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The Hon Peter Garrett AM MP
Minister for the Environment, Heritage and the Arts

Keynote address Property Council of Australia Sustainable Property - The Future is Green

Speech
20 May 2009

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I would like to begin by acknowledging the traditional owners of the land on which we meet, the Kulin clans, and pay my respects to their elders, past and present.

I am pleased to be here at 'Sustainable Property', at what we all understand to be a critical and challenging time.

It is a critical time because of the economic circumstances confronting Australia and nations around the world.

And it is a challenging time as we size up the opportunities of a low-pollution future -

I welcome the chance to address the built environment sector again, as I have done a number of times since the Rudd Government came to office.

As always, this is an occasion to exchange views - to inform you of Government policy, and to listen closely to your ideas and concerns.

It is a mark of your sector's engagement on sustainability that I have had regular opportunities to address various gatherings, to launch green buildings and meet with many of you formally and informally.

And it is a mark of the Australian Government's commitment to a sustainable built environment that on each occasion I speak to you, there are significant new initiatives and progress to report.

To reprise - the Australian Government is strongly committed to action to address dangerous climate change.

As you well know, the centrepiece of the Government's approach is the Carbon Pollution Reduction Scheme, a substantial economic reform that will for the first time recognise the real costs of using fossil fuels, and by implication, the very real benefits of renewable energy and energy efficiency.

Critically, the Government has identified energy efficiency as the second plank in our approach to tackling dangerous climate change, alongside the CPRS.

We need to unlock low-cost greenhouse gas abatement, and we need to unlock it now. We need to prepare Australian households, business and industry for the transformation to a low-pollution future, and we need to do it now.

As the CPRS matures and the carbon price begins to flow through the economy, we need to address the barriers that will prevent Australians from maximising the benefits of energy efficiency, whether it's households installing a new hot water system or a business negotiating a new commercial tenancy.

Let's just consider how far we've come and how high the stakes are in this journey.

I've just returned from the World Ocean Conference in Indonesia. There I represented Australia at the Leaders' Summit on the Coral Triangle Initiative, a unique regional partnership between between Indonesia, Timor Leste, the Philippines, Malaysia, Papua New Guinea and the Solomon Islands.

In the Coral Triangle region, on Australia's northern border, there exists some of the greatest marine biological diversity on the planet. There also exist around 240 million people who live within 30 kilometres of the coast and who depend on the health of the marine environment for their livelihood, for their food security - for their future.

It has been called the 'Amazon of the Seas', and it is an 'Amazon' at risk from the impacts of climate change and unsustainable practices.

As we in Australia ponder whether sea-level rise will send coastal property values downwards, Indonesia's Minister for Marine Affairs and Fisheries, Vice Admiral Freddy Numberi, tells me Indonesia has already revised its total tally of islands downwards, with around 24 lost to environmental damage.

And this is not to downplay the very immediate issues we confront here in Australia, in the vulnerability of low-lying infrastructure, and the impacts of coastal erosion and storm surges.

As I have said, these are high stakes, and we are not alone in confronting them.

If there is one overarching message in the Coral Triangle Initiative, it is one of connectivity - the connection between a healthy environment and sustainable development; the connection between a healthy environment and regional security; the connection between neighbouring nations who share the oceans as a source of livelihood; and most strikingly, the connection we all share in confronting the challenge of climate change.

I raise this for a couple of reasons.

One is about perspective - because our public policy debates sometimes - and sometimes necessarily - veer into the abstract. You can get a pretty good sense of this if you drop by the Senate in Canberra.

But when you think about climate change impacting the livelihood of 240 million neighbours, there's not much that's abstract about that.

The other reason concerns the connections that those of you here today share; the built environment is what connects us, not just professionally, but literally, essentially, in the places we live, work and learn, our transport systems and our infrastructure.

Our built environment is fundamental to our sense of place, and its shape and impact is fundamental to the kind of place we want to leave future generations.

When we talk of building a low-pollution economy and growing green jobs, it's not about a trade off between the environment and the economy, or between the built environment and the natural environment - it's about securing both.

These are guiding principles for the Australian Government, and they are the reason the built environment is the foundation of so much that we do.

For example, the Nation Building-Economic Stimulus Plan includes a $6.4 billion investment to build 20,000 social housing dwellings across Australia, stimulating the building and construction industry and estimated by Treasury to support 15,000 jobs over the next two years.

$12.4 billion has been allocated for primary schools to provide funding for new iconic facilities such as libraries and multipurpose halls, or to upgrade existing facilities as part of the Building the Education Revolution program.

We are making an unprecedented investment in priority transport infrastructure identified through the independent Infrastructure Australia, with an injection of $8.5 billion announced in the Budget.

Critically, a large part of this investment is being made in public transport projects such as the Gold Coast light rail system and the east-west rail tunnel here in Melbourne.

So the built environment is front and centre in supporting jobs and stimulating our economy, and it is also the foundation of the Government's approach to energy efficiency.

As I have observed regularly, there is abundant evidence that shows energy efficiency is the fastest and least-cost pathway to reducing Australia's greenhouse gas emissions.

Many of you would be familiar with the McKinsey 'Australian 2020 carbon abatement cost curve', which paints a compelling picture.

It identifies a range of energy efficiency measures that have a negative cost - that is, investment in them actually pays. So investment in better buildings - for example, in more efficient lighting, heating, ventilation, air conditioning and water heating - returns more in energy savings than it costs to retrofit these technologies.

You might also be familiar with modelling by the Centre for International Economics that suggests efficiency gains from the building sector alone, with current technology, could improve GDP by approximately $38 billion annually by 2050.

According to the International Energy Agency, Australia has the fifth highest energy intensity of 21 nations, behind only Canada, Finland, the United States and Belgium in terms of energy use per unit of GDP (GJ per USD 2000).

There are a variety of factors behind this, but what is beyond doubt is the vast scope of the opportunity to harness cost-effective energy efficiency gains across the economy, particularly across our built environment.

It's a question often asked and one very much at the centre of the Government's thinking - if energy efficiency is so good, why aren't we already doing it?

If the cheapest and cleanest power station is the one that's never built, why aren't we already turning 'megawatts' into 'nega-watts'?

The answers to this question are increasingly well understood.

There are a range of barriers to the take-up of energy efficiency opportunities, for example the lack of accessible information on cost-effective actions, the high up-front cost of some energy efficiency improvements, and split-incentives, such as those between tenants and landlords.

And without Government action, these barriers are likely to persist, particularly through the early years of the CPRS.

This challenge defines the Australian Government's comprehensive approach to energy efficiency - to identify and remove the barriers to the uptake of energy efficiency actions that are inherently cost-effective, reducing costs for households and businesses and increasing economic productivity in the transition to a low-pollution future.

And we are deeply engaged in the task at hand.

The Australian Government is advancing the National Strategy on Energy Efficiency to provide a long-term work plan, coordinating energy efficiency actions across the Australian economy, harmonising regulations across jurisdictions and creating a platform for continuous improvement in Australia's energy efficiency performance.

The National Strategy on Energy Efficiency will turn around the lack of national leadership in this space - the previous Government's legacy of inertia that led to duplication, inconsistent regulations and a failure to harness the clear opportunities for cost-effective energy efficiency gains.

For example, in early 2009, there were more than 200 separate energy efficiency programs and measures running across all Australian jurisdictions and levels of government. That's not a recipe for effective policy, let alone effective engagement with community and industry.

On 30 April, the Council of Australian Governments signed a memorandum of understanding, agreeing to progress the National Strategy through an Intergovernmental Agreement in mid- 2009, delivering nationally consistent, ambitious and accelerated energy efficiency measures over a ten-year timeline.

The Strategy will target all areas of activity where substantial energy efficiency opportunities exist, including the commercial and residential building sectors.

In last week's Federal Budget, the Australian Government backed up the National Strategy with funding for key actions. An investment of almost $65 million over four years will fund a number of measures, including the necessary work to:

Action in these areas is long overdue, but let me say clearly that effective action will require consultation and partnership with business and industry, including those of you in this room.

You are the practitioners and advocates of sustainability in the built environment - the architects, planners, developers, builders and investors with the expertise and creativity we must harness.

We will seek your advice and input in these immediate actions, and also more broadly, as the National Strategy is further developed, with a final set of measures to be agreed at the next COAG meeting.

In some cases, consultation is already underway. For example, on commercial building mandatory disclosure, I know many of you have participated in the consultation process my department has been undertaking on behalf of all the Australian governments since late last year and I thank you for your contributions.

This is an important piece of regulation. It will directly address one of the biggest barriers for the commercial property sector when it comes to motivations for investment in green office buildings by making energy efficiency part of the currency in the sale or lease of commercial buildings.

Of course, some of you have had the motivation for some time (Mike Zorbas comes to mind), and the work of the Green Building Council of Australia and the Property Council of Australia has gone a long way towards raising the profile of green buildings.

I was very happy to mark the 100th Green Star certification recently in Sydney, at Stockland's corporate headquarters, welcoming another beacon of sustainability into the CBD.

When you visit new buildings or retrofits like 'Stock-Home', it reinforces the fact that we should be shouting the benefits of sustainability from the rooftops of every commercial building - and not just from the rooftops, but from the double-glazed windows, the naturally lit workspaces and the waterless urinals as well.

The pathway to implementation of mandatory disclosure will also be assisted through the $90 million Green Building Fund, which provides up to $500,000 per office building for improvements in energy efficiency.

To date, the response to the Fund has been very positive and round three is due to close on the 30th June. I encourage you to apply.

In addition, the recently announced $50 million Energy Efficiency Trust is an innovative program that will give business access to funding for the up-front capital cost of energy efficiency upgrades, with the funds to be repaid at commercial rates as energy cost savings flow through.

This program will bring together public seed funding, private sector skills, business culture and technical know-how to stimulate and deliver energy efficient activities in commercial buildings and other business operations.

The Trust will give priority to energy efficiency initiatives with the largest flow-on effect to encourage innovation and maximise the impact of the investment.

These are the first building blocks for what I believe we can and must achieve - which is nothing short of a transformation in the sustainability of Australia's built environment.

In the residential sector, the transformation is underway, through the $4 billion Energy Efficient Homes Package, part of the $42 billion Nation Building-Economic Stimulus Plan.

Energy Efficient Homes is a resounding example of how action to stimulate the economy and support jobs now, at this critical time, can provide a foundation for a low-pollution future.

The package is unprecedented, rolling out ceiling insulation to around 2.9 million Australian households, and solar hot water to over 300,000 homes.

Since the program was announced in early February, we have already seen evidence of jobs supported throughout the insulation industry, with more than 20,000 Australian homeowners already installing insulation through the package.

We have had more than 80,000 enquiries to the call centre over the same period, and all of this before the full insulation components roll out on July 1.

Insulation can provide households with significant energy savings for years into the future, ensuring this investment to support jobs now pays off for decades.

If these figures tell us anything, it is not only that energy efficiency provides tangible long term benefits, but that the Australian community's appetite for and understanding of practical action on climate change should not be underestimated.

I want to provide one example of what can be achieved through the right combination of accessible information and carefully targeted regulation.

It has been estimated that measures under the Appliance Energy Efficiency Program will deliver energy savings of 32,000 gigawatt hours per year by 2020 through raising the performance of household appliances like fridges and industrial equipment like transformers - through energy rating labels and minimum standards.

By way of comparison, this is equivalent to 14 per cent of the total 227,000 gigawatt hours of electricity generated in Australia in 2006-07.

Put in another context, by 2020 greenhouse gas abatement from the Appliance Energy Efficiency Program will be around 19.5 million tonnes per year below business as usual projections - equivalent to removing 4,875,000 cars from the roads permanently.

This program is in some ways the 'quiet achiever' of energy efficiency policy. But the benefits are clear, and that is why we are working through the National Strategy on Energy Efficiency, backed by funding in last week's Federal Budget, to help consumers buy more energy efficient appliances, reducing energy bills for business and households and encouraging innovation in smart, cost-saving technologies.

If this is what we can achieve with today's energy efficient technologies, we should consider where innovation can take us.

In closing, I want to touch on another measure announced in last week's Budget, which is very much about innovation and the next frontier of energy-saving.

Many of you here would appreciate the benefits of smart design; if you build energy efficiency in from the ground up, the benefits are greater than trying to bolt it on afterwards.

The same principle applies to the way we access energy.

Last week, the Government announced an investment of up to $100 million in partnership with the energy sector for the development of a new National Energy Efficiency Initiative - a 'smart grid' initiative.

Smart grid technology uses sensors to monitor electricity supply across distribution networks using communications networks, such as broadband technology.

This technology will interact with 'smart' appliances in buildings, for example air-conditioners that help manage peak demand, and will more easily integrate renewable energy like solar and wind power into the grid.

This project will bring together electricity power generation, transmission, and distribution providers as well as private partners and IT experts, and will inform the wider national deployment of smart grid technologies.

The National Energy Efficiency Initiative is the very definition of a 'connected' built environment; enabling the energy generated in homes, schools and businesses to be stored and shared, reducing transmission losses and peak demand, and increasing the reliability of supply.

So just as these are immensely challenging times, the possibilities are abundant; thank you for the opportunity to outline some of these possibilities today at 'Sustainable Property'.

Our commitment to pursuing and achieving an energy efficient transformation of our economy is driven by our understanding - one I know we all share - that our environmental and economic futures are intertwined; that we must embark on a low-pollution pathway together - our prospects and prosperity depend on it.

And the Rudd Government is determined to provide the strong leadership necessary to make that journey successful.

Thank you.

ENDS

Commonwealth of Australia