Mandatory disclosure: Problems already

by FM Media
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The Property Council of Australia (PCA) says the Federal Government’s efforts to “reassert control” over the Department of Climate Change and Energy Efficiency (DCCEE) is welcome, following property industry concerns about the DCCEE’s implementation of the new Building Energy Disclosure Scheme.

The national Building Energy Disclosure Scheme, which started on 1 November 2010, requires the mandatory public disclosure of the energy rating of office buildings (over 2000 square metres) whenever they are sold or leased.
However, the PCA says the implementation of the scheme has been characterised by exceptions to rules, uncertainties and unclear definitions, all of which pose unfair risks of penalties to landlords.
According to the PCA, The Federal Government has instructed DCCEE to improve its management of the scheme. Specifically, the PCA says the Minister for Climate Change and Energy Efficiency, Greg Combet, and his Parliamentary Secretary, Mark Dreyfus, have responded to industry concerns by directing the department to properly consult with stakeholders and refrain from penalising property owners until grey areas around Mandatory Disclosure rules are clear.
“Greg Combet and Mark Dreyfus have done a great job of listening to genuine industry concerns,” says Peter Verwer, PCA chief executive. “Property investors support disclosure of environmental performance, we support the NABERS environmental measurement tool and we are committed to strong industry leadership on these issues. However, the Department refuses to heed the real world advice of industry practitioners and has turned a very simple, straightforward scheme into a shemozzle.”
The Property Council and its members have provided the Department with multiple examples of implementation problems along with practical solutions, most of which, it claims, have been ignored. “We welcome the establishment of a consultative committee, to be called the Commercial Building Disclosure Scheme Implementation Forum,” Verwer says. “It’s a great pity this committee did not meet until the last day of business before the legislation kicked off and six years after we first proposed it.”
The Property Council says the new implementation committee should be led by an independent chair rather than the Department. “We’re perplexed by the Department’s refusal to adopt modern governance principles of transparency and independence.”

PROBLEMS
The PCA has noted the following problems regarding implementation of the scheme:

  • Scope – the legislation is not working the way Parliament intended.
  • Should Mandatory Disclosure apply to hospitals, industrial estates and hotels? No, but it does.
  • Should mandatory disclosure apply to tenancies or buildings of less than 2000 square metres? No, but it does.
  • Is the legislation designed to produce meaningless information? No, it’s meant to empower building users with facts.
  • Should old advertisements for buildings that are on the Internet trigger a breach of the law? No, but the Department’s left hand says they do, the right hand isn’t sure.
  • Should you be fined when your tenant or energy company won’t give you the data needed to prepare a NABERS rating? No, but that’s a definite risk under the current rules.

In additon, the PCA asserts that meaningless information results when ratings are based on a building that has been substantially vacant over the previous year, or when it is being refurbished, or when central services (such as air-conditioning) are shared between office and non-office uses within the same building.
In these cases, a NABERS rating of zero would usually result – a black mark on any building being advertised on the open market.

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