As the CEO of the Energy Efficiency Council has said today, “there were two pieces of bad news for Australia last night; one was our result in the World Cup, but it was Australia’s poor performance on energy efficiency that kept me awake.”
It is greatly disappointing to report last night’s release of the 2018 International Energy Efficiency Scorecard: Australia ranks worst for energy efficiency in the developed world. Poor standards in energy efficiency have considerable consequences for those most vulnerable in our society.
In particular, thousands of South Australian renters on low incomes, for example, are bearing the full brunt of skyrocketing power bills, which are unnecessarily exacerbated by energy inefficient properties that plague low income rental properties.
Worryingly, many renters in South Australia are scared to turn on their heating and cooling when they need it most out of fear that the costs involved would make their everyday lives unbearable.
That’s why I was surprised to learn that current tax law actually acts as a disincentive for landlords to improve the energy efficiency of their rental properties. More strongly, current tax law actually encourages landlords to retain energy inefficient properties.
We need to remove those disincentives on the grounds of fairness, sustainability and prosperity.
The Australian Sustainable Built Environment Council, ACOSS, and Better Renting, among others, have made clear recommendations for how we might improve energy efficiency in residential rental properties. Those recommendations have broad and strong support from the Australian people.
A report by the Property Council of Australia, the Energy Efficiency Council and ACOSS that was released in April this year highlighted that “a remarkable 88 per cent of voters want governments to invest in energy efficiency, making it the most popular policy option…”.
In fact, there are many strong reasons to support a transition to more energy efficient homes, as is strongly evident in the peer-reviewed literature.
One reason is that there is strong evidence that those living in energy-inefficient homes are more likely to experience poor health outcomes.
Housing is an important determinant of health, and it is clear in the literature that improving energy efficiency of housing can have dramatic health improvements for those most vulnerable.
6.5% of deaths in Australia are attributed to cold weather (as opposed to only 3.9% in Sweden – a much colder country!). Quality of housing is certainly a contributing factor. But the quality of life and opportunities available for renters is where improving energy efficiency can make a big impact.
Nobody should have to the make the choice between living healthily and putting food on the table.
As noted by Bird & Hernandez in the Energy Policy Journal in 2012, “low income renters often spend the highest percentages of their income on energy and heating costs, yet they receive the lowest amounts of energy per dollar spent because…efficiency measures in their rental units are often at the lowest levels of efficiency.”
Low income renters are especially vulnerable and are often worse hit by the ‘split-incentives’ problem whereby landlords do not see benefits from investing in energy efficiency of their rental properties but their tenants do – but it does not have to be that way.
The 2017 ACIL Allen ‘Multiple impacts of household energy efficiency’ report outlines the full gamut of reasons to strongly support energy efficiency policies. Some key reasons they outlined include:
- Reduced household energy consumption and bill savings
- Reduced damp and mould
- Reduced financial stress
- Reduced mortality
- Reduced family tensions and social cohesion
- Reduced public health spending
- Reduced CO2 emissions
- Fewer days off work or school
- Improved thermal comfort
- Improved physical health
- Improved diet
- Improved mental wellbeing
- Increased property values
- Increased economic output; and
- Increased employment.
That is why we need to change the tax treatment of energy efficiency upgrades.
It is why I have proposed a Private Senator’s Bill in order to remove current
disincentives that get in the way of critical energy efficiency upgrades to rental properties.
The policy change I am advocating for is a win for people who rent. It is a win for landlords. It is a win for business. It is a win for our environment.
For further information on the bill CLICK HERE