Building Upgrade Finance

The Hon. J.M.A. LENSINK (14:21): I seek leave to make a brief explanation before directing a question to the Minister for Sustainability, Environment and Conservation on the subject of buildings in the CBD.

Leave granted.

The Hon. J.M.A. LENSINK: The Lord Mayor Mr Martin Haese was on radio last month talking about the Building Upgrade Finance mechanism which was passed 12 months ago. On Ian Henschke's Drive program, he was asked a particular question to which his response was:

Next year, once the regulations have been written and the legislation comes into force…it's…Building Upgrade Finance.

My questions to the minister are:

1. When does the minister expect the regulations to be finalised?

2. Why has it taken 12 months?

3. Can the minister advise the house whether the administrative unit for this piece of legislation has been determined and, if so, what is it?

The Hon. I.K. HUNTER (Minister for Sustainability, Environment and Conservation, Minister for Water and the River Murray, Minister for Climate Change) (14:22): I thank the honourable member for that most important question. Building Upgrade Finance (BUF), as acknowledged by both houses of parliament, is a very important reform which we hope will boost jobs whilst delivering environmental benefits and improving buildings across the state. Enabling legislation passed the South Australian parliament in December 2015. The remaining elements of the legislative framework, which includes the draft regulations, the draft 'no worse off' methodology for estimating tenant cost savings and the draft Building Upgrade Agreement template, I am advised, are now available for feedback on the state government's YourSAy website.

By way of background, one-fifth of greenhouse gas emissions, I am advised, come from energy used in buildings, with new development adding less than 5 per cent to our building stock every year. This is why it's important to improve the environmental performance of existing buildings. We know that barriers preventing environmental upgrades to commercial buildings from going ahead include access to capital, as well as the split incentive between landlords and tenants in leased buildings. We covered this pretty well during the debate on BUF in this place, but to assist building owners to overcome the barriers to improving energy, water and environmental performance of existing commercial buildings we have committed to introducing our Building Upgrade Finance mechanism and developing the regulations.

It's important to remind ourselves that this is going to be a voluntary situation for building owners and financiers and councils to enter into. Implementing Building Upgrade Finance will help to reduce greenhouse gas emissions and enable us to move towards our goal of making the City of Adelaide carbon neutral. Enabling legislation which provides for the introduction of this mechanism in South Australia passed the parliament in December 2015. This makes South Australia the third jurisdiction in Australia to introduce enabling legislation for such a mechanism, following Victoria and New South Wales.

The Department of Environment, Water and Natural Resources has entered into an agreement, I advise, with the South Australian division of the Property Council of Australia for the delivery of a series of events to increase awareness and understanding of the mechanism within the property and finance sectors in our state. The first event was delivered on 30 August 2016 as a luncheon, with the Premier delivering a keynote address. Further events were delivered on 29 September and 27 October 2016 as boardroom luncheons, targeting financial institutions and property owners respectively. The government is also providing support to local government-led projects which aim to assist local councils with understanding the mechanism.

We have committed $1.9 million over four years for the establishment and operation of the Building Upgrade Finance in South Australia program. Part of this funding is being used to complete the development of the legislative framework as well as deliver an early adopter program that supports business and industry to build their understanding of and capacity to take up the Building Upgrade Finance. A review of the mechanism in its third year of operation will also be undertaken using some of the funding. This funding will also be used to establish a central administrator. The administrator is expected to support participating councils by undertaking most of the functions associated with the administration of building upgrade agreements, thereby reducing associated costs to councils.

The delay, then, if there has been one, has really been about our development of the regulations, our consultation on those regulations, as well as those other parts of the mechanism that I talked about, and also the educative component, which is liaising directly with business owners, councils and financial institutions to make sure that they are aware of the legislation and will be able to make the best opportunity of it when those regulations are brought into effect.

Whilst I am on my feet, I might go to a question I was asked in this place yesterday by the Hon. Mr Lucas about Adelaide versus Melbourne and Carbon Neutral Adelaide. I undertook for someone in my agency to review the document referred to by the Hon. Mr Lucas. In answering the honourable member's question, I did advise that Melbourne's ambitions related to the city council operations rather than to the entire municipality. I am now advised that that view is incorrect.

There are two initiatives that relate to Melbourne, I am advised. The first is the carbon neutral status, already obtained by the City of Melbourne for the council's operations alone. This has been achieved through the federal National Carbon Offset Standard (NCOS), I am advised. The second initiative from Melbourne relates to net zero emissions for the entire municipality, to which the Hon. Mr Lucas referred in his question. As he remarked, that ambition relates to the entire city—he is quite correct—not just to Melbourne council's emissions alone. So, I apologise to the chamber. That advice I had and relied on was, I assume, correct at the time. My department has now advised me differently and I put that on the record to stand as a correction.