Members' Insight
by O’Keefe Murphy Gaff & Equilibrium OMG's Principal, Mr Michael O'Keefe
If you are in an environmentally upgraded building space and don’t communicate it, you’re missing out on an opportunity.
You’re not leveraging the maximum environmental return from the investment, not enhancing your reputation or not realising an opportunity to engage with a wider range of customers, staff and stakeholders.
If you don’t communicate it, the building surely won’t. It will probably still look the same from the street and your visitors and passers by will be none the wiser.
There are a few options for how, what and who you communicate to. Depending on what you’re after, it can be staff, customers or the general public – and different modes of communication are relevant to all three.
Advertising is unlikely unless it aligns with existing branding so there are three practical approaches to consider:
1. Independent third-party endorsement;
2. Staff engagement; and
3. Measure and report your change.
The most common independent endorsements for buildings are Green Star and NABERS. Core benefits of these are that they are both highly credible and have increasing reach and visibility. While neither is presently widely understood or recognised by the general public, they stand out of the pack and market a specific aspect of your environmental commitment.
Key to leveraging any such endorsement is to use it widely. If you gain the accreditation plaster it on your website, stationary, advertising, direct marketing and staff inductions.
The second communication to consider is staff engagement. This is an underestimated and underutilised aspect of any sustainability program. The IBM Enterprise of the Future report from 2008 identified that about 80 per cent of companies have sustainability as a priority but believe that their people do not have the skills and knowledge to enhance the company’s sustainability performance.
Looked at another way, if you are in an upgraded or retro-fitted building and do not engage staff to reduce energy, water and waste and be part of the new environment, you’re wasting the opportunity to align your personnel with organisational goals and drive maximum productivity, environmental performance and cost reduction.
A staff engagement strategy needs to be tailored to your purpose. Through identifying any existing roadblocks to knowledge uptake, developing benchmarks and providing a creative engagement strategy aligned with the company’s goals, this can be communication with multiple and lasting benefits.
Lastly, simply measuring and reporting the change from retro-fitting is a powerful on-going tool. If you’re the building owner, it reinforces your leadership with tenants. If you’re the company, it reinforces your reputation and integrity with staff and customers.
Numerous tools exist to facilitate each of these three communications strategies. They are practical and reasonable and should be part of any organisation’s communication strategy for staff engagement, branding and reputation and customer relations.
Simply, if you’re not leveraging your building’s environmental investment, it’s a waste.
by City of Melbourne's Director of Sustainability and Regulatory Services Mr Geoff Lawler
Victoria needs to reduce greenhouse gas emissions. It needs to shift towards becoming a low carbon economy, an economy that relies on low emission forms of energy and is efficient in its use of energy resources.
Cities are responsible for approximately 75 per cent of global energy use and greenhouse gas emissions in the world. Their buildings produce almost 40 per cent of those emissions.
Commercial buildings in Melbourne account for 53 per cent of total greenhouse gas emissions in the municipality. This sector therefore, is a primary target for reducing greenhouse gas emissions.
The City of Melbourne’s recent strategy, Zero Net Emissions by 2020 – Update 2008, identified a major initiative. Retrofitting the equivalent of 1200 commercial buildings in the municipality could achieve a 38 per cent improvement in building energy performance and result in a total greenhouse gas emission reduction of 383 kt CO2 - e per annum.
As a result of this strategy, the City of Melbourne’s 1200 Buildings program has been developed. The aim of this ambitious program is to catalyse the retrofit of 1200 (equivalent to roughly two thirds of the total stock) existing commercial buildings in the municipality by 2020.
The 1200 Buildings program is one of the first programs of its kind in the world. It will provide a significant opportunity to reduce greenhouse gas emissions for the state, as well as bolstering Victoria’s international standing as a leader in sustainability. As well, it will foster innovation in sustainable methods and technologies to achieve greater energy and water efficiency.
We believe that the 1200 Buildings program will drive almost $2 billion of private sector investment in the economy. It will also create a significant number of ‘green collar’ jobs for engineers, consultants, builders, surveyors and other industry professionals.
Retrofitting existing commercial buildings makes sound financial sense. Energy savings derived as a result of retrofitting will make buildings more economically resilient. With the expected introduction of a national energy performance mandatory disclosure scheme, the initiative will also make Melbourne’s buildings more competitive and marketable when compared with other less efficient buildings.
Adapting to climate change and reducing carbon emissions in the municipality is a key challenge facing Melbourne. 1200 Buildings provides an opportunity to meet those challenges and work towards a sustainable future for our city.
It's time to act on climate change and use the economic crisis as an opportunity. Investing in sustainable measures for the city will stimulate economic growth through jobs creation.
by ARUP's Senior Engineer Mr Nick Adams
On the face of it, the proposed Mandatory Disclosure of Commercial Office Building Energy Efficiency scheme is a good idea.
It could potentially provide transparency in building energy performance, dispelling sometimes inaccurate advertising and marketing representations. It could also provide an incentive for building owners to do something about their buildings, as the value of energy efficiency becomes more widely recognised.
As part of the process, an Energy Efficiency Assessment Report (EEAR) would be required. This report would outline steps the building owner could take to improve their building. This could be a valuable guide on simple and easy improvements for a more energy efficient building.
The devil’s in the detail
It will be the detail involved that will stand testament to this being either an effective scheme that facilitates change or an exercise in red tape.
Issues that need to be resolved before the scheme rolls out are:
Effective energy metering is vital to the success of the scheme. New metering systems will need to be installed in most existing buildings to meet the comprehensive requirements of the NABERS rating system.
Tenant energy is included in the current proposal. It is difficult for a building owner to control tenant energy and they may be unfairly penalised by an inefficient tenant.
There is a risk that the EEAR is carried out in isolation of the targets and goals of the building owner and therefore does not necessarily provide value to the owner. A one size fits all tick sheet needs to be avoided.
The scheme introduces another compliance requirement which could potentially discourage building owners from actively pursuing energy efficiency measures in their building. This scheme must complement other schemes such as National Greenhouse and Energy Reporting Act and Energy Efficiency Opportunities Program.
* The scheme currently only applies to buildings over 2,000m2. In Melbourne this is less than half of the building stock (by number). There are many buildings therefore, that will not be captured by the scheme, potentially limiting its effectiveness.
Don’t take your eyes off the ball
On the whole, the development of this scheme should be a useful step in the process of taking our buildings from poor performers to energy efficient buildings.
This scheme should not be seen however, as a silver bullet which will solve all problems. Mandatory reporting is primarily an information mechanism. It is important that attention is not diverted away from the real work of upgrading buildings.
Get started!
Before the scheme rolls out, our advice to building owners would be to get to know your building now and avoid any surprises later. Interrogate your building. Understand its current performance and informally rate the energy performance of your building for free on the NABERS website.
Set some targets and goals for your building and make a realistic plan for achieving them. The PCA/Arup document Existing Buildings//Survival Strategies can help you by setting out a six step plan and toolkit for upgrading your building.
by KPMG's Director – International Executive Services Ms Nerida Hayse
A key issue for the Australian community, but also the global community is environmental sustainability. Funding of research of sustainable technologies, the widespread promotion of energy conscious behaviour and the creation of a Carbon Pollution Reduction Scheme are all examples of how important climate change and environmental sustainability is to the current Federal Government.
The fringe benefits tax (FBT) legislation results in a significantly lower amount of FBT payable where a greater number of kilometres are travelled in a vehicle regardless of the travel being business related or private. This law directly promotes increased use of cars and, in turn, increased carbon emissions. The FBT regime does not discourage employers providing car parking to their employees by concessionally taxing these fringe benefits.
While the FBT regime appears to encourage employers to provide car and car parking fringe benefits, there are currently no such concessions that promote the use of more sustainable methods of transport.
With the spotlight firmly on our government to show leadership in the battle to protect our environment from growing carbon emissions, it may not be long before the Government moves to either remove or reduce the concessions available for cars and car parking, or to promote sustainable transport through the introduction of new tax benefits for employers.
Given that the FBT concessions available for employer provided cars are a significant supporter of Australia’s ailing motor vehicle industry, it may not be likely that the Government will move on these concessions during the current economic crisis.
Where the government could act, however, is in structuring the FBT taxable value of car benefits to promote the provision of vehicles with lower carbon emissions such as diesel vehicles and hybrids.
Providing different calculation rates for cars with different sized engines. A simplistic example might be the imposition of a 30% FBT surcharge on vehicles with greater than 2.6 litre engine capacity while vehicles with engine capacity less than 1.6 litres might receive a 30% FBT reduction. This type of tax structure might encourage the provision of vehicles which are more environmentally friendly. Clearly there would need to be a deeper economic analysis of the costs and benefits and expected outcomes. It may be that a phased approach would bring about a change in behaviour by employees as well as manufacturers.
Another alternative could be to determine the tax charge on employer provided cars based on the carbon emissions of the car. A similar approach is taken in many European countries such as the UK, Belgium, Denmark and France. Such a tax change is only likely to change behaviour if it is borne by the individual rather than the employer. However, consideration of a motor vehicle’s carbon emissions during its useful life doesn’t take into account the full environmental impact of the manufacturing and disposal process. A more complete approach would consider issues such as these.
As we see the development of hybrid vehicles and even vehicles which require no petrol, the government could consider significant FBT concessions to promote employer provision of these vehicles.
Of course - given the potential impact on the motor vehicle industry, employers and employees’ salary packages - if changes such as these were to be enacted there would need to be a transitional period.
Notwithstanding the above, the government might maintain the FBT treatment of cars in its current format, and provide incentives for employees to use other means of sustainable transport.
Melbourne has long been regarded for its strong public transport network and the introduction of an FBT exemption for public transport tickets provided to employees (either directly or by way of salary packaging) in respect of travel to and from work, would be one way for the Government to promote employer provision of sustainable transport.
It is likely that this initiative would cause increased pressure on an already stressed public transport network, particularly around peak hours. Accordingly, the introduction of such a change would need to be carefully considered in consultation with the state governments well in advance of any implementation.
This FBT concession could potentially increase the use of Melbourne’s public transport system outside regular business hours as employees with valid tickets may increase their use of the network for personal travel. This would be beneficial for the environment and for reducing traffic congestion as a whole while also stimulating the Melbourne economy.
Another alternative for the government could be to create FBT concessions for employer provided bicycles and related equipment. The United Kingdom introduced a tax exemption in 2002 where an employer lends or hires bicycles to employees for home to work travel. The government could take a similar approach, extending such exemptions to other environmentally friendly methods of transport such as electric scooters.
By creating FBT concessions for the provision of sustainable transport the government would be encouraging employers and employees to take an active approach in environmental sustainability on a daily basis.
There are a wide range of options available to the government to promote sustainable transport by making amendments to the FBT regime. Properly managed, this is likely to be a change welcomed by the community as a whole.
The views and opinions expressed herein are those of the author and do not necessarily represent the view and opinions of KPMG, an Australian partnership.
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough exanimation of the particular situation.
by UrbanTrans' Senior Consultant, Mr David Meiklejohn
Employers across the Melbourne region have a vested interest in ensuring that their employees commute to and from work efficiently and cost effectively. As many employers have discovered, however, current tax provisions are a major barrier to support employee using public transport and bicycles.
Motivated by competitive needs to recruit and retain the best and the brightest from the labour market, and by complementary sustainability and corporate social responsibility strategies, increasing numbers of employers across Melbourne are developing “green travel plans” to reduce reliance on the private automobile while improving overall employee access.
Where employers aim to encourage travelling by public transport or cycling – for example, by subsidising all or part of the costs of public transport passes or cycling equipment – current tax policy penalises such employer support for sustainable transport by tacking on an additional fringe benefit tax of 46.5%.
Similarly, current tax policy does not permit employees to pay for monthly or annual public transport passes or cycling equipment through a pre-tax, salary sacrifice arrangement.
A number of countries, including the United Kingdom and the United States, currently offer tax incentives to use sustainable transport modes. In the UK there is a specific tax exemption that allows employers to provide bicycles and safety equipment to employees through untaxed interest-free loans, while the US tax code allows employers to subsidise the cost of public transport passes for their employees (up to US$230 per month). Additionally, US tax law allows employees to pay for public transport passes and cycling expenses on a pre-tax basis, as part of approved workplace commuter benefit programs.
Australia needs to come into line with other major industrialised countries and remove the fringe benefit taxation barrier to employer support of public transport fares and the cost of cycling accessories (such as bikes, helmets and locks). This simple move would remove a major disincentive for employers wanting to do the right thing and encourage their staff to travel sustainably.
Employers throughout Melbourne are currently working in partnership to overhaul this unnecessary tax barrier. They are also developing position statements on these and other tax amendments to contribute to the Federal Government’s tax review, which runs through until the end of 2009.
If you’d like to know more, please contact Mr David Meiklejohn at meiklejohnd@urbantrans-anz.com or (03) 9018 5436.
By Mr Rob Skinner, Managing Director, Melbourne Water.
Like most major Australian cities, Melbourne is responding to challenges from climate change and population growth, forcing us all to think harder about how we build a sustainable water future.
Short-term, we face the challenge of compensating for a 37 per cent drop in average annual streamflows into our main reservoirs since 1996.
These average inflows sank dramatically in 2006, taking us to levels predicted by CSIRO under a “severe” climate change scenario for 2050. It forced us to radically adjust the timeframe for action.
This sudden drop now means we must find 240 billion litres a year from new sources and to provide the levels of certainty that a city of 3.8 million people needs, we must have these new sources in place by the end of 2011.
A wide range of options have been considered – but the list of projects that can feasibly deliver the water needed in time is short indeed.
Victoria is pursuing three:
1. Reconnection of Tarago Reservoir – building a treatment plant that will allow Melbourne to access up to 15 billion litres a year from mid-2009.
2. Sugarloaf Pipeline – bringing to Melbourne in 2010 up to one-third of the savings (no more than 75 billion litres per year) produced by major irrigation upgrades in the north. The first stage of these investments will cost around $1 billion and are paid for mostly by the Victorian Government and Melbourne’s water users.
3. Desalination Plant – creating a non-rainfall dependent source of water to provide 150 billion litres by end-2011.
Once this strategy is in place, we can meet immediate needs and help storages recover, as well as leave some room for future growth and changing climate patterns.
These projects will be powered with energy from renewable sources that don’t emit greenhouse gases, which would otherwise exacerbate climate change. They also avoid stressing our rivers any further.
But what often gets lost in the debate over the options is a critical fact – no other projects could practically give us the water we need by 2012. Here’s why.
New dams
It’s understandable that people suggest a new dam, because they’ve have served Melbourne so well for so long. But the challenge with the nine dams we already have is that they’re not filling the way they used to.
Less frequent rain means catchments are not getting wet enough to generate the runoff needed to fill reservoirs. Consider winter last year, when we had almost 100 per cent of the average rainfall but only 60 per cent of the average runoff because very low autumn rainfalls dried out the catchments. Any new dam built in the Melbourne catchments will suffer the same fate.
Rainwater tanks
It has been suggested that we should turn every roof in Melbourne into “catchments” by connecting them to rainwater tanks. Tanks have a lot to recommend them, both in taking pressure off drinking supplies and reducing urban stormwater from polluting our rivers and bays. But they will not fix the problem.
Estimates vary, but even if every dwelling in Melbourne had a rainwater tank the total contribution would be around 25 per cent of the 240 billion litres we need.
And unless every plumber in Australia wants to move to Melbourne, it could take a decade or more to install one in each of Melbourne’s 1.5 million homes.
Recent investigations into potential large-scale stormwater schemes have found that the largest might only supply 10 per cent of the water we need.
Recycling water
Across all uses, Melbourne currently recycles more water than any other capital city, and saves more than 700 million litres of drinking water a year.
Trials are underway at our Eastern Treatment Plant to recycle up to 100 billion litres more a year after 2012. Long-term, this will be a big part of our sustainable water future but the project’s scale and complexity mean it will not be ready in time to solve our immediate problems.
Saving more water
Melbourne is a shining example of what community commitment to water conservation can achieve. More than 360 billion litres are estimated to have been saved since 2002.
Without this contribution, our water storages would today be under 15 per cent instead of above 30 per cent. The Target 155 campaign will help save even more.
Any version of a sustainable water future must maintain some level of water saving. If we were to slip back to 1990s levels we would be looking for at least 350 billion litres instead of 240 billion. But we can’t “save” ourselves out of the storage shortfalls that have occurred so suddenly over the last few years.
Water pricing
Some economists suggest that the challenge can be met by radical adjustments to water prices. Although it must remain an important part of our ongoing strategy, pricing isn’t a “silver bullet” for the short term. It doesn’t create any new water in total.
Long term strategies
Now that we’re delivering immediate solutions, what are the other components of a long term sustainable water strategy?
The Victorian Government’s Our Water Our Future strategy makes recycled water a centrepiece of the longer term. As well as centralised treatment facilities like the Eastern and Western Treatment Plants, opportunities will emerge at a local level for recycled or stormwater “third pipe” solutions.
We’re already moving to decentralised systems consistent with more water sensitive urban development. If Melbourne is to become what’s known as a ‘watersmart city’, we’ll need to look at ways to hold more rainfall in urban areas in wetlands, rain gardens and rainwater tanks, rather than draining all stormwater and its associated pollutants into rivers or the bay.
A big part of the long term will involve “non-structural” solutions – water sensitive urban planning, more distributed systems, pricing and trading opportunities, continued water conservation.
Creating a sustainable water future is a complex challenge, now with a real sense of urgency behind it. The solution requires a diverse range of medium to long term options. But in the short term, there is simply no alternative to the major projects that are being built.
For more information please visit melbournewater.com.au