Senate Economics References Committee Inquiry into Residential Electrification

Event: Senate Economics References Committee Inquiry into Residential Electrification
Date: 22 March 2024, 10.50am AEDT
Speakers: Alex Waldren, National Director Industry Policy Master Builders Australia; Max Rafferty, National Technical Policy Manager Master Builders Australia; Senator Andrew Bragg Chair Senate Economics References Committee; Senator Jana Stewart Member Senate Economics References Committee
Topics: building and construction; residential electrification; net zero; supply chains
E&OE

Senator Andrew Bragg, Chair, Senate Economics Reference Committee: We now move to the Master Builders Association, Master Builders Australia, I should say. I understand that information on privilege and the protection witnesses has been provided to you for the handset record. Could you please state your name and capacity in which you appear today?

Alex Waldren, National Director Industry Policy Master Builders Australia: Hi, Alex Waldren, national director industry policy Master Builders Australia.

Max Rafferty, National Technical Policy Manager Master Builders Australia: Max Rafferty, National technical policy manager for Master Builders Australia.

Chair: Do you have an opening statement?

Alex: Yes, we do.

Chair: Go ahead.

Alex: Master Builders Australia is a national building and construction industry group representing 33,000 members across residential, commercial and civil construction. In the coming decades, the built environment must meet new goals with longevity and sustainability at the core of all building and construction work. More sustainable building practises and a commitment to achieve net zero is part of Master Builders’ sustainability goals to reduce the environmental impact of the built environment. Master Builders’ sustainability goals support the ambition to achieve a net zero built environment whilst ensuring building laws, regulations and standards are fit for purpose and minimise the environmental footprint of the industry. The benefits of electrification in net zero residential buildings are widely published. The challenge in achieving goals in this space is managing fairly and equitably upfront costs. There are significant benefits, but they require increased upfront network, building and supply chain costs that conflict with the ambitions for affordable and better-quality buildings. This, together with a shortage of workers, makes delivering a wave of change and an ambitious housing target challenging. A balance needs to be struck between policy reform and regulatory change and the capacity of the electricity network and the building and construction industry to deliver. Barriers can be overcome through actions that contribute to decreased cost and enable productivity. Change requires a combination of considered and measured approaches towards regulatory intervention, more predictable 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 the building and construction industry to better understand and navigate the requirements and outcomes needed. Master Builders has responded to some of the inquiry terms of reference, with the focus on areas most relevant to Master Builders. Some of our key messages include capacity needs to be better recognised and future planning for net zero transformation. Misunderstood impacts of implementation and not effectively costed, there needs to be a more realistic view about the capacity of industry to change and government to bring about that change. A road map is required to guide the implementation of net zero processes that recognises capacity needs so objectives can be effectively and affordably delivered. The government’s commitment to establish a built environment sector focus around this issue could help guide the implementation and capacity building process together with the revised trajectory planning for the housing sector as well. Effective strategies must be implemented by government that attract new workers to the industry and the current and emerging occupations. To boost workforce capacity, Jobs and Skills Australia,  BuildSkills Australia and other industry skills councils must play a key role in forecasting skills needs connecting industry with opportunities to innovate and developing a workforce capability. New buildings have done the heavy lifting on energy performance. Government needs to shift its focus to renewable energy connection and capacity as well as improving performance of existing homes. You know, in other areas for incentives could be explored further as well. So that’s our sort of general feedback on this inquiry process. Thank you.

Chair: Thanks. Thank you very much. So what do you think can be done for renters here?

Alex: Look in terms of renters, you know there are incentives around at the different states and territory levels and the federal government has an incentive scheme available, which it’s partnering with other state and territories to improve existing buildings. We think government in its investment in new social and affordable housing needs to be prioritising, you know, quality outcomes in the energy space as well, which it has undertaken in the commitment in its Accord targets as well to do and achieve.

Chair: Yeah. Okay. What about this issue of retrofitting apartment buildings? How big of a challenge is this going to be?

Alex: It’s a big challenge, you know, because a lot of the building stock we have, not just apartment buildings, it’s single dwelling buildings as well, are more than 20 years old. They were built before, you know, energy reduction targets was sort of built into the process. There’s a lot of unknowns in terms of what those buildings look like and how well those buildings were built that are difficult to cost and are difficult to manage an effective outcome. That being said, the former speaker was talking about the best way forward in this space is to look at pilots and we’re aware that there’s some work going on in the Melbourne CBD as well as the Sydney CBD around this and we encourage more work in that space.

Chair: Yeah. Okay. Then do you have a preferred financing model for people who want to electrify their houses? Or do you sort of agree with the view expressed by Electrify Australia that there’s a range of options that could be deployed across the income spectrum?

Alex: Look, there’s some options there, and I think they’re, I mean, they’re difficult to access. I mean, I know there’s concessional finance streams that are looking to come in place sort of later in the year. We need them, but there probably needs to be more thinking about what other options there might be. We have sort of suggested at a high level in our submission in exploring tax incentive avenues as well. But the challenge with all of this is I suppose is managing sort of the inflationary impacts and what comes from that when there are more incentives put in place.

Chair: Yeah, okay. What do you think of the, have you given any thought to the HECS style loan idea that was put forward earlier today?

Alex: Look, I haven’t. I didn’t hear what was talked about earlier this morning. I can’t say I’m across the detail on that, but we’re open to exploring new avenues, you know, and we have said we support sort of positions that are being put forward by other industry peaks in this space.

Chair: Yeah, okay. I think that’s all the questions we have for you right now. Is that right? I think that’s right. Isn’t it? Yeah. That’s all the questions we have for you.

Senator Jana Stewart, Member, Senate Economics References Committee: I just had one.

Chair: You had one? Yep. Okay. Yep. Sorry, go.

Senator Stewart: Sorry Senator Bragg and my question was really just about the electrification market and you’ve kind of touched on this, you know, the trades, jobs, services, suppliers, manufacturers, regulators and how government inter-operates in all of that. I suppose in a way that really encourages demand for and addresses upfront costs of residential electrification. And we know, there are huge upsides to electrification. We’ve heard lots of evidence about that already this morning. What work could be done to support the idea of an electrification market taking effect, particularly making residential electrification more affordable and accessible for everybody?

Alex: Yeah. Look, we support sort of the disclosure regime.

Senator Stewart: Sorry. Can’t hear.

Alex: Can you hear me now?

Senator Stewart: I couldn’t hear you for the first bit. I can hear you now.

Alex: Yeah, Master Builders supports, you know, progressing the mandatory disclosure framework. You know, that’s a good way to bring about some market signals in this place and we know a lot of work is happening in that space and we’d encourage that moving forward. Our understanding is it would be a matter of the states and territories as to whether they pick that up or not, and historically, there’s been some states that haven’t wanted to do that. We know in the ACT where it’s been in place for a while, it is having success on that front. We also acknowledge though that in that space we have numerous climate zones and different conditions for building in which makes producing one size fits all kind of standards in this space tricky. And that’s kind of where the challenge really sits in, you know, the policy and regulatory space and needs to be worked through effectively.

Chair: Okay. Well, thank you very much for your time and evidence today.

Media contact:
Dee Zegarac
National Director, Media & Public Affairs
0400 493 071
dee.zegarac@masterbuilders.com.au