We need to rebuild Australia’s approach to energy efficient housing

The following article is one of seven finalists in the 2019 Gill Owen Essay Prize, which honours the memory of Dr Gill Owen, who was a tireless campaigner in the fields of energy efficiency and social equity. The competition is sponsored by AGL Energy, the Institute for Sustainable Futures at UTS, the Association for Environmental and Energy Equity, Uniting Communities and RenewEconomy. The finalists’ essays will be published in Renew Economy between Monday 17th February and Tuesday 25th February.

A passionate and pioneering campaigner for social justice, Gill Owen was one of the first women to bring the voices of the consumer and the disadvantaged to the boards of the UK’s and Australia’s competition and economic regulators. Gill advocated passionately for these causes until her untimely death from an aggressive brain tumour in August 2016.
To celebrate Gill’s contribution to empowering disadvantaged consumers, and improving energy efficiency, the Gill Owen Essay Prize invites emerging voices under the age of 35 to offer their own perspective on energy efficiency and social equity. The overall winner of the 2019 Gill Owen Essay Prize will be announced at the Dr Gill Owen Forum: Fairness for consumers in the energy transition, hosted by the Australian Energy Regulator in Melbourne on Tuesday 25th February 2020. The overall winner receives a prize of $3000 and the runners up receive a prize of $1000 each.

Rethinking housing to improve energy efficiency, by Anna Livsey

Improving the energy efficiency of homes is increasingly important as the impacts of climate change intensify and as energy prices remain unaffordably high for an increasing number of people.

Making homes energy efficient lowers power bills, reduces overall energy consumption – placing less demand on the energy system and lowering emissions – and also, critically, makes homes more comfortable.

Increasing the energy efficiency of homes will improve the lives of many, yet despite the clear benefits, a large portion of Australia’s housing remains inefficient and progress to address the issue has been slow.

Minimum energy efficiency standards for new buildings were introduced in 2005, however, more than 9.5 million homes are estimated to have been built prior to this.

Australian building efficiency standards and energy efficiency policy and practice lag behind other comparable countries, leaving many Australians living in uncomfortable and unhealthy homes.

Tellingly, more people die in Australia due to heatwave than any other natural disaster, and we have double Sweden’s rate of cold-associated deaths.

Addressing the issue of energy efficiency is a complex task with many possible solutions. Fundamentally it will require a shift in the way Australia views housing – from property to home.

The problem of inefficient and uncomfortable homes is felt most acutely by people who are already vulnerable due to low incomes, poor health, and other factors.

These groups have the least ability to manage large power bills or make improvements to their homes. Those with poor health are most threatened by exposure to temperature and weather extremes.

A disproportionately high number of people on low incomes live in cheaper private rental properties. These are typically older housing stock and perform the worst in terms of energy efficiency and general comfort. Evidence suggests rental status may be the main barrier to being able to comfortably heat or cool a home.

The Australian Housing Condition Dataset found that 19% of private renters on very low incomes were unable to keep comfortably warm in winter and 21% were not able to keep comfortably cool in summer, compared to 6% and 4% of households on very low incomes but that owned their home outright.

Low income renters facing historically high housing costs have very little ability to change their living circumstances by seeking other housing. Instead, they must rely on their landlord to make improvements.

As the problem of inefficient homes disproportionately affects renters on low incomes, measures to improve standards generally focus on overcoming the disincentive for landlords to improve privately rented properties.

Two widely supported measures are mandatory minimum energy efficiency standards for existing and new homes, and mandatory disclosure of building efficiency performance at points of sale or lease.

While well supported, in practice minimum standards have so far had limited success. They are yet to be implemented for existing homes in most jurisdictions, and standards for new buildings are poorly enforced and regulated. Additionally, disclosure only at the point of sale or lease is slow to result in changes to housing stock.

Another popular policy is modifying the tax system to encourage landlords to invest in energy efficiency upgrades. Like minimum standards, changes in this area have been slow and once implemented rely on landlords to act in order to improve standards.

Schemes to replace or upgrade appliances and fittings have been rolled out by governments in a number of states, however, these schemes face limitations. Many rely on households to contribute some or all of the upfront cost of an upgrade, which for many low income households is not possible.

Some schemes have also met resistance from landlords, despite the upgrades being free. The 2013 NSW Home Power Saver Program was designed to help 220,000 eligible low-income households in the state reduce their energy usage through measures including the free installation of energy efficiency products.

Despite facing no cost, just 10.2% of private landlords gave permission for the program to install free efficient showerheads and draught strips for low income renters participating in the program.

Given the difficulty of overcoming landlords’ disincentive to improve the energy efficiency of their properties, policy makers seeking better outcomes for energy users should direct more attention to strategies that give more power and means to tenants, and circumvent unsupportive landlords.

First and foremost, Newstart should be raised. There are around 720,000 people living on Newstart, which currently sits at $278/week. A number of advocates and community groups argue increasing Newstart by $75/week is needed to bring the payment in line with the minimum income a single person needs to afford essentials.

Raising Newstart immediately would give the most vulnerable people more power to choose higher quality homes and drive landlords to make improvements to stay competitive.

A raise in Newstart should be accompanied by a program of building public housing. Rising living costs, particularly the cost of housing, has led to a crisis where an increasing number of people are homeless or forced to live in poor-quality homes.

The Australian Housing and Urban Research Institute (AHURI) estimates there is a shortfall of approximately 525,000 in affordable rental properties in Australia. While it is estimated a minimum of approximately 100,000 public or community housing units are needed to effectively eliminate rough sleeping in Australia.

Embarking on a program to build energy efficient public housing would likely be one of the quickest and most effective ways to improve the living standards of low-income renters and broadly improve the energy efficiency of Australia’s housing stock, while creating jobs and stimulating economic activity.

As well as increasing Newstart and building public housing, tenancy laws should be changed to give renters more security and freedom. Removing no-grounds evictions, allowing pets in rental properties and removing rules that prevent tenants from making reasonable alterations to improve energy efficiency are all measures that would give tenants more power to ask for changes and to make them where necessary.

Policy makers should also remove barriers to tenants accessing new energy products and services that allow households more control over their energy usage.

Mechanisms such as demand response – paying energy consumers to use less energy at times of peak demand – and time-of-use energy tariffs, encourage households to use energy in a smarter way and have benefits for the entire system.

These new tools have much promise but are still not readily accessible for most households. Policy makers should work to rectify this by ensuring all homes can be fitted with the required technologies to participate and that consumers receive adequate protections when using these new technologies.

Combined, these policy responses provide impetus for those who can to make changes while recognising the role governments have in ensuring all people have comfortable and efficient homes and emissions are reduced.

All the responses discussed face complexities and limitations but are essential components of a broad-ranging strategy for tackling energy inefficiency and improving the living standards of the most vulnerable in society.