productivity and consumption metrics
Link the Property Council's Quality Grade Matrix design drivers to operational drivers/outcomes
Re-cast the Property Council's benchmark service based on these metrics
Introduce the IPD Occupiers service into Australia
Agree on a model voluntary corporate responsibility reporting format for property stakeholders
Develop a standard carbon reporting statement.

2. Publish diagnostics tools and ‘how to’ management guides:

Publish a suite of leading practice management guidelines covering all aspects of property operations
Develop diagnostic tools that aid management decision-making.

3. Publish insightful case studies:

Identify and publish case studies that demonstrate innovative approaches to building design, management and retrofitting – frank descriptions of what was tried and what did/didn't work.

4. Establish a trusted portal:

Build a portal that consolidates the best thinking in benchmarking, diagnostic tools, case studies and management trends.

5. Strengthen relationships:

Develop strategies to improve the relationship between key stakeholders, starting with owners and occupiers
Some potential actions include a guide to commonsense green leases, guides to green tenancies and greater certainty in 'make good' provisions.

6. Reform public policy settings:

Advocate incentives for retrofitting buildings to higher standards, based on the Property Council priorities
Reform national energy markets
Harmonise regulation to a commonsense standard across the country
Modernise OH&S rules
Improve Regulatory Impact Statement processes
Increase the dollars in the Green Building Fund
Develop green chapters in the Building Code of Australia
Launch a national building tune-up program.

7. Improve skills:

Design a program that will address the skills shortage in the management and consulting sector, including both higher education and industry-based learning.

8. Increase practical R&D:

Encourage applied R&D into priority targets for commercialisation.

9. Integrate rating tools:

End the confusion in environmental rating tools.

10. Conduct foresight exercises:

Commission long-range, strategic analysis of the factors that will shape the built environment in the future.

The Property Council's extensive strategy for existing buildings will be led by a high-level national roundtable.

We'll also engage with our international partners and local leaders, such as the Facilities Management Association and CoreNet.

Networking nirvana

Tina Tang — Sun, 03 Aug 2008 23:04:51 GMT

You all know that feeling – you’ve read the brochure, checked out the speakers and decided it was a good idea to attend. Now at crunch time, you look at your diary and think, “what am I doing going to and spending days at a gabfest when I have so much work on?” Are conferences a good idea, and how effective is the networking?

Some events are a must no matter who is on the speaker list (referring to Congress of course). People go there to be seen, press the flesh, talk up their current projects and hand out business cards.

These events are often labelled ‘networking’ so you are in no doubt as to why you are really there. You will find these events at the best venues in the best towns, because they need the relaxing elements necessary to act as social oil.

Other events are all about the speakers. These people labour over their presentations, and they can be real learning opportunities. You can work out how much of an impact their presentation has made by waiting for the buzzwords to infiltrate your company.

Other speakers use conferences as covert pitches for their pet projects or simply to win work for themselves – it would be interesting to know how much impact this really has on their bottom line.

You will often see recruitment agents prowling the floor at conferences, poking around the large glass bowls which hold business cards for the door prize, cornering people as they head for the facilities, or waiting patiently in the buffet line to catch the eye or ear of a likely client.

Clearly they think the people contact is worth the effort, so there must be something in that.

So what are the most effective networking techniques to employ?

One business development manager I know carries his electronic card scanner and scans business cards into his blackberry, sending a jolly follow-up email before the welcome drinks party is even over. That is what I call hard-core networking.

Others prefer the loud party method, laughing heartily at lame witticisms, so it will look as though their little gaggle is having all the fun, and making everyone want to drift over and join them.

Name tags are handy when networking, but can be problematic. For a woman it is hard to know whether the tag or something else is being examined – men take note, we are on to you! Tags can also be unforgiving on delicate fabric, requiring ingenuity to find an appropriate spot to pin or clip them – amazing how handy those bra straps can be at times.

After the firm handshake, there is the issue of what to talk about so that your networking target doesn’t start looking over your shoulder for someone more interesting.

That’s when it pays to do your homework. By anticipating who might be there, you can mentally rehearse a few conversation starters that are relevant to that person. Things relevant to their specific roles with a touch of humour will certainly break the ice such as:

“So have you guys managed to find any spare money out there?”
“Did you hear about the [insert sale/transaction/lease], that was such a great/not so great deal!”
Or if all else fails, there is nothing wrong with the ubiquitous “Hi, how’s business going for you at the moment?”

For some people this is entirely natural behaviour – it’s called social graces – but for most of us in the property industry a bit of forethought goes a long way.

There is no question that getting out and about and being seen is a worthwhile pastime. However, nobody wants to be known as a Sir or Lady Lunchalot.

So conferences turn into a balancing act of just enough party time, just enough content absorbed and making sure the right connections are made, and followed through.

Following up is the key and this requires an excellent memory. Send something relevant to your conversation and you will be well on the way to establishing a friendship. A great networker will always follow up with an email or invitation.

So who are the best networkers we know? The one’s who go to everything or the more select? Nobody wants to look like a groupie who turns up on the doorstep invited or not, but really if you’re not there, you’ll never know.

So commit the dates and make the conference as important as a project and you’ll get the most out of it.

Keeping it real

Jason Little — Fri, 01 Aug 2008 03:09:32 GMT

Hasn’t Robbie Deans said and done all the right things in his first month of tenure?

In the press Deans has been promoting the virtues of the team rather than the individual performances of the players. This is in stark contrast to what the Wallabies have been all about in the past couple of seasons, when you would have been forgiven for thinking that there were only two or three worthy players representing the country.

This approach was evident when Deans was asked if Lote Tuiqui would play a senior leadership role within the team. His response would have made George Orwell proud – all players are equal and he does not promote a hierarchical system.

We are all hoping for an overnight miracle that would see the Wallabies win the Bledisloe Cup and Tri-nations trophy in 2008, but we have to be a little more realistic. While not saying we will not be triumphant, a complete change of style, approach and culture will take time to implement and nurture.

Some players will revel in Deans’ style of promoting instinctive play, while others out of the Eddie Jones and John Connolly era of robotic play will self-implode.

Matt Giteau is one that will thrive. He has all the skill and vision, coupled with the opportunity of taking over from Stephen Larkham as the play maker to challenge Dan Carter as the world’s best rugby player.

The Pacific Nations Cup has also been a great success. Not only does it give some of the more flamboyant countries a platform to show their wares, but it also provides an opportunity to develop some exciting local talent.

But for me, playing games on a Sunday afternoon at great rugby venues is something that has been sadly lacking in the professional era.

It was wonderful to see families at the rugby together, rather than just Dad making the trek to Homebush alone. Also, generally the quality of game in the afternoon is much better as you do not have to contend with the lights and night dew, making handling the ball much easier.

From Australia A grade’s performance, there was none better than Timana Tahu. Playing him at inside centre has been a master stroke.

Inside centre is the easiest place to defend in Rugby. Sure you have to make a lot of tackles, but the decision making process is so much easier than number 11, 13 or 14. Tahu does not have an issue with making a big hit, but for a guy new to the game this is the best spot defensively.

But it is his feet, which have movement when he has the ball, that have us all excited about what he can achieve. Only time will tell if he can match the feats (pardon the pun) of Michael O’Connor or Brett Papworth and step his way to Wallaby folklore.

Here’s good luck to the Wallabies in the Tri-nations and hopes of Deans to become another great Australian like Russell Crowe or Tim and Neil Finn.

Jason Little is general manager – Australia at Goodman International

Illusionary zoning

Peter Verwer — Sun, 06 Jul 2008 07:18:41 GMT

The recent Senate inquiry into affordability recommended:

"… that state and territory governments introduce enabling legislation for inclusionary zoning to require affordable housing in all new developments …" (our emphasis)

The theory is that 15 to 20 percent of all new homes should be discounted to 20 percent below their market value.

In other words, enact a law that forces developers to slice the market price of each new block of apartments and every new residential community by a fifth and, hey presto, the affordability problem is solved.

Imagine a law dictating a 20 percent discount for every fifth car, every fifth DVD, every fifth airline ticket, every fifth banana and every fifth taxi fare.

Inevitably, the four other car, DVD, airline ticket, banana and taxi purchasers are going to pay for the fifth consumer.

When it comes to homes, inclusionary zoning is a stealthy "tax thy neighbour" approach.

The US, UK and Europe have applied inclusionary zoning for decades.

The result has been a paltry number of so-called affordable homes and artificial price hikes for the rest of the market.

The markets in the US, the UK and Europe still suffer huge affordability problems.

Why import a failed experiment in planning policy to our shores before implementing and reviewing common sense strategies?

Such strategies would aim to increase the supply of land and homes and slice the taxes and red tape that artificially boost home prices.

Like the magic pudding that keeps renewing itself, inclusionary zoning provides a feel good factor that is illusory. On our shores, South Australia is the darling of inclusionary zoning advocates.

In 2005 that state released a policy requiring 10 percent of homes to go to those on low incomes, and 5 percent to those with ‘special needs’.

No one mentions that the South Australian Labor Government soon back-tracked from the mandatory approach.

It sensibly switched to voluntary schemes, except where the government places incentives, such as discounted land, on the table.

This change of heart occurred because inclusionary zoning is flawed on several counts. For starters, few new affordable homes are delivered.

In other words, inclusionary zoning fails in its principal purpose.

A meaningful solution would deliver massive increases in homes across all markets and social strata.

Then, there’s the high compliance costs and artificial price hikes forced on the rest of the market. Finally, a universal mandatory scheme, like that proposed by the Senators, raises huge equity issues.

Who defines the Australians who qualify for the discounted homes? Who actually selects them? What happens when their circumstances change? Who really pays for this stealth tax?

No doubt a universal inclusionary zoning system would require massive new bureaucracies in every state and territory to ensure that developers comply with the new rules.

It is stunning that witness after witness to the Senate inquiry – mainly academics, planning professionals and bureaucrats – thought that it was possible to create something out of nothing.

What they really hoped was that developers would absorb the cost. They want the private sector to pay for the delivery of dividends that are shared by the entire community.

Most people believe we have a tax system to meet these costs.

There was no understanding that investors and developers already take all the risks involved with delivering homes to Australian communities.

Property investors have significant social responsibilities, which they take very seriously.

However, they don’t have a responsibility to cover the shortcomings of failed government policies.

Industry critics also demanded the sector provide a greater variety of homes, including smaller homes.

One witness noted: "We face a problem that, if you ask the development industry about building a greater diversity of housing, they say there is no demand for it …"

Hellooo? Wake up and read the floor plans! The Property Council and our allies are taking ministers to housing estates to observe the tremendous and growing diversity of Australia’s modern housing precincts for themselves.

The nation’s housing affordability crisis is too important to leave to pie-in-the-sky solutions.

We need to attack the source of the problem, which is re-righting the (ever growing) imbalance between demand and supply.

The Rudd Government and several states have recognised the urgent need for supply and demand side solutions. They are working hard with industry to shape new policy approaches following years of neglect.

Bad indigestion

Bob Hawes — Mon, 30 Jun 2008 20:30:00 GMT

As an economist, or at least a graduate with an economics degree, I find it both fascinating and disorienting to absorb the plethora of material professing and prescribing the “certainties” in such “uncertain” times in relation to the current local and world economic circumstances.

In other words, at a time when the economic signals in many arenas range from robust to basket-case, there’s a variety of inspirational and illuminating viewpoints espousing bad, good or indifferent predictions.

There’s a plethora of angles and divergent subject matter to digest. The experts simultaneously and differentially postulate why this happened and what we can expect in the future.

Yes folks, it’s time to get out the dart board and study up on your horoscope!

On a recent holiday I read a book which revealed an interesting perspective on the economic discussion.

The book is by Stephen Leeb, The Coming Economic Collapse – How You Can Thrive When Oil Costs $200 a Barrel, I know, it’s not a title that would entice many as a holiday read. Leeb is a US-based investment adviser with an economics degree, a Masters in mathematics and a PhD in psychology. He also authored The Oil Factor, a book that explores the consequences of America’s dependency on oil.

Written in early 2004, The Oil Factor boldly predicted that oil would reach $100 a barrel by the end of this decade. At the time, the forecast earned Leeb ridicule. He was patronised by a swag of investment commentators and students of economic form. Well, oil has zoomed past $130 a barrel (May 2008). Whilst some suggested Leeb was outrageous, with hindsight, it appears he is a conservative.

In his latest book Leeb notes, “It appears that $200 a barrel by the end of the decade is entirely probable.” Won’t that be fun filling the tank in the 4WDs (SUV if you’re American) and the big V8s!

Leeb “models” how $200 a barrel will influence investing and living in the US. Some of his predictions are not pretty and the property industry is not immune from trouble either.

However, it was not only the ‘economics’ in The Coming Economic Collapse that I found gripping. It was also Leeb’s theory on why predictions and forecasts like that in The Oil Factor are ignored and dismissed as useless diatribe within influential forums like the leading investment houses and government think-tanks until it’s too late.

Leeb singles out conformity, authority and groupthink as the evil agents, the influences of the behavioural responses that we inevitably generate and witness. He cites a mix of past economic and societal experiences that highlight how these non-tangible qualities can play such a huge part in shaping the ‘now’ and ‘what’s coming’ contexts. For example, Leeb points to the herd mentality that enveloped so many in the NASDAQ tech stocks boom of the late 1990s as typical and destined to be repeated. He believes there’s still too much of this groupthink behavior about and this will be to our peril.

Of course, like any good adviser, Leeb prescribes some investment remedies that you’ll have to read the book to profit from.

Serious stuff.

On the same holiday, I watched the movie No County for Old Men. One character, Ellis, had this great line; “this country's hard on people, you can't stop what's coming, it ain't all waiting on you”.

Those who have seen the movie will understand why I would prefer Leeb’s plight compared to that scripted and directed by the Coen brothers of many characters in the movie.

In economics, like life, who do you believe to judge on what’s coming? Which road do you go down? Whose advice do you trust or do you make your own assessment and decisions? History will tell us who’s right.

Anyone interested in buying a diesel?

Bow Hawes is development partner at Buildev and chairs the Property Council of Australia’s Hunter Chapter.

Let loose the (bull) dogs of war

Paul Waterhouse — Mon, 30 Jun 2008 20:30:00 GMT

We’re midway through various footy seasons and the clichés are already coming home to roost.

Continuing the fine tradition of Rex “oose” Mossop, former footballers turned commentators are brushing off their thesauruses and bringing out their stock of footy phrases.

Each weekend and in footy shows and articles throughout the week, imagery (so well-worn that the floorboards are starting to show) is tossed around like hapless opponents. And there’s usually a theme.

As with any “titanic struggle” or “rugged contest” that “separates the men from the boys”, military terms find frequent use in descriptions of football matches.

Let’s face it, when two tribes face up against each other in front of their baying, one-eyed fans in a contest where the score, rather than the game, is the most important thing, it’s no surprise that comparisons will be made with competitions of a more life-or-death nature.

Would (insert your code here) football really be as interesting if there wasn’t the constant potential for bloodshed or violent outbursts?

Could football tribalism survive if teams didn’t hold on tightly to perceived slights and grudges?

Is there any better way to inspire bloodlust amongst players and spectators than making the stakes seem more desperate – even if the justification for hatred is decades old?

Your humble correspondent thinks not.

Tribalism allows football teams to survive and prosper.

As cities get bigger, they let us reconnect with a community – even if that community is over 1000km away, we’ve never visited it, and we’re only supporting it because our parents bought us the jersey when we were four. And we use our knowledge of perceived offences to reinforce our support and prove our loyalty.

Thus it is that ardent fans remember when an opponent Tommy “the Gun” Jones knocked on when scoring the winning try in the 1912 Grand Final, or when the umpire failed to notice that Bertie Smith touched the ball as it went through the posts and awarded a goal in the 1926 Premiership, or when Barry Hall knocked out Brent Staker – and maintained the rage each and every week.

Football fans are tribal creatures. Once someone supports a team, they are unlikely to abandon their loyalties in a hurry. So you would never expect that Kiwi immigrants would ever renounce their support for the All Blacks, even if they became Australian citizens. Nor would Queenslanders in Sydney or New South Welshmen in Brisbane readily switch State of Origin loyalties.

Even foreigners, to whom a ‘handpass’ is something that happens in a crowded pub, have been known suddenly to become slavish and undying supporters of Carlton … for some reason…

Football allows the average punter to alleviate their own aggression by watching grown men (and occasionally women) beat the daylights out of each other. It is the modern version of the gladiatorial contest – except that players don’t end up being fed to the local dogs after the game – an alternative to war.

However, I have a theory: football is not just a substitute for war, it’s a replica.

Over several sessions of intoxicated debate, I have identified a significant international conflict that epitomises each major code of football.

Take rugby league, for example. Have we ever seen a situation, where:

One side runs directly at another with no thought for safety, tactics or common sense?
The sole purpose is gaining and holding territory, only to be lost with each counter-attack?
A key weapon is the ‘bomb’?
And we have borne witness to senseless massacres (such as occurred in the recent State of Origin)?

It reminds me of the First World War. (the mud should be a giveaway)

Rugby Union? The Second World War – it’s a similar conflict, but both sides have worked out how to move around each other.

Soccer could only be described as equivalent to the Korean War – you have an entire conflict, but at the end, it’s still a draw. Oh, and like the war, there’s often a significant amount of police action.

What about Victoria’s number one religion, AFL? I think it’s most like Vietnam – you have a large number of people running around a paddock, nobody really knows what’s happening and, let’s face it, most of the action occurs behind the play.

And our American cousins aren’t exempt.

Gridiron? The American Civil War, of course:

It’s an Americans-only affair
Each team involves a cast of thousands
The game plans look like they’re the product of a night sampling moonshine
Each contest drags on forever
The rest of the world wishes they’d just get on with it!

As you can see, it’s a developing theory. But in its own way it helps me to make sense of each football code in all their glory.

Let the battle begin!

Paul Waterhouse is national policy manager at the Property Council of Australia.

Countdown...

Peter Verwer — Tue, 03 Jun 2008 20:30:00 GMT

For the first time in many years, this was a budget that talked a lot about the built environment and cities as a means of leveraging higher economic growth and improved community prosperity.

It would be easy to criticise the funds allocated to many of the property-related programs, but at least a start has been made. It also means that in future years we can push to top up these funds.

Amongst the swag of initiatives directed to the property sector, here are the highlights.

Nation building

The Budget established the Building Australia Fund, with a kitty of $20 billion.

It also maintains previous programs such as Auslink. Indeed, we added up close to $50 billion in infrastructure spending over the next four years, much of which will seed additional funds from the states and the private sector.

The promised major cities program remains in the policy incubator. However, the proposed $75 million for urban transport programs is a start.

The government’s major cities unit, which will flesh out an urban strategy for Australia, has been established.

Housing

There are three big programs:

$1.2 billion for First Home Savers Accounts, which will help bridge ever-growing deposit gaps
$623 million for the National Rental Affordability Scheme (NRAS), which is a first step to forging an investment asset class for rental housing
And the $500 million Housing Affordability Fund (HAF), which targets cuts in developer levies and red tape. $30 million of HAF money has already been allocated to fast-track the online development assessment systems nation-wide.

It’s no secret that industry believes NRAS and HAF are financially undercooked. However, all three programs reverse the Australian Government’s neglect of the housing space.

NRAS and HAF also show the Rudd Government understands that supply-side solutions are as important as programs that pump demand.

Climate change and the environment

The $90 million Green Building Fund finally acknowledges the role retro-fitted buildings can play in combating climate change.

The Fund only meets $200,000 in expenses per building, which won’t deliver the quantum leap in eco-efficiency that would attach gears to the coming emissions trading scheme.

The Property Council will argue for the reintroduction in next year’s Budget of accelerated depreciation for existing buildings that are upgraded to a high environmental standard – green depreciation.

Treasury boffins are sceptical of accelerated depreciation and so plenty of policy IVF will be required over the coming months.

Tax Reform

The decision to slash international withholding tax from 30 percent to 7.5 percent is a huge win for the property sector.

Instead of penalising the world for investing with Australian fund managers, we can now become a financial hub for the fastest growing regions on the globe.

The Budget also confirmed the Rudd Government’s commitment to a ‘root and branch’ review of the tax system.

The Property Council, as a member of the Business Coalition for Tax Reform, has already commissioned the Centre for International Economics to develop an alternative to our outmoded Federal-State-Local taxing frameworks.

The Government has also recognised that Australia’s collective investment vehicle regime urgently deserves modernisation and has committed to a staged review of managed investments rules.

And then there’s the sting. Treasury has gutted the GST margin scheme in those cases where land held by a GST-exempt vendor is ‘improved’ before it is sold to a developer.

We’ll be fighting this measure, which is likely to increase housing costs.

All in all, this was a Budget that built foundations for firmer engagement between the government, the property sector and the community.

The countdown to the 2009 Budget has begun.

The art of negotiation

Maureen Jackson — Mon, 02 Jun 2008 21:30:00 GMT

A fact of life in the business world is that relationships sometimes go sour. This is nothing new and can come about from a variety of factors which if not dealt with swiftly can, in the end, become a dispute that needs resolution.

Thankfully, I can only point to a rare but recent case which arose after a number of years of a successful working relationship between us and our intermediaries (the people who liaised with our client).

Towards the conclusion of a specific part of a project, there arose a dispute on the interpretation on the scope of works and monies owed.

Put simply, it was a failure to communicate consistently between senior members of both teams. Pistols were drawn and each party matched email to email and spreadsheet to spreadsheet as proof of their respective cases.

After a few meetings, both parties agreed that there must now come a point of resolution or we would all go crazy with spreadsheet overload. This led to what we termed the ‘final meeting’, whereby a venue was chosen and strategies were put in place.

The intimidation strategy

To prepare for the ‘final meeting’, we put together a PowerPoint presentation to hit them with the facts, mark our territory and get them to see the error of their ways.

We also rehearsed in a mock presentation prior to the meeting with our in-house coach (AKA fellow office worker).

Another tree was felled with a copy of the PowerPoint for all parties and a hard copy of the spreadsheets. For good measure a member of our finance division attended the meeting to send a message that this was of concern to management.

The showdown

The meeting began with each party facing each other at either ends of a table. As the PowerPoint was switched on I detected an anguished sigh from the other side, followed by some glazed expressions on their faces. I would hate to presume what was going on their minds but here are some suggestions:

“It is nearly lunchtime”
“I wonder if there is a good restaurant nearby because I’ll really need a good drink after this meeting” or
“I hope I put enough coins in the meter because that would really bug me if I get a ticket’.

Finally a sum is mentioned, our team leave the room stony-faced to discuss the offer and come back with a counter offer. This decision is greeted with dismay, irritation and a sense of injury as they are really trying to help us and now have to negotiate our case with the client.

The deal is done, hands are shaken and pleasantries exchanged. Returning to our desks I hastily put away every bit of information relating to the case.

All textbooks on developing successful relationships will tell you a relationship should never get to the ‘final meeting’. But another group of business writers and psychologists have made a great deal of money by telling us how to deal with the situation once it has reached this point.

So what is to learn from this?

Firstly, it is difficult to adopt a style of negotiation and bravado if it is not already part of your character and way of doing business. In any case, does such a display really achieve anything given both parties already have their bottom lines and will not be wavering from it to any significant degree?

Secondly, the importance of regular meetings between parties is critical to ensuring that any misconceptions are put to bed as quickly as possible.

And finally, there needs to be continuity of staff dealing with the project at both junior and senior levels. The more change of staff there is with a long-term project, the more critical the need for regular and face-to-face communication.

Too save on the emotional wear and tear of the parties up to and including the ‘final meeting’ and the subsequent performance (unless there is a paying audience), perhaps each party should be put under the cone of silence, holding cards up to show the final sums that are to be negotiated. The parties are therefore trapped until there is an agreement of the final sum. Mostly the impetus would lie in the fact that each party just wants to agree to be able to get out of the cone of silence.

Further, the cone needs to be sufficiently small so it cannot accommodate your legal representative joining you. If it worked for Maxwell Smart it can work for us... or did it really work for him?

Maureen Jackson is a director at Davis Langdon.

Getting Closer

Jason Little — Sun, 01 Jun 2008 20:30:00 GMT

With the Super 14 semi finals drawing upon us, it is again another tight finish for three of the four spots.

As usual, the Crusaders have dominated the number one spot for the year, in some circumstances even fielding a second or third string side! Strangely this is a positive for Australian rugby, the Crusaders coach and new Wallabies coach, Robbie Deans who is continuing his strong record, not that he needs to justify his Australian appointment.

Other coaches have not been so lucky. With the Waratah’s second on the table, the axing of Ewen Mackenzie earlier in the season stumps me.

However the predictability of the appointment of his replacement being played out in the press is no surprise and is not a good reflection on the NSW Rugby Union. If the next coach does not receive more support, will we start resembling the NRL with their revolving door coaching circus?

Leaving town

The trend of players from Australia, New Zealand and South Africa who continue to take up large overseas contracts in the UK, France and also Japan is a major concern, with a record number of top line players set to depart when the Super 14 concludes.

There is talk of Daniel Carter taking up a contract for a figure of €1.5 million (A$2.5 million) per season to play in France. With the incumbent All Black five-eight Nick Evans already signed to play in the UK, these must be worrying signs for New Zealand rugby. After taking huge strides this year under new coach Phil Mooney, the Reds will also lose their fair share of players.

Queensland will again need to rebuild from scratch which is a sad reflection for a team that was once a dominant and feared rugby institution. How can one team lose at least five world class players including the great Chris Latham? The Australian Rugby Union and the State Unions need to work together and address this issue sooner rather than later or we could be back to where we were in 2007.

The younger the better

On a positive note, it is exciting to see the depth of young talent which is on offer this year; all teams are continuing to roll out younger and younger players who all can play an exciting and fearless style of rugby.

The inside backs for Australia will have some strong talent and competition for the years ahead with both the Tahs and the Force unleashing their school boy stars in Rob Horne and James O’Conner being 18 and 17 years old respectively.

O’Conner, who debuted for the Force, has played with the maturity, vision, talent and aggression of a player many years his senior, not bad for the youngest ever Super 14 debutant.

Add his name to Beale, Horne, Cooper and Barnes all coming through, and we are well positioned to go through to the next world cup with lots of talent and by then with the key ingredient: experience.

It is also fantastic to see the performance of Lote Tuqiri this year. It is amazing the inverse correlation between Lote’s media exposure and his rugby performance. Let’s hope we don’t see him in any papers for the rest of the year.

Jason Little is general manager – Australia at Goodman International

Model Insights in Vogue

Peter Verwer — Thu, 01 May 2008 03:30:00 GMT

Now it’s serious. Supermodels are refusing payment in Greenbacks and mafia bosses are hedging in Euros.

The world’s richest model, Giselle Bündchen, says the US dollar is no longer the globe’s reserve currency and the US economy is tumbling off the catwalk.

With a haughty sideways glance at fashionable de-coupling theorists who contend the world no longer rides on America’s couture tails, Giselle joins Warren Buffet, George Soros and hedge fund managers in dumping the dollar.

They're not alone. Jim Rogers, the legendary commodities trader and former Soros business partner, is even fl ogging his house and US currency possessions to buy China’s Yuan. Rogers said, “I’m moving to Asia because moving to Asia now is like moving to New York in 1907 or London in 1807.

It’s the wave of the future.’’ It’s simply unfashionable to be optimistic about the US or the world’s economic outlook. Critics accuse the investment crisis – deniers on Wall Street of being NIMPs – “Not In My Portfolio ”.

They argue there’s much worse to come and depict swelling waves of global fi nancial pain. They say a US credit crunch will lead to a consumer spending crisis spurred by worsening negative home equity, followed by declining asset values and investment, lower productivity, job losses and an economic shame spiral that engulfs the world.

It’s a pretty convincing theory really, what with the UK on the (Northern) rocks, Europe patchy, Japan back in the doldrums and even a handful of other Asian economies, such as Singapore and Malaysia, looking soft.

The saviours are meant to be China and India, which continue to motor along at a slightly reduced rate of economic growth. China, in particular, is no longer as reliant on its exports to the US and seems set to maintain its voracious appetite for Australian raw materials (and, increasingly, our services). Australian property commentators might also be accused of NIMPism.

They talk of a distinction between the capital markets and the `real markets’, arguing that the crash in listed property prices doesn’t refl ect the strength of the underlying property economy.

And they’re correct in pointing to the 25-year low in offi ce vacancies, the stable consumer spending in shopping centres and jauntily high hotel occupancy rates. Not to mention a booming Western Australia, a strong-ish Queensland and South Australia, which is on the cusp of becoming the Wild South thanks to its emerging minerals boom.

The consensus is that we’ll see some yield decompression in secondary markets, but that prime assets are prime assets and there’s still plenty of money to maintain prices during a few inevitable fi re sales.

Indeed, there’s much talk of once-in-a-cycle opportunities for picking up entire portfolios with a bout of M&A activity in the offing.

All of which seems reasonable, but misses the point. We haven’t begun to see the real pain wash onto our shores. When the world slows down, Australia goes along for the ride.

The difference between 3.5 percent average annual economic growth and 2.5 percent growth is massive. Harry S. Truman remarked that it’s a recession when your neighbour loses their job and a depression when you lose your own.

These days we might say that it’s a recession when your colleague doesn’t get a bonus and a depression when yours disappears.

An economy built on 18 years of growth doesn’t need a technical recession to induce pain, especially as most workers under 40 have never seen a fully-blown slowdown.

For the Property Council, this means our agenda will re-focus on property fundamentals – the new black. It also means further boosting our political activism.

The vulnerabilities of the Australian economy call for more radical action on the nation building, single markets, tax reform, red tape cutting and urban policy fronts.

That’s why we’ve welcomed the Rudd Government’s 2020 Summit outcomes, many of which reinforce our key messages of the past 10 years.

The Property Council is in the business of energising policy debates that lead to reform. The 2020 Summit has made public policy discussion trendy. Like nerf balls, dingbats, foosball and iPhones, every kid on the block will soon want their own 2020 platforms. The property industry is ready for the policy ideas vogue. Maybe Giselle will help us with the policy launch.

Be careful what you wish for

Tina Tang — Tue, 29 Apr 2008 21:30:00 GMT

I sometimes wonder – what do we really give people? When we walk away at the end of a project, we have spent years planning, developing, designing, financing and building something. We may pause at that point to celebrate the milestone, but what is our true legacy?

By this I mean, how does the property or precinct really work for the people who live and work there every day?

Whilst at some stage in our careers we may be lucky enough to work on true landmarks – the sorts of places remembered and known for the right reasons – there are many other projects that are not standouts as projects, but which people happily occupy and customise for many years.

I recently attended a party in a small flat in a Harry Seidler-designed building in Sydney’s Elizabeth Bay, still with its original early-60s kitchen cabinets. The owners were devotees of the modernistic sensibilities expressed in their building, complete with small car spaces protected by concrete latticework, tiny balconies and blank street façade. With the owners’ lovingly restored Parker furniture, the apartment had withstood the test of time and was still truly enjoyed and celebrated by its inhabitants.

Australia Square tower in Sydney still looks great and works well on any level, but the quirky wedge-shaped lifts and unusual shower facilities refer to a pre-exercise obsessed era, and as for bicycles – well you’d have to have the folding variety. Nevertheless, it is a landmark building and its occupants generally have affection for its quirky layout. The public domain too is well utilized, as anyone who has tried to have a drink there on a Thursday or Friday evening will attest.

Any of the grand late 19^th century buildings in Australia’s cities are a treat, offering good light from beautiful windows, high ceilings, stylish entry lobbies and stellar thermal properties with their thick stone walls. It makes you wonder if our current urban design will provide such a strong legacy in 150 years.

But never mind 150 years, it always pays to take a walk around a site soon after initial occupation. To see people enjoying landscaping that perhaps was a bone of contention between developer and council, or to feel the buzz of a new alfresco eating area, is reward in itself.

All around Australia it is possible to see where spaces like this have hit the mark. I recently had the pleasure of speaking with someone who, unbeknown to either of us up to that point, had recently moved into a building that I had overseen. It was extremely gratifying to hear all the positives about natural light, great working environment, cafes, and other aspects over which we had spent so many hours deliberating. Equally. however, I am sure we have all experienced at some stage the disappointment of empty shops and unfriendly wind tunnels – testament to where we may have done better.

But what about inside? Commercial offices are a mixed bag. Often the things which most delight workers have little to do with the base building. Is it really possible for a typical tenant to express satisfaction with air quality? Or lift speeds? Or are these things just taken for granted? It is more likely to be interior architects and fitout specialists who take the credit for the success or otherwise of a commercial office through their choice of carpet, furniture or even art hanging on the wall.

While we can all draw conclusions around single projects, or make our own judgments, few industry players are good at, able to, or even bother to follow up with the intended occupants. Property post-occupancy reviews tend to focus on contract-based criteria or pre-publicised standouts such as energy efficiency or traffic flow.

Anyone working in residential development, especially inner-city apartments, would probably be the most connected to their market, particularly as this segment tends to deal directly with people spending their own money as opposed to say commercial, where the occupants are often simply the workers in a larger organisation and the decision to remain or move is not in their control.

In residential, there is nearly always an involved retiree who makes it their mission to supervise the defects period, and who is fully engaged in resolving operating and ongoing issues. These people are able to galvanise support from all residents, and can really test the mettle of the developer or builder.

Equally though, those same people can become the greatest advocates for their development. They may love the views, community or facilities and, properly harnessed, will be a wonderful supporter for years to come.

Perhaps an industry standard post-occupancy measure that looks at a range of things, not just whether the owner got what they asked for, but also whether those who use the space thought it measured up, would provide something objective to compare ourselves to – although, even those opinions are by their very nature subjective.

Major projects tend to receive public commentary either in newspapers, especially letters pages, or in conversations at social gatherings. How many times have you been involved in a meeting in an office that looked out at another building and used that property’s merits or otherwise as an icebreaker? These conversations go on daily on privileged executive floors around the city. It’s a sobering thought when you consider that our clients are part of these conversations, and our brands are very visible on hoardings and cranes.

Without an accepted industry-wide measure in place, it is left for each of us to do our own research. I advocate taking the time to walk around and talk to people living and working in your past projects. Who knows, you may even get some insights which solve a current issue for you.

And what to do if you hear something bad? Definitely don’t hand out your business card!

Tina Tang is a project director at Brookfield Multiplex.

Talking ‘bout my generation

Bob Hawes — Tue, 29 Apr 2008 20:30:00 GMT

The anecdotal, statistical and social evidence proffered on the debate about the generation divide has been recounted in popular media, at dinner parties, pub talk, staff review sessions and so on, time and time again. Whatever the objective or clinical out-take on the generation debate, and whatever the definition of the age bands, it’s interesting to observe how these groupings have made it convenient to categorise behavioural characteristics. The story lines and themes that develop have a ring of familiarity.

Here’s my take on it so far.

The pre-war crowd, now all aged over 60 and numbering about 3.4 million, is shrinking at a fast rate. They have done their bit in the work stakes. They are our retirees shifting about the place in Winnebago style motor homes, on motor bikes, sea or tree changing in the accommodation context. They have a sense that everything shouldn’t be so hard. They have seen it all – depression, wars, Menzies and the rest. For most, technology is too hard – all a bit of a fad. It’s not how things were done in their day. The Cat Stevens song Father and Son says it all.

Next is the lot that seemed to start the debate – the baby boomers. There are over four million of them, with the bulk aged between 50 and 60. They see themselves as the true leaders, the portals of wisdom. Their life experience, invariably self described as tough, has witnessed cyclical change but somehow perversely, it’s deemed perfect, like having mixed good and bad, innocence and experience and they want things to stay that way. Why can’t those that follow see that, they muse? But to those that follow, things aren’t the same. The rules have changed and the baby boomers have a lot to answer for.

Generation X number 4.3 million or so and have zoomed past 30 years-old. They are flexing their muscles, although they haven’t had it too easy either. They have witnessed the boom to bust sequence, prosperity to recession and back again – the dreaded economic cycle. However, for many Xs, things are often just beyond reach and they grow impatient, doing things new ways. The baby boomers have crammed them for space; blocked their way. Boomer way is not the only way – and never mind if it doesn’t work out, there’s the family fortune to inherit.

Generation Y, the younger ones in the 15-30 age bracket at approximately 3.9 million, are the stay-at-home generation. They have well and truly sprouted, yet some behaviour patterns suggest they refuse to buckle down to the task and choose to do things only their way and only when they feel like it. They risk destabilising entire economies, or so we’re told. They’re difficult to motivate; either won’t sit still or won’t move; lack the exposure to TV shows like Hey Hey it’s Saturday and Seinfeld and instead crave reality TV experiences. Technology and their contact with it, of course, is to blame. The prodigy successors of Walkmans (invented by baby boomers) have a lot to answer for!

Generation Z, so far a batch of around 3.9 million, are yet to really get past their teens. Their parents, mostly Xs, cram them for a good education. The Zs are emerging as ultimate consumers. Of course you need a mobile phone, Ipod, DS, Wii, i-toy, lap top, broadband and overseas holiday by the time you’re 10! Well why not if mum and dad want to spend their money that way? In reality, the Z jelly isn’t properly set so it’s difficult to tell the true damage they will reap. However, there will be a price to pay for entertainment driven by technology and virtual continuous after school experiences!

Emerging through these characteristics is the notion that every other generation has it easier than another. It’s shades of the Monty Python Yorkshire men sketch – you know “you were lucky” and “luxury” and having to “wake up before yea went to sleep” – all part of life and spoken of course in thick Yorkshire accents. However, the converse to this ‘truism’ is as old as life itself.

That is, the ‘universal’ belief within each generation that, not only is there after burn from the previous generation, but if their own lot had been in charge of things when the former had the reins, life would have been so much better. The lyrics to the Mike and The Mechanics song The Living Years reflects “every generation blames the one before and all of their frustrations come beating on your door” captures a part of this sentiment in a wider context than why the song was written, but I’m sure you all comprehend.

Understanding the underlying motives and structure of the generations gives us fuel to plan economies and adjust to consumer fashions. As property people, this translates to different forms of accommodation and floor space – making a product the market will actually want.

As a society though, generational differences seem stressful. They are a barrier to those seeking to achieve homogenised outcomes. Ultimately, we all still have our own definitions of nirvana – we sometimes don’t want to know about anyone else’s!

And as each of us reminisce and speak about what was, should or might have been the last words go to the Python Yorkshire men: “just try and tell that to the kids these days and they just won’t believe you.”

Bob Hawes is development partner at Buildev and chairs the Property Council of Australia’s Hunter Chapter.

J'Accuse Blues

Peter Verwer — Mon, 31 Mar 2008 23:30:00 GMT

The PCCBEC condemns the Property Council for the following transgressions.

The Property Council has questioned many unchallengeable doctrines of the planning system. Its Top 10 Myths and Fallacies of Urban Growth in Australia is a blatant attempt to create debate in areas of discussion that have been finalised to our satisfaction.

For instance, the Property Council says there is evidence that outer metropolitan development is better for our planet than urban consolidation.

In point of fact, we can only agree with our colleague at the Planning Institute of Australia who said, “There is plenty of real research that has been done on the unsustainability of urban sprawl.” We stress the word’s ‘real research’. We also note the Property Council’s failure to utilise approved words such as ‘sprawl’.

Clearly, we already have all the research we need and can see no reason for more.

We cannot overlook the Property Council’s outrageous abuse of data from the Australian Conservation Foundation’s recently published Social Atlas [Conservation Atlas].

The findings from the Social Atlas show that the eco footprint of families (and therefore homes) in outer metropolitan areas is far lower than for families in city centres and inner suburbs. It is true that this finding holds for every city in Australia and takes into account the almost universal use of cars in these fringe and sprawl zones.

However, the Property Council totally ignores the main reason for the superior environmental performance of the sprawlburbs: that’s where the poor people live. Of course, they consume less.

The Property Council’s claim that “the planet is blind to the socio economic status of individuals and families” is transparently designed to challenge an accepted truth – sprawl is bad because it is sprawl.

We feel no need to respond to the Property Council’s call for public debate. Nor will we be blindsided by calls for a comparison of different research methodologies. We already possess the findings we need.

Consequently, we order the Property Council to purchase one million tonnes of carbon offsets as punishment.

Secondly, the Property Council opposes the mandatory disclosure of a building’s environmental performance on a regular basis.

We have already modified our position on this issue as our preference is daily disclosure by notice in the foyers of all buildings.

In typically hysterical fashion the Property Council says this reasonable measure equates to a BAS (business activity statement) for carbon. It says that an hour and dollar spent on reporting paperwork is an hour and dollar lost to meaningful greenhouse gas reduction programs.

They claim that there is no evidence that mandatory disclosure has ever saved a single tonne of carbon and that even the Danish Government recently scrapped their disclosure regime as an unqualified waste of time. (Note: The PCCBEC will investigate why our Danish colleagues have indulged in such aberrant behaviour).

As usual, the Property Council misses the point: mandatory disclosure sounds good.

In fact, it doesn’t go far enough.

We can only agree with the RAIA’s brains trust – Archicentre – when they say it should be illegal to sell homes that have not been refurbished and certified to a higher standard, irrespective of the financial capacity of the owner.

These are critical times for the planet and so environmental issues must outweigh equity.

The Property Council and its running dog chief executive has accused several professional bodies of hypocrisy on this count.

It says that if owners must declare their eco footprint then so must professional firms. It says that we are Janus-faced (not an approved word) and that we demand an ethical performance standard of others that we refuse to apply to ourselves. It says that we tell others what they must do without applying the same principles to ourselves. It says we are “musturbators”.

This is cruel and hurtful.

The Property Council does not understand that we are too small to make a difference! Besides, it would tie us up in needless red tape.

We order the Property Council to purchase a further million tonnes of offsets for this transgression and a further 10 million tonnes for being so horrid.

PCCBEC commentariat.

Organised chaos

Nathan Clark — Mon, 31 Mar 2008 22:45:00 GMT

When I took on the challenge of moving abroad to work in Shanghai two years ago, I had no real idea what was in store. My task was to build an agency retail business in a market where second tier cities have populations that outstrip the whole of Australia and a retail sector that was powering ahead in a league of its own.

While I have been back in Australia for only a few months now, it’s surreal looking back on the whole experience, and one that I am sure many other ex-pats will identify with.

Fresh off the boat, I dived into a culture that was vastly different from my life in Melbourne. Stepping in as an outsider to take over the running of a business can be tough at the best of times. But when you throw in cultural differences, language barriers, traffic chaos and unusual food, the challenge is even greater.

Where’s my dictionary?

When I first arrived, one of the most difficult parts of the experience was the language barrier. I did not know any Mandarin, yet probably 70 percent of the business meetings I attended were in Mandarin and/or Cantonese. Luckily my assistant was fluent in both as well as English, so her role quickly expanded to include interpreter.

By the time I left I knew enough Mandarin to get by, but would still find myself in tricky situations with taxi drivers who either looked at me like I was from another planet or dropped me at completely the wrong place. Who knew that asking “take me home” would leave you stranded in an old part of the city 10km away, all because I got the tone of the word wrong.

I thought relationships were a big part of the industry here, but it has nothing on China, which places even greater importance on the bond between your peers. Of course it was my number one priority to build a strong team when I arrived. But this wasn’t as easy as I thought it would be. The cultural differences in the workplace are significant. They asked themselves “Who’s this lawai? (Chinese slang for foreigner) and what does he know?”

Once you build relationships and establish trust in China, people will open up to you, but before that it can be like extracting teeth – with no happy gas.

On the lighter side of work life, as many people know, the Chinese have the option of using either their Chinese first name or their “western” name in the workplace. So when I first arrived I found it a little weird introducing my clients to the likes of Winky, Fauna, Cinderella and Chocolate. But by the time I left it felt quite normal.

Watch out for the…!

Living in a city of 22 million people is an experience in itself. The street theatre was incredible, but the problem was most of it wasn’t meant to be ‘theatre’. On any given morning as I would walk to the office there would be people walking backwards clapping their hands wearing their pyjamas – apparently a common form of exercise – guys selling dumplings out of rusty, old, 44-gallon drums next to a shoe shine man, all within metres of the doorstep.

The streets have a controlled chaos, a bit like one big dodgem car ride. Along with cars there were motorbikes, scooters, pushbikes and buses appearing from all directions cutting each other off – street crossings seemed to mean nothing there.

Footpaths were as good as the road for most vehicles. My scariest experience was when I was run over by a “stealth” scooter. These electric scooters make no noise so I didn’t hear him coming up behind me on the footpath. I was relatively unharmed but pretty shaken, while he just kept going!

I later inadvertently discovered the secret to clearing a path when I bought a Golden Retriever. Chinese people are generally wary of dogs and many would make a detour around me to avoid Lola.

Third floor please

You’d never think that catching the lift at the office could be an unexpected experience.

Elevator etiquette doesn’t exist; it’s every man for himself. Everyone seemed to arrive at exactly 8:55am, which resulted in about 300 people bustling to get into a lift at the same time. The same thing would happen at lunchtime right on 12 noon.

Mobile phone etiquette was somewhat different too. In meetings phones would be going off left, right and centre and people would answer.

One night my wife and I went to the opera. There seemed to be a light show in the audience where mobile phones and cameras were flashing and buzzing the entire time. Theatre staff would walk around holding fluorescent batons with “quiet, no phones, no cameras” in Chinese written on them and shouting at people to be quiet.

Round the clock

Life at home was interesting too. It seems there was a mobile man for everything.

I bought a barbeque when I first arrived and took the gas bottle down to the petrol station to be filled. This was another occasion where I was looked at like I had two heads, as it was clear this wasn’t the system they used in Shanghai. It took me three months before I found out that the “gas man” rides around on a bicycle with gas bottles on the back – a risky exercise at the best of times, let alone in Shanghai traffic.

Every home had their own water coolers and every week the “water man” would deliver water barrels, carrying 20-30 at a time on the back of an old bike.

Life runs 24/7 in Shanghai, with one kind of life running during the day and a whole other one running at night.

At 10.00pm one night we received a knock at the door. After much confusion, we established the “visitor” was there to read our electricity meter.

The city of opportunity

Shanghai is certainly a city of extremes, which I grew to love. Leaving was one of the hardest things I’ve ever had to do. Coming home, I’ve got a whole different view on the world. I’ve realised how isolated Australia is and how much impact the growth of China could have on Australia and how we can benefit from it. I am looking forward to seeing the results.

The opportunities, scale and pace of business is incredibly exciting in Shanghai. It was an experience I would definitely do all over again and one which I certainly recommend to anyone who has the opportunity.

Nathan Clark is national director – retail agency at Colliers International.

Bledisloe: Breathe it in

Jason Little — Mon, 31 Mar 2008 22:30:00 GMT

What a spectacle the fourth Bledisloe Cup will be this year on November 1, in front of a crowd of 90,000 people at Hong Kong Stadium.

Hong Kong has hosted the best annual rugby event, the Hong Kong Sevens, for as long as I can remember, and for those that have attended a Sevens, there won’t be much to remember at all.

It is a weekend of festivities enjoyed in the spirit that is rugby. The benefits will be two-fold – not only are we supporting and growing the game in Asia, but financially it will be a huge windfall for all unions involved. This will only be the start of Bledisloe Tri Nations games being played throughout Asia and United Arab Emirates in the future.

Congratulations to the ARU and Western Force for finally standing up to poor off-field behaviour. It is no surprise there is a correlation between team behaviour and performance and unfortunately the recent results in Australian Rugby have not been good.

Whilst it is never easy to sack someone, Matt Henjak had been given enough last chances. It makes my last nine lives look thin. Above all this, a precedent has been set and a line drawn in the sand. Unfortunately the off-field behaviour of all sporting codes has been sullied. The Wallabies once had a fine off-field reputation and John O’Neill will be keen for that to return very quickly. He has barely been back in the job for nine months and already O’Neill has made a big impression on the game, both domestically and internationally.

First he has disbanded the national competition, Australian Rugby Championships (ARC), after only one season in existence. While showing all the right on-field criteria, after a disastrous domestic season, the Australian Rugby Union (ARU) could not afford to prop up a competition that lost $8 million in three short months. The ARC filled the gap between club and Super 14s rugby, provided an opportunity for young players to show their wares and, best of all, was played as an open, free flowing, spectacular game. This competition showed enough promise that I believe it will come back in the future in a revised format when the ARU is financially secure.

After the Wallabies have given little to the Australian public over the last couple of years, O’Neill has had enough and appointed the first foreign coach in the history of Australian Rugby, and who would have thought he would be from across the Tasman? This strategy is not new to O’Neill as he appointed a foreign coach to the rival sporting icon The Socceroos. Robbie Deans was head and shoulders above the rest as the best candidate and we applaud the decision. We can only hope he will be as successful as O’Neill’s other appointment, Gus Hiddink.

Finally the new Super 14 rules are a breath of fresh air. The players are fitter and more dynamic, making the game much more enjoyable to watch as opposed to last year’s Rugby World Cup.

Jason Little is general manager – Australia at Goodman International

High speed correction

Adrian Harrington — Mon, 31 Mar 2008 21:30:00 GMT

The UK direct property market, once the standout on the international property investment menu, is now leading the global property market correction. This high profile collapse is even more notable for the speed at which the re-pricing has occurred.

The IPD Index, which has been tracking commercial property returns in the UK since the 1970s, shows UK commercial property values fell 2.0 percent in January after being down 8.7 percent in the December quarter 2007, and more than 16 percent in the past year. According to IPD, the December quarter recorded the largest quarterly decline in capital values in the history of the index – surpassing movements in the early 1980s and 1990s corrections.

There are many reasons put forward why the UK has been so badly affected. Clearly the UK markets were severely overheated, fuelled by a wall of equity from investors seeking assets that feed off debt supplied by banks fighting for market share at LTV levels much higher than we are used to in Australia. Hindsight is a wonderful thing – but a correction was inevitable.

However, the sheer velocity of change was driven by:

Pricing signals from the listed market – UK REITs, which have only been up and running for a year, had been trading for most of their short life at 30 percent plus discounts to net tangible assets
The IPD index is published monthly, giving a more timely snapshot of the market, notwithstanding it is appraisal-based
The UK has a very sophisticated and growing derivatives market, which at the end of the day provides another pricing signal to sentiment in the direct property markets
The large number of open-ended unit trusts owning property that had poorly conceived redemption facilities, which when sentiment turned and investors wanted out, forced many managers to place redemption freezes – intensifying the negative sentiment in the market.

As we are witnessing in the broader capital markets, sentiment plays a major role in investment markets and the property sector is not immune. Sentiment remains negative in the UK, although after the fall from grace in 2007, some leading market commentators are predicting a turn around in second quarter 2008. It’s a brave person to call that the bottom is near, but for those cashed up investors, some of the best buying opportunities in more than 20 years may be just around the corner.

UK debt – refinancing remains a risk

De Montfort University’s (DMU) six monthly UK bank lending study, released at the end of 2007, highlighted just how much the UK commercial property market became dependent on debt. Since 2003, outstanding debt secured against UK commercial property increased by a staggering 55 percent from £120 billion (A$264 billion) to £187 billion (A$411 billion).

Interestingly, the DMU survey estimates that 23 percent of this debt is up for refinancing in the next two years. Those borrowers who took advantage of plentiful and cheap short-duration debt, with the view to refinancing off higher property values, may well find themselves in zero or negative capital positions.

Property derivatives – a market on the rise?

Derivatives for direct property are a recent innovation in Australia, and I am sure not fully understood by many in our industry.

The UK has led the way with a sophisticated and now quite deep market in place. Recent reports in the UK put the volume of UK property derivatives trades in the UK in 2007 at more than £7 billion (A$15.4 billion), up from £3.6 billion (A$8.0 billion) in 2006.

In January 2008, almost £1 billion (A$2.2 billion) of property derivatives were traded. Clearly, either speculators are punting on when the UK recovery will occur or investors are seeking more sophisticated ways to manage the increasing risk in their property portfolios created by the uncertainty in the market.

With these sorts of volumes, property derivatives for direct property are here to stay. It will be interesting to see over time whether they become a hedge funds dream or a new market in which to wreak havoc – just look at their impact on the listed REIT sector over the past three to six months.

Australia’s safe haven status: on the nose?

As the fall-out in the northern hemisphere gained momentum last year, Australia was widely seen by investors in this part of the world as a safe haven. Our REIT sector was holding up (many of the REITs were trading at premiums to NTA and had strong growth prospects) and both our economic and underlying property fundamentals looked good.

How a few months can change things – D-day was December 17 when Centro shocked the market with its announcement that it was having issues refinancing its debt. All of a sudden, the Australian property market was not immune to what was happening around the world. The reaction of investors and hedge funds was swift – just look at the pressure the entire REIT sector has been under – down more than 20 percent in three months.

As one European pension investor, who has investments in both Australian listed and unlisted property funds, said to me recently “Australia has gone from one of my major ‘safe haven’ picks to a higher risk property market.”

His reasoning: capital has again started to think about the meaning of risk-adjusted returns. The fallout from Centro and other stocks such as MFS and Allco/Rubicon has savaged investor confidence, Australian banks are now on notice that they are well and truly exposed to the fallout from the credit crunch and will undoubtedly put tougher lending criteria in place, and with the RBA serious about further interest rate rises, pressure is undoubtedly going to be put on property cap rates, given Australian cap rates are now below the risk free rate.

While one pension fund investor does not make a market, if his logic is adopted by other global investors, then global equity and debt capital will become increasingly discerning about Australia, and I’m afraid we have yet to see the full fallout from this.

Adrian Harrington is chief executive officer, funds management UK and USA at Mirvac.

Local knowledge

Stephen Evans — Thu, 31 Jan 2008 22:30:00 GMT

I have a friend who declares that he’s never had sex as good as his best surfing sessions – it’s the sort of comment that speaks volumes about some part of his life. Given he spent most of the 60s and 70s as a local rock star, he’s obviously had some very good surfing sessions.

An aspect of modern surfing is surf travel. I remember at some point in the early 70s going to see a slide presentation by some local surfers in a community hall in Avalon. They had just returned from Bali with images and tales of an idyllic tropical lifestyle and deserted reef breaks with large and perfectly formed waves – years roll by and life moves on.

My surfing buddy and I and our wives (sans enfant) arrived at Denpasar airport and loaded the 9ft plus surfboards onto an airport taxi for the trip to a small but attractive resort on the less popular part of Bali out along the east coast. As usual, the driver was a wealth of information about shopping, antiques, restaurants and he assured us that he knew of a secret surfing location that had a perfect right hand point break. Sceptically, we agreed to meet him early the next morning so he could show us his secret surfing location.

Next day, we drove through the volcanic hills that run down to the sea along Bali’s east coast, plunged off the main road and through villages awash with children, chickens and mangy dogs, finally, along a track through a quiet, dark coconut grove. Eventually we reached the ocean and behold – it was exactly as described. A perfect 6-8ft right hand point break, wrapping around the headland into a small bay beach.

We surfed there for a couple of hours until the tide changed the shape of the waves – it was so perfect all we could do was laugh and wave to each other, hoot and holler as we took the drop, then carved across a broad blue face 12-15ft high, finish by tucking and trimming into a fast barrel to flip out in a rush of spray at the end – then paddle out and do it all over again and again.

Afterwards, we sat at a roadside warung opposite our secret turn-off, eating nasi goreng for breakfast, washed down with hot sweet tea, talking about sex and surfing and which one gives a better rush. Looking out at the endless parade of overloaded passing trucks, I watched as a mini bus jammed packed with young Japanese surfers and their boards laughing and waving, turn down the secret road.

As Australian property companies make inroads into emerging Asian markets, we should keep in mind the valuable surfing lesson – no matter how worldly wise you may be, there’s still a lot to be learned by listening to the locals and the fact is, we’re probably not the only ones passing this way.

Stephen Evans is general manager of management services, at Gleeds.