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The Fifth Estate Political Salon On how to:Re-ignite the political agenda for sustainable property in Australia

GUESTS o Senator Christine Milne, Leader of The Australian Greens, Guest of Honouro Hon Mr Mike Rann, former Premier of South Australia, chair of Low Carbon Australia and recently appointed Australian High Commissioner to the UK o Ms Tanya Cox, chief operating officer, DEXUS Property Group, board member Low Carbon Australia Ltdo Mr Peter Verwer, chief executive officer, Property Council of Australia, o Ms Monica Richter, sustainable Australia program manager, Australian Conservation Foundationo Mr Bruce Hawker, political campaign strategist and managing director and founder of Campaigns and Communicationso Mr Michael Zorbas, head of Strategy and Communications, Grocono Mr Chris Briggs, advisor to Senator Milne

Pre dinner drinks and tour of six star 1 Bligh Street, SydneyLeft to right, front: Mike Rann, Christine Milne, Tanya Cox, Monica RichterRear: Lynne Blundell, Bruce Hawker, Michael Zorbas, Chris Briggs

SPONSORED BY: DEXUS PROPERTY GROUP

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Introduction

The Fifth Estate Political Salon

The Australia property industry has won accolades as a world leader in sustainability, ahead of any other global business sector.

Now sustainability is flagging, in the property sector and politically Australia wide. The word itself should no longer be mentioned, we’re told. Governments around the country are failing on sustainability and abandoning programs.

That’s the thinking, right?

We asked some of the most influential people in the political, environmental and property space to address these urgent issues. And to suggest how to re-ignite the sustainable agenda for the Australian property industry.

The forum was a salon dinner in Sydney.

Our generous sponsor for the evening and this ebook was DEXUS Property Group.

Our sincere thanks to DEXUS and to chief operating officer, Tanya Cox, in particular.

Our very special thanks to Leader of The Australian Greens Senator Christine Milne, our guest of honour for the evening.

And to the Honourable Mike Rann, former Premier of South Australia, chair of Low Carbon Australia, and recently appointed as Australia’s High Commissioner to the UK.

To all our guests, thank you for a most generous contribution of time, energy, ideas, passion, and most of all, generosity of spirit.

The conversation from this evening is a rare insight into the machinations that have had huge impacts on the sustainable property industry. It leaves us better informed and better placed to identify the challenges and opportunities, to play our own part to seize and re-ignite the agenda for this critically important sector.

Not just for Australia but as a global leader – why not?

– Tina Perinotto

From Tanya Cox, chief operating officer, DEXUS Property Group, a welcome

“This is an unusual but really quite opportunistic event.

“It is rare that we have the opportunity to discuss the sustainability agenda. I know a number of people here personally, and it’s just a pleasure to be able to share ideas about the issue. And if we land on a common cause, there is always a chance that we might actually line up behind it and achieve a result, make a difference.”

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Mike Ran, Tanya Cox

Christine Milne

Lynne Blundell, Mike Ran, Monica Richter, Bruce Hawker, Michael Zorbas

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Introduction

On Friday 21 September, The Fifth Estate gathered some of the most influential people in Australian sustainable property and green politics to generate discussion on how to re-ignite the political agenda for sustainability, especially for the built environment.

The call was for frank and open discussion on a wide range of critical issues facing the built environment and the sustainability movement generally.

The night began at 1 Bligh Street, Australia’s most sustainable high rise building, where owner and developer DEXUS, and our sponsor for the evening, hosted a tour of this landmark six star Green Star property.

The evening continued at Rockpool Bar and Grill where guests gave their insights on a broad range of issues from the failure of governments to lead on sustainability and climate change to carbon pricing, to the urgent need to reform the National Energy Market.

The Fifth Estate kicked off the discussion with some of the issues that have emerged for sustainable property in the past couple of years:

In recent times the Federal Government has scrapped the promised $1 billion tax breaks for green buildings. There has also been a wind back of programs nationally. Worse is that the industry is showing signs of faltering in its previous outstanding leadership in sustainability, something that has in the past attracted international note.Is this a fair and reasonable impression? Is it temporary, or more long lasting?

The honourable Mike Rann, former premier of South Australia, chair of Low Carbon Australia and recently appointed Australian High Commissioner to the UK, gave some valuable insights into the green initiatives he introduced to South Australia, against considerable pressures. These reforms, other participants said, stand as a blueprint for how governments can lead on climate change and sustainability.

Senator Christine Milne, Leader of the Australian Greens, showed the scope and depth of her knowledge on the critical issues of the sustainability agenda, from carbon pricing, to lack of accountability in the public service, to reform of the national energy market. With the cooling of the resources boom, says Senator Milne, Australia is facing crunch time and is in for a difficult transition unless we urgently address skills shortages and education.

Peter Verwer, chief executive officer of the Property Council, talked about the commitment of the property industry to green reforms and the failure of both major parties to provide leadership in this area. The built environment is on the cusp of major transformation, through the development of green precincts, distributed energy networks and major leaps and bounds in technology. But politicians and regulators need to catch up fast, Verwer said.

Monica Richter, sustainable Australia program manager, Australian Conservation Foundation, called for politicians to push the boundaries. Australia was falling behind, still locked into “a resource-intensive, hot, heavy, wet paradigm”, Richter said.

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Introduction

Bruce Hawker, political campaign strategist and managing director and founder of Campaigns and Communications, provided some rare insights into what drives mainstream politics.

As chief operating officer of a leading listed property company, Tanya Cox discussed the drivers for property investors and developers, as well as those of tenants looking for buildings that offer both energy efficiency and a healthier work environment. She also called on regulators and government to reform the energy network so that property owners can connect their co-gen and tri-gen plants to the grid. “Many are sitting unused in basements across Sydney,” Cox said.

Michael Zorbas of Grocon attended as facilitator and provided valuable input on the role of privately owned property companies in pushing the green agenda for property.

It was a highly productive and, at times passionate, discussion. Here are some of the highlights.

On the need for governments to lead, not look to polls.

Mike Rann was asked to explain how South Australia, under his leadership achieved outstanding sustainability outcomes including:

o Abolition of plastic bags in supermarketso Introduction of container deposit legislation to encourage recycling of cans and bottleso Introduction of Thinkers in Residence so that the best minds could contribute to sustainability and climate change policyo Arms length committees to ensure government is accountableo Prosperity targets for a wide range of issues from indigenous employment, access to childcare and mining royalties.

Mike Rann:First of all I’d like to say I’m not a pessimist. I think it’s also really important not to react off the media or what people tell you is popular or unpopular. A couple of apocryphal, but real stories:

We decided in South Australia to ban plastic bags – the non-reusable type used in supermarkets. 3.94 billion plastic bags go into the environment every year.

It was like the end of civilisation. If we’d taken notice of the lobby groups it was going to destroy industry, kill retail – we were lobbied by unions, the shop assistants union and major retailers. We tried to push it nationally and one by one every state government in Australia backed down but we decided to go ahead with it.

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Introduction

Some of my political friends and colleagues rang me and said it is going to cost you votes, it’s going to make it difficult for people and workers. We announced it and put the legislations through – set the statutory date eight to nine months away to let people adjust. On the day it started the media sent out crews trying to find problems but it went swimmingly. I’m a politician who believes in the importance of 50.1 per cent as the most important statistic. And we got 80 per cent support from South Australians for the ban on plastic bags. We recently e-polled – it’s still 80 per cent support. People are really proud of it. With people under 35 years of age there is 90 per cent support. There were no jobs lost and some companies proudly announce it as part of their green credentials.

Container depositsThe plastic bag story was a repeat of what happened in the 70s when Don Dunstan introduced container deposits in 1976. I recently revamped it. We’ve got a big recycling industry in South Australia – it is great for clubs as they raise money from recycling and we have cleaner streets. It has been a spectacular success and other states are now considering it 37 years after we did it. And the public love it.

So I think it is really important when people tell you things are popular or unpopular that you actually test it.

Renewable energyI really pushed hard on renewable energy. We had not one operating wind turbine in South Australia in 2002, now we have 26 per cent of our power – possibly more – coming from wind power…and 54 per cent of the nation’s wind power. We’ve got more power from wind than we have from coal and now we have just edged ahead of Denmark, which is the world leader. Hopefully next year, which is part of the plan, we’ll be ahead of Germany in terms of percentage of power from solar power. And you know what?

The public loved it. Our internal polling before the election regarding what we were doing on renewables showed people felt proud about it.

At the same time we were trying to prove you could be pro business, pro jobs, pro sustainability, pro environment and pro social justice – that those things are not mutually exclusive. We had 15 per cent drop in emissions over five years [at the same time as record growth and record jobs] So it can be done – it just requires not being spooked by media and others telling you that things are unpopular. Maybe they’re not – it pays to test.

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Introduction

Christine Milne:On that note we’ve just put [Container legislation has just been defeated in the Senate] They always say it is premature and yet it has been operating in South Australia this way for decades. The evidence base [for its value] is there but nevertheless it is voted down.

The pressure is coming from industry – from multiple voices.

Mike Rann: Manufacturers were telling me it would be the end of civilization. There’s a real difference between noise and voter peril. You’ve got to distinguish between the two and that’s the art of it.

So why are governments caving in to industry pressure?

Bruce Hawker:I don’t know that there’s one particular answer to that. I think governments do worry about upsetting the applecart with vested interests…[NSW Premier] Bob Carr was never a supporter of it and he had strong environmental credentials. I wouldn’t want to overstate the power of Coca Cola to influence too much government thinking on that.

Christine Milne:Also, the cost of living is a very powerful political weapon, particularly when it is true – low income workers are looking at food inflation and so on. It is very easy to pitch an argument that everything in a can or bottle will be more expensive and it immediately has a potential electoral impact if someone runs hard on the cost of living….

Bruce Hawker:The enemy of green initiatives is the cost of living.

Christine Milne: It’s very easy to exploit and very easy to overstate. People hear it and think this affects me and my family. Whether it is true or not becomes almost irrelevant and you just have to get it going with shock jocks and the rest and before you know it everybody is afraid this is going to make a massive debt in their household budget, when it’s not. Trying to get the alternative, actual figures out there is quite hard.

Bruce Hawker:In politics if there is a kernel of truth in it, it is easier to make a case. There are cost implications in green initiatives.

[In the residential sector the Master Builders Association opposes every sustainable initiative on that basis, Christine Milne said.]

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Sustainability

Is sustainability a dirty word? Has it lost its meaning and become devalued? What’s the “vomit principle”?

Christine Milne:There are two aspects to that. For eight years I’ve been on the global board for the International Union for the Conservation of Nature. There was a big debate in Geneva in 2007 over whether to abandon the notion of sustainability – the word, not the conceptual framework. The argument was put that people were asking for sustainable road funding, ustainable this and that - the term had been devalued – it had become a greenwashed term that meant all things to all people and had lost its ecological meaning.

It was very interesting to me because it was the Russians – and I always listen to the Russians because change comes from the periphery not the centre – who argued that the conceptual framework needed to change to environmental health, rather than ecological sustainability, because everyone relates to health. [Business people said not to change because the message was just starting to register.]

It comes back to the vomit principle: when you don’t think you can say it any more, or you will throw up, is the point when people are only just starting to hear it in a broad sense. The argument was that sustainability had just reached that point and they decided to stick with it.

In Canberra sustainability as a concept is devalued. It doesn’t necessarily mean green or ecological sustainability any more. The driver behind it is from both sides of politics. None of the Coalition’s policies have any integrity on this front at all. Because the Coalition is so bad on this, Labor don’t think they have to do any more than they’ve done already.

The Clean Energy Package has taken a lot of skin off Labor’s nose and they are not prepared to take any more skin when the Coalition is so bad.

The second thing is that Labor is so wedded to the surplus as a political statement …

[Labor] has just frozen the Clean Energy Program and the Energy Efficiency program has been delayed, for example. It’s all about manipulating the timeframes to just get that surplus in the financial year

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Sustainability

I can’t emphasise enough that this is the front and centre of where the government is, so getting any movement on these programs is all to do with maintaining the surplus.

Bruce Hawker:I think that’s absolutely right. That’s been my sense for some time. Things like cutting green cars to fund the Queensland flood program. The carbon tax has been the big thing. It sells short the opportunity to do things that are exciting and innovative.

[The talk moves to the federal government’s next budget. There is no way they are going to achieve a surplus, it’s thought. And why is it so important, anyway. The feeling is that Labor has lost confidence in its ability to sell messages. So it’s stuck to just one message, the carbon price and not much else. Kevin Rudd looks good by comparison.]|

Bruce Hawker:

Rudd will go down as the most environmentally adventurous prime minister this country’s ever had. Peter Verwer:Well when you see what the alternative is. Greg Hunt’s [shadow environment minister] Direct Action Plan is far more ambitious than what is left over with Labor, which is a comment on Labor.

How hard is it to get the sustainability message across? Are politicians just gutless these days?

Monica Richter:Why is it that there is this lack of courage from our political leaders to step out beyond where they think people are?

Bruce Hawker:

Putting a price on carbon is a pretty big thing. It will probably be the defining thing in the next elections. A lot of heat has come out of it but research shows there’s still a long way to go before people’s opposition to it diminishes substantially.

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Sustainability

Monica Richter:Dealing with climate change requires a multi-pronged approach. We’ve had a debate in Australia about putting a price on carbon for a long time. And we’ve had a Labor government that’s been inconsistent about its messaging. A carbon tax is one of many things – we have renewable energy target that’s up for review at the moment – people are confused. How can we expect people to follow when there is no leadership?

Bruce Hawker:The truth is most people have no idea about many of these things. Four out of 10 people don’t know who Barry O’Farrell is. This is the level of engagement.

Mike Rann:It is very hard to get people to listen and understand. We reached our carbon targets nine years ahead of target and I kept talking about it because I was excited about it.

But it was only when Al Gore came out to Australia and was asked where he thought they were doing good things and he said South Australia that suddenly people were saying, We’re the best – it’s on the front page of the paper. It came from the wild side but it helped punch it through.

Low Carbon Australia

Mike Rann: I think Bruce is right. Carbon pricing thing has been politically very difficult for the government, and all credit for them and everyone for getting it through.

But also of course out of that comes – and obviously Christine’s been involved in this, setting up the CFC [Clean Energy Finance Corporation] $10 billion dollars’ worth of initiatives – that starts on July 1. And of course Low Carbon Australia is a kind of pioneer in this area, because we’ve got $2 billion dollars with CFC – we had about $100 million at the start – and what we’ve been doing is, rather than preaching at people, some people call us a green bank, or whatever they want to call us – we basically don’t provide grants; we provide finance, loaned finance on a commercial basis, working with the major banks, and also working with manufacturers, whether it’s manufacturing ice cream or refrigeration costs, or abattoirs or Sydney Council or Melbourne Council on tri-generation, and so on. So we actually provide in a sense the bridging finance to make it worthwhile for the banks, worthwhile for the manu-facturers. The businesses are now lining up to talk to us, because they can see the benefits of cutting their energy costs. So again it’s that thing about demonstrating that at the same time as you’re cutting emissions, you’re actually cutting your energy costs and making your businesses more profitable. It gets back to that thing about saying that pro business and pro sustainability are not mutually exclusive. And I’m hoping – and there’s talks going on now with Gillian Broadbent and her board at CFC – that we’ll see Low Carbon Australia really continuing what it does, but with the backing, or with much bigger financial backing which will enable companies around Australia to be much more efficient and save costs in the process. So again out of that carbon pricing there’s a massive range of initiatives that are about to emerge.

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Sustainability

Tanya Cox:Low Carbon Australia, many of you will be aware, was set up by the federal government back in 2007, because it was envisaged that there was a market failure relating to the availabil-ity of finance to fund sustainable initiatives, whether they are new technologies, or carbon reduction initiatives . These initiatives are not easily financed through the traditional finance system, so Low Carbon Australia was created to address this failure market.

And it’s really been a fascinating journey. Low Carbon has) made real progress. We have largely satisfied our government funding commitment and are very focused on what our next step is going to be.

Mike Rann: [Low Carbon Australia finds a whole swag of businesses happy to be part of its program.] If it saves costs and will also save emissions and if the two align perfectly then everyone benefits.

That’s why I’m encouraged that businesses are getting really savvy about this That gives me great confidence that the market does work.

Tanya Cox: Steeply rising electricity prices mean that in a high percentage of cases businesses can repay Low Carbon loans from energy savings, loans they couldn’t borrow from a bank.

Mike Rann

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Energy

Renewables and the Clean Energy Finance Corporation

Christine Milne: We knew that the carbon price wouldn’t be high enough to bring on the renewables at scale in the time frame. It just wasn’t going to be. And that’s why we needed the Clean Energy Finance Corporation to complement what was happening with the RET [renewable Energy Target] The issue then with ARENA, the Renewable Energy Agency and the Clean Energy Finance Corporation was really to make them statutory authorities so that there was no political interference. And the reason for that was that Solar Flagships had been such a disaster from terrible management. The department didn’t listen to industry, they interfered with it… it became obvious to me that if we were to actually get some of these projects off the ground, they needed to have an expert … at arm’s length…

The National Energy Efficiency SchemeThe National Energy Efficiency Scheme we pushed really hard as the Greens to try and get a real commitment to that. We got a commitment to it, but that’s about all; there was no timeframe, or momentum for it. We are not going to make way on built environment.. I don’t think we’re going to see much progress on that till after the next election. But work’s being done behind the scenes. But we’ve just got to get beyond grants, and we have to get to a scheme that actually drives it…that’s where we need systemic change.

The property industry and the kind of savings possible from energy efficiency

Michael Zorbas: Can I ask a question of Tanya, in the sense that the forces of nature around the table have all opined in such a way that if you put it to music it’d be a bit of a dirge, a bit of a funereal lament about the state of leadership… from your perspective, from an industry perspective, do you share that sense of frustration or … is your view more optimistic?

Tanya Cox: In some ways I am encouraged because electricity prices threatening to go through the roof are driving tenant demand which is making property owners’ respond. Whether we like it or not tenants are going to avoid inefficient B, C and D grade buildings in the future, because electricity costs will be horrendous.

A really simple example: 45 Clarence Street, Sydney which DEXUS upgraded just recently now operates at a 5 star NABERS rating and uses 1.7 million kilowatts less power per annum, which is a saving of about $370,000 per annum, And the payback is really relatively short.

So we are starting to see quite good evidence that on a transaction by transaction basis, we are starting to make a difference.

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Energy

DEXUS has looked at its entire portfolio for similar upgrade opportunities…and the great thing about an organisation like Low Carbon is that it is enabling those owners that are in a different position to DEXUS – those that can’t financially decide to spend whatever they need to upgrade B and C grade buildings – to access the finance necessary commence the carbon reduction journey. In the commercial building space, in the built environment I do think that there’s “pull”, and I think that whether property owners like it or not, they are going to have to respond to it.

We’re starting to see rental premiums for greener buildings. It’s a 3 or 4 per cent premium at the moment, which is relatively light, but we’re expecting itto continue to grow. And there’s a capital premium associated with greener buildings also. Through a number of the indices there’s hard financial evidence now to underscore that investing in sustainability is good business.

Tanya Cox

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Energy

How about connecting to the grid?

The National Energy Market reform is long overdue and is holding back progress in the built environment, the salon thought.

Christine Milne:The National Energy Market rules prohibit innovation in the built environment. The govern-ment has agreed to take on reform of NEM. Now we have got a Senate enquiry on the issue – I’m on that. The Property Council has also got some proposed changes. This reform will make a huge difference. If we can get changes to NEM rules and get an environmental incentive in there, but also get it changed so that the grid has to take renewable energy into the system so that people have some guarantee that if they design a building that’s capable of putting energy into the grid it will actually happen and the grid operators can’t just mess around, it will make a big difference.

I’m keen to get all the people who understand the problems with NEM to get behind the change to rules and regulations. That’s one thing the public doesn’t understand is important – in the built environment sector it will be huge.

Peter Verwer:We can create green power on site, which means we don’t lose 40 per cent of it w hen generated 200 km away and then lose another 20 per cent on its way here.

We can’t get it to our building across the road because that’s controlled by the guys who’ve got a vested interest in not allowing us to. So what we say is, bring in clear rules that have to do with security and health issues dealing with power, like any development assessment process.

Tanya Cox:Just while we’re on that point, I don’t have actual statistics on how many cogen plants are already installed in commercial building, but we’re pretty sure that almost none of them are operating. So we’ve got multi-million dollar plants that are not being used. They are all over Sydney and are not operating because they can’t be connected to the grid.

Michael Zorbas:I can say the one at Stockland [head office] works because I have been there and it’s definitely on. [Michael Zorbas previously worked at Stockland.]

Tanya Cox: But they can’t be connected to the grid. The way that the market is set up at the moment, let’s face it, is prohibitive. This is one of those burning issues. If we could find a way to actually break through the regulatory deadlock, the solution is already here. 80 per of electricity is lost through transmission, and co-gen plants produce 60 per cent less carbon emissions so if they were all turned on we would really start to see a massive reduction in carbon emissions. We’re trying to progress the connection debate but we’re not getting very far.

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Energy

Peter Verwer:The CSIRO says we can get 40 megatonnes of abatement [with on-site power generation], which is nothing to sniff at, in the next 20 years. When they did the report in 2010 they said 20 megatonnes by 2020.

The real breakthrough is when you are doing it not just generating green power for one building but for a precinct.

But if the owners can’t get it across the road, it’s not going to happen.

Christine Milne:The Prime Minister wants this issue dealt with at COAG in November. I think this is important for the built environment to campaign ahead of COAG meeting and lobby for change to the NEM rules. It will allow real innovation in the built environment because it means precinct planning can look at a whole different way, whether it is a housing estate or a shopping precinct.

Peter Verwer:Green grids will be complementary to brown grids but ultimately this is where energy networks will be heading.

Left to right: Chris Briggs, Lynne BLundell, Mike Rann

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Left to right: Chris Briggs, Lynne BLundell, Mike Rann

Mike Rann

Christine Milne, Peter Verwer

Christine Milne, Mike Ran, Bruce Hawker

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Mike Rann Bruce Hawker Chrstine Milne

Mike Ran, Monica Richter, Bruce Hawker, Michael Zorbas

Bruce Hawker, Christine Milne, Mike Ran

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Vision

The vision question and accountability in government. South Australia did both.

Mike Rann’s Thinkers in Residence program and 10-year strategic plan came with accountability and measurable targets in government. Rann’s program included integrated design, so that sustainability and business issues were considered at all stages of planning. Infill development along transport corridors was a priority and brownfield sites, such as the old Mitsubishi site, were purchased by government to create green technology hubs.

Mike Rann:Under the Thinkers in residence program we brought in some of the world’s best thinkers to tackle a whole range of things from homelessness to sustainable development. And the thing about the plan which came out of people like [businessman] Robert Champion de Crespigny, was that every two years we are measured independently by an outside group… I got phone calls from around Australia from politicians saying, You have gone stark raving crazy…The key thing about it was we had an executive committee at cabinet [and it include De Crspigny and Cappo]

Peter Verwer:

South Australia is the only state with prosperity targets whether it is indigenous employment, access to childcare, patents or mining royalties.

Bruce Hawker: Because the others are too scared to have a target, because they might not reach it. Then they get held accountable for it. I mean, hats off to South Australia.

Peter Verwer: Accountability means punishment.

Bruce Hawker:Amazing. People who aren’t elected members of Parliament. It hasn’t been done anywhere else in Australia. It has overseas, but not here.

Peter Verwer:As a political adviser would you counsel against it?

Bruce Hawker:Not at all.

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Vision

Christine Milne:For the Multi Climate Committee it was the same thing. We asked the Prime Minister to have expertise on the committee, not just political views, because the advantage of having expertise is that it creates the space for people to change their minds.

Bruce Hawker:I took Mike’s model to a state leader who is no longer and it was knocked back by the advisers. What happens is nobody is accountable. Politicians are ultimately accountable through election but public servants aren’t. If they don’t think they have to be held accountable then they won’t – they always revert to being cautious. I’ve never thought it was the role of government to be cautious. I think governments should push the boundaries.

Public Servants

[One guest says public servants have too much power in Canberra. The Fifth Estate points to recent calls from business leader Jennifer Westacott to reinstate the authority of public servants who no longer have job security and are more fearful of speaking their minds. There is also evidence that in state government some public servants want to give ministers the answers they want “or we will all be out of a job.”]

Mike Rann:My successor got rid of the Thinkers in residence and social inclusion went the day of swearing in. ExCom was also abolished – it was always about driving the state’s strategic plan. ExCom was very annoying to senior public servants.

Monsignor Cappo had involvement in a wide range of areas from homelessness to school retention, mental health and disability and he reported directly to the Premier. I can see why a lot of people would have thought

“Who will rid us of this troublesome priest?” Like Thomas a’Becket.

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Government and governance

Michael Zorbas: Are there any other planks to a governance revolution, Peter, that we haven’t covered?

Peter Verwer:Well, regulatory impact statements and cross-benefit analysis, these are terms that are almost as tainted as sustainability now, as a word. Mind you we love sustainability, and we love green.

If you’re going to an evidence-based approach you have to weigh up the costs versus the benefits. The methods used in Australia are farcical.

So the issue here is, particularly politicians, they go, RIS [regulatory impact statements] and cost-benefit analysis … Well, if we’re going to have an evidence-based approach, you have to weigh up the cost versus the benefits. And the approaches that we use in Australia are farcical.

Christine Milne:If they exist at all.

With coal seam gas they have not done a single field study in Australia for future emissions as a result of coal seam gas.

Yet they’ve got CSG going right up and down the eastern seaboard using figures out of the United States, which are irrelevant to future emissions here. They’ve been given planning approval on that basis.

Peter Verwer:[Any company] could have said “We’re 15 star” [Green Star rating for 1 Bligh Street]. But they’ve got to have third party certification – it’s in their interests to be credible. Stockland when they do their Corporate Responsibility and Sustainability reports commit themselves to being verified. They can’t just make the numbers up. Michael Zorbas: And it’s very rigorous. You get a good grilling from the board, on multiple occasions.

Peter Verwer: The Government has multiple reporting methods for all the different schemes. There should be just one – an independent measurement approach. Evidence based. And it could be used for all schemes. One methodology – after all in the end they are units of water or waste or greenhouse gases – and then it could be converted to some sort of market value.

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Government and governance

Regulation can be accepted by the property industry.

Peter Verwer: Some things need to be regulated but not others.

The question is what are the core valuable things for society to regulate and what are the things best left to the market?

Mike Rann:The answer tended to be a mix of things.

Peter Verwer:The Property Council supported mandatory disclosure

Now the number of buildings with NABERS ratings has gone through the roof. Tanya Cox wanted to know what the thinking was on extending NABERS mandatory ratings to tenants.

Peter Verwer:We proposed this the government and they said it was a bridge too far.

Was it time to re-ignite this issue?

Peter Verwer:That’s now a bridge even further.

Bruce Hawker

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Government and governance

The action is at the local government level…and state

Mike Rann:Sixty to 80 per cent of decisions that affect the environment and climate are actually made at state, city and regional level even though media concentration is on what happens federally. Just as while, (including me – I was committed to renewable energy) the focus is on things like renewable energy, in fact 60 per cent of emissions cuts over the next 30 years will be about energy efficiency. That’s the space Low Carbon Australia is in.

Christine Milne:Local government is exciting. People in local government around the country are really considering the local precinct. Trends are very different now in terms of what people want regarding density. Younger people want fewer cars, more bikeways, more green belts in cities, more urban agriculture, the opportunity to meet and have communal spaces. If you’re going to have an exciting city you’ve got to have a transport system that can allow everybody to access it in an equitable way.

If you look at what younger people say, they want quality in their life and it is about amenity in quite a dense inner city environment. Where local government is delivering that it is incredible to see the transformation of those areas.

That’s where we’re going to see some terrific innovation but it has to come from fixing the grid.

That is the biggest impediment to this transformation – the NEM rules must change to allow the sort of collaborative work needed.

Bruce Hawker:

The biggest issue for people, as evidenced by polling, is the cost of electricity. Nothing is bigger than that, and nothing really comes too close to it. That’s the thing that’s really driving people’s anxieties right now.

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Government and governance

The Greens gamble on carbon

Peter Verwer: As the business group that supported a carbon price in 1999, and with the ACTU and the ACF supporting it, isn’t there the danger that there are other business groups that have agreed and then you’ve removed the floor price. The BCA said it would back it at $10. What do you do when it becomes $9.98?

Christine Milne:I’m taking a gamble. It’s as simple as that. The government wanted companies to meet their obligation by being able to purchase 100 per cent of permits overseas, which meant they could buy all CERs [Certified Emission Reduction] – cheap overseas units that cost about $5. We said no we didn’t want that and we wanted to achieve change at home – we didn’t want cheap offsets because we wanted to drive change at home, so we agreed on 50 per cent for overseas units.

And after the fixed price period we want a floor. We don’t want the price to fall to $5 after the fixed price period because we need a price signal for anyone investing in low carbon economy, to show it is a reasonable price. The floor price was only out to 2018, which is not long in a business context, and come 2018 it would have fallen to the CER price.

So what we’ve now got, which is why we were enthusiastic about it is the floor is going. We will have a fixed price until 2015 and then it floats. But in order to link to the European Union we have restricted the number of CERs allowable to 12 and a half per cent of the 50 per cent allowed overseas. So after 2015 it will be the European price so any business can see the price curve.

And so I’m gambling on the European price curve in 2015 being greater than what the floor would have been. Before 2015 it would have been $15 and the European price is currently just under $10 – I’m gambling that by 2015 it will recover.

The reason is because there is such a pipeline of investment in Europe in low carbon technology – everything from fast trains to offshore wind to everything you can imagine. Germany is going out of nuclear into renewables. They have all got so much lined up they need the price to recover.

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Government and governance

It is the whole business strategy out of Europe – they are talking about taking permits out of the system to drive up the price. We’re going to have to see if Europe delivers or not.

It means businesses in Australia can buy European permits now for $10 and bank them and sell in 2015 at $15. This is where the Abbott issue comes is. That’s why I say to business you’ve got to have certainty on this – you could be making quite a lot of money. Even if we abolished the carbon price here you could still buy the permits and sell them back and make money.

The thinking is that Abbott won’t go to a double dissolution and risk losing the “windfall” seats he might have just gained, to remove the carbon price and would be prevented from doing so by his party if he intended to do this.

Mike Rann: But business won’t speak out, that’s the … [multiple voices] they’re too frightened of speaking out at the moment

Peter Verwer:Can I tell you one thing, frankly, and that is what you just outlined there, that’s going to be news to most of them. What you’ve outlined is – you’re taking a risk as well in saying that there’s a long-term play here, which is aligning the carbon price in Australia with the Euro-pean price.

Michael Zorbas & Lynn Blundell

25

Business

The structure of corporate Australia and boards make it extremely difficult for CEOs to tap into something that is highly politicised.

Bruce Hawker: The structure of Australian boards makes it extremely difficult to talk to them about things that are political. It it’s deemed second tier [by boards] and not core business, they’re not going to be happy with the CEOs if they do take a political line.

Christine Milne: Government needs to provide the information to business. But blind Freddy can see this provides certainty. All they have to do is watch the European price

Why don’t they know that? It’s not the big listed companies with boards who are courageous but the private companies. These are the ones that will change the way we do things. Listed companies are also hamstrung in terms of choices they make in tenants.

Michael Zorbas: You look at Pixel in Carlton in Melbourne. That leads the world in terms of the US Green Building Council rating scheme which has graded 45,000 buildings. Here’s someone [Daniel Grollo, who heads Grocon which developed the highly rated Pixel] who said, these are my values – sustainability is one of the four key values of the company. We’re going to do everything at five star standards at least.

Monica Richter:

There aren’t enough private sector companies to revolutionise the way business is conducted. We need to actually be changing the rules or setting different standards of behaviour.

The World Business Council for Sustainable Development head, Peter Baker, said at IUCN meeting, he said the new CEOs and board members that are coming into big global corpora-tions now are all in their 50s. They have no excuse for damaging the world, as some of their forebears were. And I really think that we need to be pushing companies to be those exem-plars, of greening capital, listed shareholders, they’re the ones that

26

Politics

Who will lead the parties to the next election?

Is it a sure thing that Labor will be voted out anyway? No say Christine Milne and Bruce Hawker. Yes say others. Even more interesting is the thought the best change for sustain-ability is a Coalition Government led by Malcolm Turnbull. The scenario could well be Tony Abbott leading the Coalition to the next election and Turnbull installed soon after because Abbott’s pledge to remove the carbon price would be a business disaster.

Bruce Hawker:The whole thing is weird at the moment – on both sides of politics. If the public had its way at the moment it would go for [Malcom] Turnbull [as leader of the Opposition]. It would be scary for Labor if that happened. [Tony] Abbott’s only virtue as far as the Liberals are concerned is that he can undermine the government.

Christine Milne:I’ve been saying the Coalition has got to change its policy on carbon or change its leader or both because it is unsustainable for them to go into the next election with the policy they’ve got. They’ve got to change it because where are they going to get the money to do all this. And it’s unsustainable to change their policy and leave Abbott there. My view is that it is really going to be over to business. I’ve been saying this for 18 months. Business has to show some leadership – I’m sick of everyone saying it’s politics. We have led the way in this government in terms of carbon pricing and the whole regime.

Now it is up to business to stake a claim and say we want the framework to stay – we want certainty for the future and you, the Coalition, had better start agreeing to it or shift. If they don’t and back the idea this will be abolished – and it won’t by the way – if they back that and force a double dissolution, it is only a matter of time until it comes back and next time it does it will be much more stringent than it is now because we’ve run out of time and the ramifica-tions get more extreme.

And now there is a critical mass in business that needs this framework.

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Politics

Courageous decisions and Copenhagen

Bruce Hawker:[The government’s decision to impose a carbon price was a “huge move… massive” and it would probably be the end of the government for various reasons.]

It’s wrong to say they haven’t demonstrated real courage and they’re banking on this in a way that shows they know they will have nil return at the next election.

Christine Milne: I’m not as pessimistic but regardless of whether it does or does not [mean the end of the government] it will be looked back on as the greatest economic and environmental reform in decades.

Bruce Hawker:I think that’s right.

Christine Milne:It certainly wouldn’t have happened if it wasn’t a minority government.

Mike Rann:It was an incredibly courageous decision.

And Rudd’s view, if he were drafted back? Asked Michael Zorbas. What might his appetite be in the environment area?

Bruce Hawker: Rudd did try to legislate for an emissions trading scheme. And the Greens didn’t support it and if they did maybe we wouldn’t have the problems we have now.

Christine Milne is adamant: things would be a lot worse. Australia would have wound up with a 5 per cent emissions reduction target “with no prospect of change.”

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Politics

That’s what people don’t understand.

[The target just might have been raised to 15 per cent if a series of conditions were met, and the government might consider 25 as an “absolute maxium.”]

And there were no renewable energy components, no soil carbon or biodiversity components.

I would argue a thousand times over that the institutional structure we set up is better, that the Climate Change Authority will lead to a much more robust framework for delivering carbon reduction.

[It would now be possible to reach 80 per cent reductions by 2050.The bad news at Copenhagen could not have been foreseen.]

Bruce Hawker:I was always pessimistic.

[There was the looming GFC.] “It was a fool’s paradise..no-one really understood what it meant... then someone said, it’s actually it’s going to cost.

If expectations were better managed it would have been harder for Abbott to take over the leadership of the Liberal Party.

Mike Rann: [who was at Copenhagen, said expectations were too high]Bruce is absolutely right, there was a massive GFC and on the television every night mayhem in other parts of the world. People said yes, we support climate change but as long as it’s not me paying.

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Business

How will The Greens fare at the next election?

Christine Milne: Victoria is the best hope of picking up an other senate seat.” [Other seats will hold.]

It’s very hard to see from here how much difference there will be between the major parties …because I’m still of the view that Abbott won’t lead the Liberals into the next election and if Turnbull takes over it will change the dynamic completely. I don’t think they will go to the election with Abbott.

The Greens will grow because sustainability is at the heart of our agenda and that’s the challenge of the century… that’s at the heartland.

Bruce Hawker: I think the environment, all these concerns are going to be the way of the future. Talk to the kids and they have no doubts about it.Sometimes I think no-one over the age of 50 should get a vote on this because they won’t be around.”

The election will be tough for Labor and it will be tough for The Greens.

If Labor keeps the number they have now or a bit better and if did get up to a genuine 50-50 for three months and maintained that then Tony Abbott will be in a whole lot of trouble. As Christine says it change the whole dynamic. The whole Liberal Party is now so conservative, Christine Milne said.

30

The Future

From sheep’s back to stranded assets. Where’s the future?

Monica Richter:I’m interested in what Mike said earlier about South Australia having no choice but to change. We haven’t been pushed to the brink federally to make the necessary shift in consiousness to say we need to shift our thinking or create a green economy.

I’ve just come back from the ICUN [International Union for Conservation of Nature] meeting in Korea. This is the conservation Olympics, they call it. And we have the World Business Council for Sustainable Development, the new head, Peter Baker, there. We had the Koreans – they’ve initiated their Global Green Growth Institute. The world is galloping ahead on a green issues – green economy, green technology and the way of the future – but in Australia, other than South Australia, where this new initiative around the green smart precinct industry development, we’re still locked into this very resource-intensive, hot, heavy, wet paradigm.

The World Business Council for Sustainable Development are talking the need for radical transformation and thinking about business opportunities and resource productivity. And that conversation isn’t even happening here and federally I wonder how do we initiate that. We can’t wait for people to do it. It has to come from government.

Christine Milne:It has been too easy for Australia. We are a resource-rich country in fossil fuels of all kinds and in renewables of all kinds as well, but it has been very easy in Australia to make money out of digging up and shipping away. That has been the basis of our economy for so long that nobody in my experience in Federal Parliament on either side of politics really believes it’s ever going to come to an end.

The massive expansion in coal in Queensland and in particular this huge investment in coal infrastructure – ports, railways etc – runs the risk of being a massive stranded asset.

Because if you look at what China and India are doing they will get off imported coal as soon as they can.

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The Future

They are investing massively in solar and I think they’re doing it much faster than Australia is anticipating. They are going to cut back hugely and then we’re going to be left with an enormous investment, having destroyed half the Queensland coast with six new coal ports – the whole shebang.

The opportunity was lost in the Howard years – they had the boom, had the opportunity to set up [in Australia’s future] in education and training and they didn’t do it.

Bruce Hawker:That’s exactly what the mining tax is meant to do.

Christine Milne:Yes, I know, but it didn’t happen and the opportunity is now a decade …

We need to transform from a resources to knowledge and service-based economy.

Peter Verwer:The problem is who’s going to suffer [from the end of the resources boom] and the answer is those who are already at the margins in Australia.

Bruce Hawker:Revenue’s going to go down too. There’ll be a dramatic effect. This is where, as you rightly say, the Howard Government over 12 years refused to invest in infrastructure, create a future fund, like they have in Norway, or wherever. A large part of the purpose [of the carbon price] was to gird us against the change that is coming..

Monica Richter:We’re missing the point here in that we’ve got a booming global population all demanding the kind of lifestyle we are used to or aspire to. If we don’t actually grapple with the issue and rebuild productivity we’re going to be eating ourselves off this planet. We won’t be able to provide the food for the people or the kind of lifestyle they want or preserve biodiversity. Those are the environmental, social and political issues we are going to have to grapple with over the next 10, 20 years.

Peter Verwer

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The Future

Peter Verwer:Technology in cities is the answer. When we have all electric cars and these precincts not only generate their own power but become green battery packs and harvest their own water and mine their own waste, this will be a huge revolution.

Monica Richter:In Seoul they are taking municipal waste and converting it to carbon that can be used in tech-nology.

Peter Verwer:1 Bligh Street in 10 years will not have solar panels. They’re going to paint it on. Every building will be a solar generator.

So where would change from now? Not the political process, was the consensus, but from business and the community. Business needed push for change, Christine Milne said.

Peter Verwer: [Politics was almost irrelevant; the property industry was leading globally in sustainability.]

We’re in a post political phase of public policy.

The only answer [for change] is when there is a totally different style of mandate. It will come from strange bedfellows – the Australian Conservation Foundation, Shelter WA, the Council for the Ageing and the Property Council.It will be, We agree on this idea – it could be a precinct – and we give the politicians permis-sion to enable this.”

We now have crowd sourcing and social media for developing an extra political mandate.

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