Senate Economics Reference Committee inquiry into Australia’s electrification efforts

Master Builders provides the following response to the Inquiry terms of reference.

Section 1 of this submission provides background on Master Builders, the value of building and construction to the economy and the Master Builders Sustainability Goals. Section 2 responds to six of the Inquiry terms of reference with a focus on the areas most relevant to Master Builders.

More sustainable building practices and a commitment to achieve net zero is part of the Master Builders goal to reduce the environmental impact of the built environment.

The benefits of electrification and net zero residential buildings are widely published. The challenge in achieving goals in this space is fairly and equitably managing upfront costs. A balance must be made between policy reform and regulatory change and the capacity of the electricity network and building and construction industry to deliver.

Capacity needs to be better recognised in future planning for net zero transformation of the built environment.

Barriers can be overcome through actions that contribute to decrease cost and enable productivity. Change requires:

• a combination of considered and measured approaches towards regulatory intervention
• minimising construction timeframes
• effective incentives to ease cost burdens
• a clear view on the capacity and capability of the market to deliver
• effective information and education resources for energy consumers, property owners and industry to better understand and navigate requirements and outcomes.

The COVID-19 pandemic and subsequent economic shocks prove that we need to factor contingencies for these situations into long-term planning. There needs to be a broader acceptance that additional transition periods might be needed to navigate these types of circumstances.

The pressure of change fatigue needs to managed by reasonable sequencing of reform milestones and long term signalling. At the same time industry needs to be supported with tools for educating and upskilling for net zero transformation.

Effective strategies must be implemented by Government that attract new workers to the industry in current and emerging occupations.

Strategies must also retain existing workers and ensure they keep pace with evolving skills and knowledge. Simpler migration pathways for construction workers will play a role, but importantly, Jobs and Skills Australia together with BuildSkills Australia and other key Industry Skills Councils need to forecast skills needs, connect industry with opportunities to innovate and develop workforce capabilities.

New buildings have done the heavy lifting on energy performance. Government now needs to shift its focus to renewable energy connection and capacity as well as improving performance of existing homes.

While States and Territories are responsible for regulating change around renewable energy use and connection at the development stage of subdivisions for new homes it is best achieved in a coordinated way under national leadership. The approach adopted by the ACT and Victoria using regulation and incentives provide a model for other jurisdictions to consider.

To offset the cost of transition, governments are offering consumers low-cost finance to upgrade homes and banks are developing green finance products. There are mixed views about the effectiveness of these schemes. The success or otherwise of these incentives needs to be closely evaluated as they progress. The taxation system could be used more effectively to offset electrification costs and the transition to net zero.

A commitment from the Government to establish a Built Environment sector focus around energy transformation could help guide the implementation and capacity building process.

This process and the Government’s commitment to updating the National Trajectory Plan for Low Energy Buildings and Report for Achieving Low Energy Existing Homes should form the basis of a national plan to guide the transition away from fossil fuels and to a renewable energy net zero system in the most cost-effective way.