Home-buyers have laid enough golden eggs for government

The decision by the Australian Building Codes Board (ABCB) to press ahead with mandatory five-star energy ratings for homes built after May this year, comes at the worst possible time for consumers and the building industry.

In recent times the Australian Institute of Health and Welfare has stated that 1.7 million Australians were in “housing stress”, spending more than 30 per cent of their income on accommodation in 2004. That figure will have certainly risen in the past 12 months.

The Commonwealth Bank’s median first home-buyer price for a new house and land package in Sydney in the September quarter was $504,000. To qualify for such a home, a household need to have in income of more than $120,000 per annum.

These statistics will not be news to those saddled with a mortgage and those trying to enter into home ownership. For years now they have had to confront rising house prices as well as a mounting pile of levies and charges imposed by all levels of government.

Now the ABCB has added to the pain by upping energy efficiency requirements from four to five stars, a move that will add more than $4,400 to the cost of an average $200,000 home. It brings the total cost for complying with energy-regulation requirements to $12,000.

Consumers do not even have the consolation of knowing this latest assault on their pockets will result in a significant benefit for them or the environment. The present four-star rating already imposes strict energy efficiency standards and a move to five stars will have only marginally improved results.

This latest move raises the bill that Australians will have to pay for energy-efficiency regulations to $31.5 billion over the next 15 years - all for a meagre 0.8 per cent reduction in greenhouse gas emissions.

The board’s decision flies in the face of the findings of two government-backed inquiries into five-star regulations this year. The Productivity Commission identified that heating and cooling, the two key energy factors in housing, contribute a mere two per cent to greenhouse gas emissions and account for only five per cent of energy consumption.

A survey conducted by the Victorian Competition and Efficiency Commission into existing mandatory energy efficiency standards in that state found no clear evidence of them delivering the expected environmental benefits.

It is incomprehensible that in the face of a substantial body of evidence doubting the effectiveness of these regulations and at a time when the Federal Government is supposed to be working to reduce regulation, the ABCB has forged ahead.

It presented no research of its own to support the move to five-star ratings, probably for the very good reason that none could be found. On the contrary, its own reference group recommended a deferral of those regulations pending further research that could justify the costs and benefits.

The ABCB says it is committed to monitoring the results of its decision. However, its actions to date suggests it is too firmly under the influence of the Green lobby and state regulators who have an agenda to drive for any research to be fair and impartial.

This impost is just the latest in a series imposed by governments on the home building industry. In Sydney a range of taxes and charges for infrastructure development is adding more than $100,000 to the cost of new home in a city which is already one of the most expensive.

In recent weeks NSW home buyers have been facing yet another round of price increases following changes to long service leave levies and the introduction of a new assignor duty. The Iemma Government seems oblivious to the damage it is doing to one of the state’s most important industries and is making a mockery of its much touted slogan that NSW is “open for business”.

Housing is becoming a regulatory target for a range of outcomes seen as desirable by local authorities. Increasingly these local authorities are pursuing environmental or social housing agendas through planning regulations, encircling builders with ever-increasing layers of red tape. Even when these regulations do not actually involve payments, they often produce delays that result in additional costs to the developer which will eventually appear in the final price of the home.

During his recent visit to Australia, American public policy expert Wendell Cox identified the great Australian dream of home ownership as being at risk, with young households and low income earners increasingly relegated to a lifetime of renting.

Laying the blame squarely at the door of government regulation, he pointed out that equity in housing represents nearly one half of overall assets owned by the household sector. “Australia’s rising home ownership has been a principle factor in the tripling of real per capita incomes since World War II,” he said.

“Take home ownership away and there will be a weaker economy with fewer jobs and a future looking more grim than in the past. That would be a first for Australia, or for any high-income world nation - and for no reason.”

Governments at all levels - federal, state and local - must review their attitudes to the housing industry as a matter of urgency. The goose has already laid more than its fair share of golden eggs and is beginning to look very sick. Remedial action is urgently required.