Bills Digest no. 152 2009–10
Building Energy Efficiency
Disclosure Bill 2010
WARNING:
This Digest was prepared for debate. It reflects the legislation as
introduced and does not canvass subsequent amendments. This Digest
does not have any official legal status. Other sources should be
consulted to determine the subsequent official status of the
Bill.
CONTENTS
Passage history
Purpose
Background
Financial implications
Main provisions
Concluding comments
Contact officer & copyright details
Passage history
Building Energy Efficiency
Disclosure Bill 2010
Date introduced: 18 March 2010
House: House
of Representatives
Portfolio: Climate Change, Energy Efficiency and Water
Commencement: Sections 1 and 2 commence upon Royal Assent while
sections 3 to 72 commence on 1 July 2010.
Links: The
links to the Bill, its Explanatory Memorandum and second
reading speech can be found on the Bills page, which is at http://www.aph.gov.au/bills/.
When Bills have been passed they can be found at ComLaw, which is
at http://www.comlaw.gov.au/.
The Building Energy Efficiency
Disclosure Bill 2010 (‘the Bill’) creates a national
scheme which requires disclosure of information about the energy
efficiency of large scale commercial office spaces when those
spaces are offered or advertised for sale, lease or sublease.
In 2004, the Ministerial Council on Energy (MCE) announced the
National Framework for Energy Efficiency (NFEE), which aims to
unlock the significant but un-tapped economic potential associated
with the increased uptake of energy efficient technologies and
processes across the Australian economy. The NFEE aims to achieve a
major enhancement of Australia’s energy efficiency
performance, reducing energy demand and lowering greenhouse gas
emissions.[1]
Stage One of the NFEE contained a package of policy measures
that included mandatory disclosure of energy performance of both
commercial and residential buildings.[2] It was stated that:
... these measures ... have the potential
to save around 50PJ of energy a year by 2015, approximately
equivalent to three times the electricity generated by the Snowy
Scheme annually, reduce greenhouse gas emissions by the equivalent
of taking around 900,000 cars off the road and provide GDP benefits
of up to $400 million a year.[3]
As part of its 2007 election policies the Australian Labor Party
(ALP) stated that:
A Rudd Labor Government will also work with the
States and Territories, the building industry and other
stakeholders to ... require disclosure of energy or environmental
ratings for appropriate types of large commercial buildings at
point of sale and point of lease. Mandatory disclosure will be
phased in gradually, beginning with office buildings above a
threshold of 5,000 [square metres].[4]
At its meeting of 30 April 2009, the Council of Australian
Governments (COAG):
reaffirmed a commitment to introducing a
National Strategy for Energy Efficiency to help households and
businesses reduce their energy costs. As a first step, COAG
agreed to five key measures to improve the energy efficiency of
residential and commercial buildings across Australia...
[including] the phase-in of mandatory disclosure of the energy
efficiency of commercial buildings and tenancies commencing in
2010.[5]
On 2 July 2009, COAG signed the
National Partnership Agreement on Energy Efficiency[6], to deliver a
nationally-consistent and cooperative approach to energy
efficiency.[7]

A Regulatory Impact Statement (RIS) was commissioned by the
Department of Environment, Water, Heritage and the Arts (DEWHA) on
behalf of State and Territory Governments. The aim of the RIS was
to assess the proposal under the NFEE to introduce a national
scheme for the mandatory disclosure of the energy efficiency at the
point of sale or lease for office buildings above certain
size.[8]
The RIS found a number of factors in the market for commercial
office space in Australia that impede the take-up of economically
feasible energy efficiency improvements:
- building owners and prospective tenants or buyers do not always
have equal information, so that tenants and buyers are placed at a
disadvantage in understanding the energy efficiency performance of
premises on the market
- those in the best position in the market to effect change (that
is, building owners) have little or no incentive to do so, and
- organisational failures exist so that low, or no cost,
opportunities for increased energy efficiency are not
taken-up.[9]
The RIS explored three options to remedy these market
failures:
- Option 1 — Mandatory disclosure of energy efficiency at
the point of sale and lease. Under this Option property
owners would have to report a National Australian Built Environment
Rating System (NABERS) Energy star rating, tenant lighting details
and energy efficiency guidance to buyers or tenants, where the
property meets certain criteria. Two permutations of the size of
properties to which obligations would apply were assessed, being a
Net Lettable Area [NLA] larger than 2000 square metres
or larger than 5000 square metres
- Option 2 — Industry code of practice. This Option
is similar to Option 1, except that there is no explicit
regulation. Instead, the industry (representing building owners)
develops an industry code of practice, which participants can
voluntarily adopt. By signing up to the code, building owners
make a commitment to provide energy efficiency information in sale
or lease transactions.
- Option 3 — Mandatory minimum energy efficiency
standards. This Option moves away from an information
approach to addressing the problem, instead mandating that building
owners meet minimum energy efficiency standards within a stated
timeframe. Where applicable, the triggers would be the same as for
Option 1. That is, where the NLA is greater than 2000 square metres
or greater than 5000 square metres.[10]
Of these, Option 1—mandatory disclosure of energy
efficiency at point of sale and lease for properties above
2000m2, was the most cost effective option.[11]
Option 2—based on an industry-led code of practice for
disclosure of energy efficiency performance at the point of sale or
lease—was not the preferred option. The RIS
acknowledges that ‘there is already some voluntary action
being taken by industry’, and that ‘a code would have a
positive impact on disclosure (compared with the current
practice)’.[12] However it was considered that:
it is likely that there would be positive bias
in disclosure on a voluntary basis, in favour of better performing
buildings. Such a scheme would therefore have lower benefit for
buyers and tenants, as it would provide less information with which
to compare properties, and would have reduced impact on the
information in the market, compared with mandatory
disclosure.[13]
In relation to option 3 which involved imposing minimum
standards for energy efficiency for existing buildings, it was
considered that:
Mandatory minimum performance standards would
impose the highest cost on building owners of all options, with
benefits from energy savings not offsetting costs within a 10 year
timeframe of the minimum standard being achieved. As such the net
cost of the option would be $334 million for properties larger than
2000 square metres or $277 million for properties larger than 5000
square metres.[14]
It was considered that the benefits of the scheme proposed
in Option 1 would be:
- direct benefits to those tenants and/or prospective buyers who
are able to use the disclosed ratings to choose a premise with a
higher energy efficiency rating—the benefits achieved are
through savings for these parties of occupying higher rated
premises, and
- indirect benefits through voluntary energy efficiency
improvements, and associated greenhouse gas abatement, that may
occur with a better informed marketplace.[15]
According to the Minister Assisting the Minister for Climate
Change and Energy Efficiency, the scheme proposed in this Bill
will:
… not only help lead to more informed
purchasers and lessees, it will also help to transition the market
to a low-carbon future. It will reward current market leaders and
encourage owners of inefficient buildings to pay more attention to
energy efficiency opportunities ...[16]
The transition to a lower carbon future is relevant because,
under the National Australian Built Environment Rating Systems
(NABERS) standard, Australian offices average a rating of just two
and a half stars of a possible five, and commercial office
buildings account for approximately 2.7 per cent of Australian
emissions.[17]

The proposed scheme provides that:
- corporations must not offer to sell, lease or sublease premises
without a Building Energy Efficiency Certificate (BEEC)
- owners, lessees and sublessees must not fail to provide genuine
prospective purchasers, lessees or sublessees with the BEEC upon
request, and
- corporations must not advertise premises for sale, lease or
sublease without a valid and current energy efficiency rating (EER)
included in the advertisement.
The BEEC contains three key components:
- an energy efficiency star rating (EER)
- an assessment of the energy efficiency of the lighting
- generic advice on how the energy efficiency may be
improved.[18]
The methods and standards of assessment to be used to calculate
energy efficiency information will be determined by legislative
instrument. The NABERS assessment methodology is expected to be
adopted.[19]
The provisions of the Bill were referred
to the Senate Environment, Communications and the Arts Legislation
Committee (the Committee) for inquiry and report by 11 May
2010. The purpose of the referral was to consider the regulatory
burden which the Bill would impose, and to examine the changes in
approach since the original scheme was announced by the government.
This has arisen because the ‘assumptions contained in the RIS
have been widely challenged’.[20]
Although there was extensive consultation in the preparation of
the RIS with some 40 written submissions received, the Committee
received only five submissions.[21] From these five submissions it seems that the
specific aim of the Government is largely supported and the Bill is
seen as necessary by most stakeholders, but not without some
amendments. Lend Lease Corporation (Lend Lease) is particularly
concerned, claiming that the Bill will ‘fail to provide a
meaningful incentive for businesses to operate buildings
efficiently and help to transition the market to a low carbon
future’.[22]
The Committee tabled its report in Parliament on 12 May 2010.
The Committee, by majority, recommended that the Senate pass the
Bill subject to three recommendations discussed in further detail
below.
The Australian Greens welcomed the Bill but support stronger
market mechanisms in line with the Safe Climate (Energy Efficient
Non-Residential Buildings Scheme Bill which was introduced in
September 2009.[23]
The Greens’ Bill would establish a cap-and-trade scheme that
limits the total energy use from commercial buildings and relies on
permit trading to ensure that energy efficiency measures are
undertaken at the lowest cost.[24]
Although the NFEE and its measures were announced under the
Howard government, mandatory disclosure of energy efficiency in
commercial buildings was not an explicit element of the Coalition
2007 election policy, nor was it part of the Coalition’s
response to climate change, the Direct Action Plan.[25]
Importantly, the Coalition members of the Committee provided a
minority report, recommending that the government reconsider the
Bill and engage in further stakeholder consultation. Of
concern to the Coalition Senators were:
... technical flaws in the National Australian
Built Environment Rating System (NABERS); the inclusion of a
tenancy lighting tool; the development of supporting technical
tools and availability of assessors; timeframes and the extent of
details of the regime to be specified by Regulation.[26]
The Coalition Senators also questioned the Government’s
rationale for lowering the mandatory disclosure threshold from 5000
square metres (as stated in 2007 ALP election policy) to 2000
square metres.[27]
These issues are further elaborated below under ‘Key
issues’.

According to the Explanatory Memorandum, funding to support the
development and implementation of the scheme will be $5.3 million
over four years starting in the 2009-10 Budget:
This funding is intended to cover both the
initial phase of the scheme, covering office buildings, and the
expansion of the scheme over the coming years to include other
types of commercial buildings. Administration of the scheme will be
undertaken with the objective of moving to full cost recovery at
the cessation of this funding.[28]
A break-even analysis of mandatory disclosure was undertaken
against a ‘base case of no action’ to determine the
requirements for a net positive outcome. For this, it was estimated
that the average cost of assessment to a property would be $5919
and that average turnovers of stocks are:
- 8 per cent of properties (2000 metres squared and above) sold
annually and
- 6 per cent leased.[29]
This results in a total cost to owners of $18.7
million over ten years (net present value) for mandatory
disclosure.[30]
It was concluded that for the direct benefits of
the scheme to balance the costs, 3.9 per cent of annual
transactions (or 114 transactions over the ten years of the
program) must be influenced by mandatory disclosure. That is, in
114 cases the tenant or buyer must choose to rent or buy a property
of an energy efficiency rating one star higher than other
properties being considered. [31]
The Bill does not specify the energy efficiency rating system to
be used for the creation of BEECs. However, the Explanatory
Memorandum states that:
In practice, and for the foreseeable future, it
is anticipated that the legislative instrument would state the
energy efficiency rating of a building as the energy efficiency
rating of a base building that is determined by NABERS
Energy.[32]
NABERS is the National Australian Built Environment Rating
System, a national initiative managed by the New South Wales
Department of Environment, Climate Change and Water (NSW
DECCW).[33] NABERS
is just one rating system on the market. Others include
GBCA’s Green Star rating tool,[34] the Victorian Government’s
FirstRate5,[35]
BERS (Building Energy Rating System) and more.
NABERS has been criticised by industry for
‘inconsistencies in the methodology, which suggest that a
particular star rating does not mean the same thing across state
boundaries’.[36] The concern may be warranted, given that the system was
originally designed for and with NSW information, standards and
benchmarks, and then extended for application nationally. In its
written submission to the Committee, the Property Council of
Australia (PCA) supported NABERS but noted that it is currently
under formal review. That being the case, the PCA considered
that the ‘review should be completed and the NABERS
methodology revised before the disclosure regime comes into
force’.[37] Lend Lease is of the opinion that no rating
system should be mandated, instead ‘the Bill should describe
the rules and process, not a proprietary tool’.[38]
The Committee took note of these comments but ultimately
supported the use of NABERS because of its ‘broad level of
acceptance within the sector’. It furthers recommends that
the use of NABERS within the BEEC be complemented by information
from the National Greenhouse and Energy Reporting Scheme to
future-proof the scheme to potential international carbon
markets.[39]
The PCA raised concerns over the second part of
the BEEC, information on the energy efficiency of the lighting, on
the grounds that a tool for measuring the energy efficiency of
lighting had not been finalised or tested and was not ready to
deploy cost-effectively. The Committee recognised the importance of
the lighting element to the scheme. It therefore recommended that
this part of the BEEC be delayed until the measurement tool was
ready and assessors had been appropriately trained in its
usage.[40]
There is a concern within the industry that the Bill might lead
to a steep increase in the volume of commercial building energy
assessments and subsequent problems. According to Lend Lease, new
assessors will need to be recruited, trained and accredited under
the new scheme. This has the potential to make the proposal costly,
highly administrative and prone to bottlenecking.[41]
The Senate Committee came to a different conclusion. Of the
approximately 2170 eligible buildings in Australia, an estimated 14
per cent are sold or leased each year. This creates a need for
about 300 assessments annually. According to the Department of
Climate Change and Energy Efficiency there are currently 585
accredited NABERS assessors.[42]

The pecuniary penalties imposed in the Bill have been criticised
for being excessive. Contravention of proposed clause
11 (no sale, lease or sublease without a BEEC) and
proposed clause 15 (advertisements to include EER)
attract a maximum civil pecuniary penalty of $110 000. In addition,
a separate contravention will occur on each subsequent day of
non-compliance with these disclosure obligations. Accordingly, a
building owner that places three advertisements in a weeklong
campaign failing to disclose an energy efficiency rating may incur
a penalty of more than $2 million. According to the Explanatory
Memorandum:
This provision is necessary to support the
rigorous application of the Bill and to ensure that a contravention
does not continue beyond the initial day that it is
identified.[43]
Contravention of proposed clause 12 (rights of
a prospective purchaser, lessee or sublessee) attract a maximum
civil pecuniary penalty of $110 000 for a body corporate and $38
500 for an individual.
It should be noted that if an infringement notice is issued, the
penalty imposed therein cannot be more than one-tenth of the
maximum penalty a Court could impose for that contravention. For
example, if the maximum civil penalty for contravention of a
provision is 1000 civil penalty units ($110 000) the maximum
penalty that could be imposed under an infringement notice for one
contravention could only be $11 000. In the case of a contravention
of proposed clause 12, the maximum penalty that
could be imposed on an individual under an infringement notice
would be $3 850.
The Committee report does not contain any specific analysis of
proposed penalties. However the Committee recommended that
the Government ‘give consideration to whether the penalties
proposed to be imposed by the Bill are appropriate’.[44]
According to the Explanatory Memorandum, compliance with this
scheme is estimated to cost around $6 000 or $15 000 for more
complex buildings. This is ‘likely to be less than half a per
cent of the overall value of the property
transaction’.[45] Accordingly, there is a real danger in larger
corporations simply treating the penalties imposed in this Bill as
a minor transaction cost. Having two alternative enforcement
mechanisms (infringement notice and Court order), arguably gives
the scheme further flexibility to account for differences and for
harsher penalties to be imposed appropriately and
proportionately.
The obligation contained in proposed clause 11
to not sell, lease or sublease premises without a BEEC has been
drafted ‘in order to account for standard property
transactions and some of the more complex
transactions’.[46] These appear to include:
- standard sales, leases and subleases that take place through
advertisement, negotiation, contract exchange and settlement
procedures
- call options, put options, put and call options, right of
pre-emption, agreement for lease and sale by court order, sale by
sale of shares or units and sale of a partial interest.[47]
According to the Mallesons Stephen Jaques law firm, ‘not
all transactions which have the effect of transferring the economic
benefits of ownership or leasing of an office building will be
caught’.[48]
For example:
- the sale of units in a trust that owns an office building
- the sale of shares in a company that owns an office
building
- the assignment of a lease of an office building, even a long
term lease
- a mortgagee exercising a power of sale (although the obligation
may still be imposed on the mortgagor).[49]
The Energy Efficiency Council has also criticised the Bill for
not applying to governments as well as the private sector.[50] The Crown is not a
constitutional corporation, as defined and therefore the
obligations imposed on constitutional corporations under this
scheme will not be imposed upon federal, state and territory
governments. Nonetheless, the Explanatory Memorandum notes that
‘a disclosure obligation, or an obligation to provide access
or information, may be triggered where a government is involved in
a sale, lease or sublease transaction involving a constitutional
corporation’.[51] According to the Department, this is the majority
of government transactions.[52] It is not clear whether the obligation to
disclose the energy efficiency star rating of premises when
advertising will also apply to the government.
In terms of specific exemptions from the scheme, the PCA
maintained that the ‘provisions are
inadequate’.[53] Exemptions can only be granted upon request and at the
discretion of the Secretary.[54] The PCA recommended that exemptions be clearly
defined and automatic. Failing this, penalties not apply during the
application for exemption period.[55]

The commencement date for this Bill is 1 July 2010. The
implementation date is to be determined by proclamation by the
Governor-General. However, COAG undertook to have the measure
implemented from 2010.[56] A transition period of 12 months begins on the first
day of implementation. During the transition period, a valid NABERS
Energy rating, on its own, acquired before the implementation date,
can be used in lieu of a BEEC.[57]
Some industry players are using this transition period as
motivation to invest in a NABERS Energy rating assessment prior to
the commencement of the scheme.[58] The PCA however claimed that the transition
period is too short in light of uncertainties that exist in the
tenancy lighting efficiency measurement tool, especially given the
excessive penalties. [59]
In 2007, the ALP policy outlined a mandatory disclosure to be
phased in gradually, starting with office buildings above 5000
square metres.[60]
The RIS provides an analysis of this approach against one with a
Net Lettable Area (NLA) threshold of 2000 square metres. It
concludes that:
... a 2000m2 NLA threshold is
preferred because it presents greater scope for benefit (as it
influences a larger proportion of the building stock), but its
costs are still at a low level and within a reasonable range (i.e.
only requiring a small proportion of direct benefit means that
there is strong scope for a net benefit to be achieved — i.e.
benefits to be greater than costs).[61]
According to the Coalition Senators’ Additional Comments
in the Committee Report, reducing the NLA threshold from 5000
square metres to 2000 square metres includes an additional 996
buildings in the scheme, specifically ‘second tier and
smaller property owners’ who may find the compliance costs
burdensome. The Coalition Senators called for further stakeholder
consultation on this issue.[62]
The Bill itself leaves much of the detail to subordinate
legislation. This arguably provides the scheme with flexibility and
adaptability to new information. It also leaves the potential for
linkage with future international greenhouse gas reduction schemes.
The Green Building Council Australia (GBCA) believes this approach
to be a necessary one, and calls for further stakeholder
consultation with each decision within the regulations.[63] The Department of
Climate Change and Energy Efficiency has confirmed that ‘any
changes would not be taken arbitrarily by the secretary or the
department ...there would not be just an arbitrary change without
consultation’.[64]
However, the PCA fears a lack of clarity (and therefore
assessment) on the requirements of the sector. It would like more
detail included in the Bill, specifically:
- exactly which buildings, or parts of buildings, will be
captured by the scheme
- what information will be disclosed in the BEEC
- clear grounds for exemptions to be granted, including automatic
exemption for new buildings until two years after a certificate of
practical completion is issued, and
- the accreditation requirements for registered
assessors.[65]
Part 1—Preliminary
Proposed clause 3 contains definitions to be
used in the Act. Of particular note are the proposed definitions of
the terms ‘disclosure affected area of a
building’ and ‘disclosure
affected building’. Importantly, those
definitions apply to an area which is ‘used or capable of
being used as an office’. That being the case, the
scheme established by this Bill does not regulate residential
buildings.
Proposed clause 4 establishes the circumstances
in statute under which a person is considered to have offered to
sell or is inviting offers to purchase a building thus triggering
an energy efficiency disclosure obligation. For example,
proposed subclause 4(1) provides that a person is
deemed to offer to sell a building if they offer to enter into a
contract in which a contingent obligation or right to sell the
building would be created. Proposed clause 5
similarly establishes the circumstances in statute under which a
person is considered to have offered to let or sublet or is
inviting offers to lease or sublease a building or an area of a
building. For example, proposed subclause 5(1)
provides that that a person is deemed to offer to let a building or
an area of a building if they offer to enter into a contract in
which a contingent obligation or right to let the space would be
created. The Explanatory Memorandum notes that these statutory
‘triggers’ mean that disclosure will be required before
substantive negotiations begin.[66] Significantly, it also notes that ‘the
action of selling or purchasing an area of a building, such as may
occur when a building is strata titled, does not trigger a
disclosure obligation under the scheme’.[67] Proposed clause
6 provides that any further subleasing of a building or
area of a building is also subject to the energy efficiency
disclosure obligation.
Proposed clause 7 provides that this proposed
energy efficiency disclosure scheme will only displace or limit a
law of a State or Territory which similarly imposes disclosure
obligations in relation to the sale, lease or sublease of a
building or an area of a building if it is directly inconsistent
with this scheme. Proposed clause 8 provides that
the Crown is to be bound by this Act but significantly, the Crown
is not a constitutional corporation, as defined and therefore the
obligations imposed on constitutional corporations under this
scheme will not be imposed upon federal, state and territory
governments. Nonetheless, the Explanatory Memorandum notes that
‘a disclosure obligation, or an obligation to provide access
or information, may be triggered where a government is involved in
a sale, lease or sublease transaction involving a constitutional
corporation’.[68] However, proposed subclauses
7(2) and (3) state that the Crown (not an
authority of the Crown) will not be liable to pecuniary penalties
or prosecution under this scheme.
Proposed clause 10 provides that the Minister
may determine that a specified kind of building or area of a
building is ‘disclosure affected’. Such a determination
is to be by way of legislative instrument.[69] Although the Explanatory
Memorandum predicts that the scheme will mainly apply to offices
that are larger than 2000 square metres there is no specific
reference to the applicable area of a disclosure affected building
in the Bill.[70]
The RIS provides the following
pictorial of the office areas which will be captured by the
Bill.
Proposed clause 11
generally prohibits a constitutional corporation from selling,
leasing or subleasing a disclosure affected building or area of a
building without a BEEC.[71] The maximum civil penalty for doing so is 1000 penalty
units ($110 000).[72] In addition, proposed subclause 11(5)
provides that a constitutional corporation commits a separate
contravention on each day that it fails to comply with the
requirements of this clause.
Not all property transactions involving constitutional
corporations are caught by the scheme, for instance as previously
mentioned, the action of selling or purchasing an area of a
building, such as may occur when a building is strata titled, is
not expected to trigger a disclosure obligation because there is
currently no practicable method for assessing the energy efficiency
of such offices.[73]
Proposed clause 12 provides constitutional
corporations that have a good faith interest in buying, leasing or
subleasing a disclosure affected building or a disclosure affected
area of a building, with the right to require the owner, lessor or
sublessor of a building or area of a building to provide a BEEC.
Such a request must be in writing and may be made at any time while
the offer or invitation continues. Proposed subclause
12(6) establishes the maximum civil penalties that may be
applied for failure to provide a valid and current BEEC ‘as
soon as is reasonably practicable’. Namely, 350 penalty units
($38 500) for an individual and 1000 penalty units ($110 000) for a
body corporate.

Proposed clause 13 relates to the contents of
the BEEC. Proposed subclause 13(1) lists
what a BEEC must contain if it pertains to a building:
- the energy efficiency rating for the building
- an assessment of the energy efficiency of the lighting for the
building that might reasonably be expected to remain if the
building is sold, let or sublet, and
- guidance of a kind determined by the Secretary by legislative
instrument on how energy efficiency might be improved.
Similarly, proposed subclause 13(2) lists what
a BEEC must contain if it pertains to only an area of a
building:
- the energy efficiency rating for the building in which the area
is located
- an assessment of the energy efficiency of the lighting for the
area that might reasonably be expected to remain if the area is let
or sublet, and
- guidance of a kind determined by the Secretary by legislative
instrument on how energy efficiency might be improved.
Significantly, the regulations may prescribe that additional
information must be included in the BEEC.[74] According to the Explanatory
Memorandum, such information ‘may include details of on-site
renewable or low-emissions energy sources, green power usage, and
past years’ energy efficiency ratings’.[75]
Under this scheme, a certificate must be valid and
current. A BEEC is only current for 12
months beginning on the date it is issued.[76] It appears that a BEEC will only be
issued after both energy assessments and the guidance for
improvement are completed even if these three assessments occur at
different times.
Proposed subclauses 13(5) and
(6) contain the requirements that make a BEEC
valid for a building and an area of a
building respectively. In brief, a BEEC is valid if the issuing
authority is satisfied that:
- the energy efficiency rating is appropriate for the building
when applying the assessment methods and standards,
and
- the assessment of the lighting energy efficiency is appropriate
for the building or area of the building when applying the
assessment methods and standards.
If an audit reveals that an assessor had not appropriately
applied the assessment standards and methods, the BEEC would
presumably not therefore be valid and a new BEEC would need to be
issued.[77]
Proposed subclauses 13(7) and
(8) provide that the Secretary may, by instrument,
(though not a legislative instrument) recognise a person or body as
a BEEC issuing authority. The Explanatory Memorandum notes that
this is expected to be the NSW Government department responsible
for the administration of NABERS Energy.[78]
Proposed clause 14 relates to the creation of a
Building Energy Efficiency Register (the register). According to
the Explanatory Memorandum, it is expected that this online
register will be established and administered by the NSW government
department responsible for NABERS and will be similar to the
database that currently exists for buildings that have been
assessed under NABERS Energy.[79] The Bill does not appear to require owners,
lessors or sublessors to register BEECs. Proposed subclause
14(1) provides that the Register will contain
particulars of valid BEECs. However, such particulars may
include information from both current as well as lapsed
BEECs.[80]
Proposed clause 15 relates to the disclosure of
energy efficiency ratings in advertisements. This clause requires a
constitutional corporation that owns or leases a disclosure
affected building or a disclosure affected area of a building
wanting to sell, lease or sublease the building or area to include
in such advertisements an energy efficiency rating for the entire
building.[81] The
Secretary will determine by way of legislative instrument, the
manner in which the rating is to be expressed in the advertisement.
Failure by a constitutional corporation to comply with these
requirements attracts a maximum civil penalty of 1000 penalty units
($110 000). A corporation that contravenes a requirement of this
clause (that is, an energy efficiency rating is not included in the
advertisement or the assessment is not expressed in a manner
consistent with the Secretary’s determination) in relation to
a continuing advertisement commits a separate contravention in
respect of each day during which the person fails to comply with
that requirement, including the day of the making of a relevant
civil penalty order and any subsequent day.[82]
Proposed clause 17 provides that an application
may be made in writing to the Secretary for an exemption from the
requirement to not sell, lease or sublease without a BEEC as per
clause 11; to not fail to provide a copy of a BEEC to a prospective
purchaser, lessee or sublessee as per subclause 12(6) and to not
advertise without an energy efficiency rating as per clause
15.[83] Such
an application will attract a fee yet to be prescribed. The
proposed statutory circumstances in which an exemption may
be granted include:
- if the building or the area of the building is used for police
or security operations
- if the characteristics of the building or the area of the
building make it not possible to assign an energy efficiency rating
to the building, or assess the energy efficiency of lighting of the
building or the area of the building, or
- if the building or area of the building fall within ‘any
other class prescribed by the regulations’.
Proposed clause 18 provides ‘information
gathering powers to all parties that may have a disclosure
obligation under the scheme’.[84] Under proposed subclause
18(2) an assessor may require an owner, lessee or
sublessee to provide specific information that is
necessary for the purpose of the assessment if they reasonably
believe the person has the information. A person must not be
required to produce such information in less than 14 days. Under
proposed subclause 18(4) an assessor may also
require an owner, lessee or sublessee to provide access to
‘a place in or associated with the building or area’ if
such access is necessary for the purpose of conducting the
assessment and the assessor reasonably believe the person
‘either occupies or controls access to the place’. The
timeframe in which such access is required must be
reasonable.[85]
Failure by an individual to comply with these requirements attracts
a maximum 200 civil penalty units ($22 000) while failure by a body
corporate attracts a maximum 500 civil penalty units ($55
000).[86]
Proposed subclause 18(7) provides that a person
who fails to provide information within the specified period
commits a separate contravention on each day after the specified
period including the day when the civil penalty order was made and
any subsequent day. Similarly, a person who fails to provide access
at the specified time commits a separate contravention on each day
after the specified period including the day when the civil penalty
order was made and any subsequent day.
Exemptions from this clause may be granted by the Secretary. All
applications for exemption must be in writing and be accompanied by
a fee to be prescribed. Proposed subclause 18(10)
states that the Secretary may approve an exemption in relation
to:
- access to a building specified in the exemption
- access to an area of a building specified in the exemption
- access to an area associated with the building specified in the
exemption
- access to a building or an area of a building on a day or at a
time specified in the exemption, or
- a class of information specified in the exemption.
The Explanatory Memorandum notes that:
It is expected that the administrative
arrangements for the Act will be structured such that a person will
not be subject to a civil penalty under subclauses (6) and (7) in
the time between making an application for an exemption under
subclause (8) and receiving written notification of the
Secretary’s decision under subclause (11). However, an
explicit legislative provision to this effect has not been included
in the Act as it may have the undesired effect of exemptions being
sought as a delaying tactic by applicants wishing to avoid their
obligations without good reason.[87]
Proposed clause 19 creates offences for persons
who misuse information that is acquired under clause 18.
Proposed subclause 19(1) provides that a person
commits an offence if they acquire information for the purposes of
a BEEC and they copy, use or otherwise disclose such information to
another person. The maximum penalty for such an offence is two
years imprisonment. However, proposed subclause
19(2) generally permits the information to be:
- copied, recorded, used or disclosed for the purposes of
obtaining a BEEC
- copied, recorded, used or disclosed in, or in connection with
an audit under the scheme
- copied, recorded, used or disclosed in circumstances in which
the conduct is permitted under the Act
- copied, recorded, used or disclosed for the purposes of
proceedings for various offences under the Criminal Code
relating to false or misleading information or documents and
obstruction of Commonwealth public officials
- copied, recorded, used or disclosed with consent, or
- copied, recorded, used or disclosed if the information is
already publicly available.
Proposed clause 20 provides that if an owner,
lessor, lessee or sublessee of a building or area of a building
suffers damage as a result of an assessor’s failure to comply
with a duty under this clause, they may recover damages for any
loss suffered as a result of that failure. Proposed
subclauses 20(1) and (2) set out
assessors’ duties when conducting an assessment for a BEEC in
a building or an area of a building respectively. Such duties
include applying the assessment methods and standards determined
under proposed clause 21 but also to comply with
the assessor’s conditions of accreditation.
Proposed subclause 21(1) provides that the
Secretary may, by legislative instrument determine the assessment
methods and standards to be applied in:
- working out the energy efficiency rating of a building
- assessing the energy efficiency of lighting for a building that
might reasonably be expected to remain if the building is sold, let
or sublet, and
- assessing the energy efficiency of lighting for an area of a
building that might reasonably be expected to remain if the area is
let or sublet.
Proposed subclause 21(2) provides that for the
purpose of determining an assessment method and standard the
Secretary can apply, adopt, or incorporate, with or without
modification, any matter contained in any other instrument or
writing as in force at a particular time or as in force from time
to time. This means that, whilst the stated intention of the
Government is to use the NABERS assessment methodology, it is
possible that a different methodology could be used in the future.
Proposed clause 22 provides that obligations
arising under proposed clause 11 (to not sell, lease or sublease
without a BEEC), clause 12 (to provide a BEEC to prospective
purchasers, lessees or sublessees) and clause 15 (to not advertise
without an energy efficiency rating for the building) will apply on
or after the implementation day, which will be a day to be
fixed by the Governor General in a proclamation.[88] However, if proclamation does
not occur within six months from the commencement of the Act, the
implementation day will be the day after the end of that period
(six months from the day on which the Act commences).
Proposed clause 23 provides that for the 12
months after the implementation day (‘the transition
period’) a valid and current BEEC will be taken to be
registered if:
- a rating of the energy efficiency of the building has been
issued before the start of the transition period,
- the rating was issued by a person or body that is recognised as
an issuing authority at the start of the transition period
- the issuing authority is satisfied that the rating is
appropriate for the building, based on assessment methods and
standards substantially similar to those determined under section
21 as 11 in force at the start of the transition period
- the rating has not expired, and
- the rating is included in a register maintained by the issuing
authority by electronic means and available for inspection on the
internet.[89]
Proposed subclause 23(3) specifies when the
energy efficiency rating of a building will expire and
proposed subclause 23(4) provides that for the
purposes of clause 15, it will be valid until the rating
expires.

Proposed clause 25 sets out the circumstances
in which the Secretary must refuse an application to become an
accredited assessor and the circumstances in which the Secretary
has discretion to refuse an application. More explicitly,
proposed subclause 25(1) provides that the
Secretary must refuse to accredit a person (an applicant)
as an assessor if:
- they have not successfully completed the prescribed
training
- the Secretary is satisfied that the applicant has provided
false or misleading information in, or in connection with the
energy efficiency rating of a building, or
- the applicant has been convicted of an offence against Division
137 of the Criminal Code for the provision of false or
misleading information in, or in connection with:
- an application
for a BEEC
- an audit
conducted under Part 4, or
- an application
for accreditation or renewal of accreditation.
Proposed subclause 25(2) provides that the
Secretary may refuse to accredit a person if he/she is
satisfied that the applicant:
- needs to undertake further training in applying the assessment
methods and standards
- does not have the qualifications or experience necessary to
properly apply the assessment methods and standards, or
- will not be able to satisfy a condition of accreditation.
If an applicant has previously been accredited as an assessor,
the Secretary may also refuse their application for
accreditation if:
- the applicant has been found in proceedings for damages under
the Act or the Secretary is otherwise reasonably satisfied that the
applicant has not properly applied the assessment methods and
standards for the purposes of working out an energy efficiency
rating or performing an assessment as to the energy efficiency of
lighting, or
- the applicant has failed to comply with a condition of
accreditation.
If none of the above circumstances apply, the Secretary
must approve the application to be an accredited
assessor.[90] The
period of accreditation is set at a minimum of 12 months and a
maximum of three years.[91]
Regulations may prescribe conditions which can be imposed on the
accreditation of all, or a specified class of, assessors and the
Secretary may impose additional conditions on the accreditation of
an individual assessor.[92]
Proposed clause
28 empowers the Secretary to suspend the accreditation of
a person as an assessor if:
- the applicant has been found in proceedings for damages under
the Act or the Secretary is otherwise reasonably satisfied that the
applicant has not properly applied the assessment methods and
standards for the purposes of working out an energy efficiency
rating or performing an assessment as to the energy efficiency of
lighting, or
- the applicant has failed to comply with a condition of
accreditation.
In turn, proposed clause 29 empowers the
Secretary to lift such a suspension if satisfied that the issues
that resulted in the suspension have been addressed, and any other
action necessary to ensure the person will properly apply the
assessment methods and standards and comply with the conditions of
accreditation has been, or will be, taken. Subclauses
29(2) and (3) make provision for
arrangements when expiry of accreditation occurs prior to the
lifting of a suspension.
Proposed clause 30 governs the revocation of
accreditation as an assessor. The circumstances in which the
Secretary must revoke an accreditation are set out in
proposed subclause 30(1) and these largely mirror
the circumstances in which an application for accreditation must be
refused under proposed subclause 25(1). The
circumstances are:
- the Secretary is satisfied that the person has provided false
or misleading information in, or in connection with the energy
efficiency rating of a building, or
- the person has been convicted of an offence against Division
137 of the Criminal Code for the provision of false or
misleading information in, or in connection with:
- an application
for a BEEC
- an audit
conducted under Part 4, or
- an application
for accreditation or renewal of accreditation.
The circumstances in which the Secretary may revoke the
accreditation of a person as an assessor are set out in
proposed subclause 30(2). The circumstances
are:
- the person has been found in proceedings for damages under the
Act or the Secretary is otherwise reasonably satisfied that the
person has not properly applied the assessment methods and
standards for the purposes of working out an energy efficiency
rating or performing an assessment as to the energy efficiency of
lighting, or
- the applicant has failed to comply with a condition of
accreditation.
Proposed clause 31 provides that an online
register containing the name of each accredited assessor any other
information considered relevant to a person engaging an assessor is
to be set up. Proposed clause 32 provides that
holding oneself out to be an accredited assessor when one is not is
punishable by 60 penalty units ($6600).

Part 4 creates an auditing system to ensure
that accredited assessors are correctly applying the assessment
methods and standards. Proposed subclause 33(1)
provides that the Secretary may appoint a person or body as an
auditing authority. The function of the auditing authority is to
direct auditors to ensure that:
- accredited assessors properly apply the assessment methods and
standards in carrying out assessments for BEECs only, and
- assessments are not influenced by any conflict of
interest.[93]
The auditing authority must perform these functions in
accordance with any policies notified by the Secretary and must
report directly to the Secretary if the energy efficiency rating or
the assessment of the energy efficiency of the lighting in a BEEC
is not appropriate for the building or an area of a
building.[94]
There is no requirement to notify the Secretary if an accredited
assessor is found to have a conflict of interest.
Under this proposed scheme, only a public servant or a person
engaged by the Commonwealth may be an auditor. The functions of an
auditor are set out in proposed subclause 34(3).
These include conducting audits of assessments for BEECs and
documentation/record keeping of such assessments. It also includes
supervising assessments to ensure the methods and standards are
properly applied and documented.
An auditor’s powers are set out in proposed
clauses 37 and 39. They include:
- entering a building, an area of a building, or any place
associated with the building or area if voluntary consent is
provided by its occupant or under a monitoring warrant
- exercise ‘monitoring powers’ such as observing any
activity, inspecting something, making copies of documents,
operating electrical equipment (such as computers) and so forth,
and
- ask any question and seek production of any document relating
to whether an assessor has properly applied the assessment methods
and standards set out in clause 21.[95]
Proposed clause 40 governs consent by an
occupier to enter a building, area of a building or an associated
place. It clarifies that an occupier may refuse consent and any
consent given must be voluntary. Consent can also be limited during
a particular period and can cease to have effect. Proposed
clauses 41, 42 and 43 in brief provide that an auditor
entering under a monitoring warrant must announce that they are
authorised to enter unless they believe on reasonable grounds that
immediate entry is required. Once entry is achieved they must make
a copy of the warrant available to the occupier (or another person
apparently representing the occupier) and inform them of their
rights and responsibilities (outlined below).

An occupier is entitled to observe the execution of the warrant
under proposed clause 45 however, such a right
ceases if the occupier or another person impedes that execution.
The warrant may also be executed simultaneously in two or more
areas. Under proposed clause 46 an occupier, or
another person who apparently represents the occupier, must provide
the auditor and any assistant with ‘all reasonable facilities
and assistance for the effective exercise of their powers’.
Failure to comply attracts a penalty of 30 penalty units
($3300).
Proposed clause 47 relates to monitoring
warrants. It provides that an auditor may apply to a magistrate for
a warrant in respect of a building, an area of a building or any
place associated with a building or an area of a building. The
magistrate must be satisfied on the basis of information provided
by the auditor or some other person on oath or by affidavit that
access is reasonably necessary for determining whether an assessor
has properly applied the assessment methods and standards
determined under proposed clause 21.[96]
The power to issue a warrant is conferred on a magistrate in a
personal capacity and not as a court or a member of a court under
proposed subclause 48(1).
Proposed clause 49 enables the Secretary to
obtain information or documents if he or she reasonably believes
that a person has knowledge of information or custody or control of
documents relating to whether a civil penalty provision has been
complied with. A person must be given at least 14 days to comply
with a request for information. Failure to comply with this clause
is an offence of strict liability punishable by a maximum 30 civil
penalty units ($3300). A person is not required to comply if the
information or document might tend to incriminate or expose them to
a penalty or if they are not capable of complying.[97]
Proposed clause 52 provides that the Act will
apply to a person who is involved in the contravention or attempted
contravention of a civil penalty provision, for example, a person
who attempts to contravene such a provision or conspires with
others to do so.[98]
Proposed clause 53 provides that the Secretary
may apply to a Court for an order that a person who has contravened
a civil penalty provision pay a pecuniary penalty. In determining
the appropriate penalty to be imposed, the Court must have regard
to ‘all relevant matters’ including:
- the nature and extent of the contravention
- the nature and extent of any loss or damage suffered
- the circumstances in which the contravention took place
- whether the person has previously been found to have
‘engaged in any similar conduct’ in proceedings under
the Act
- the extent to which the person has cooperated with the
authorities.[99]
In relation to continuing and multiple contraventions,
proposed subclause 53(6) provides that the Court
has discretion to make a single civil penalty order against a
person for multiple contraventions of a civil penalty provision if
it is founded on the same facts or if the contraventions form part
of a series of contraventions of the same or a similar character.
However, in doing so the penalty must not be greater than the sum
of the maximum penalties that could be imposed if a separate
penalty was ordered for each of the contraventions.
If conduct contravenes more than one civil penalty provision,
proceedings may be initiated in relation to the contravention of
any one or more of those provisions. However, a person is not
liable to a penalty in respect of one provision for the same
conduct.[100]
Under proposed clause 57, a person is not
liable if they were under a mistaken but reasonable belief about
facts, which if true, would mean there was no contravention.
However, a person wishing to rely on the defense of mistake of fact
bears the evidential burden of proof.

Under proposed clause 58, the Secretary
may issue an infringement notice if he/she reasonably
believes that a person has contravened a civil penalty provision.
The matters that must be included in an infringement notice are set
out in proposed clause 59 though provision is made
for regulations to set out other matters. An infringement notice
must, amongst other things, state:
- the pecuniary penalty that is payable (significantly, this must
not be more than one-tenth of the maximum penalty that could be
imposed by a Court for the contravention)
- if the penalty is paid within 28 days after the notice is
given, court proceedings will not be commenced against the person
unless the notice is withdrawn
- the person may apply to have the period in which to pay the
penalty extended[101]
- if the person chooses not to pay the penalty, court proceedings
may be commenced in relation to the alleged contravention, and
- the person may seek the withdrawal of the notice.[102]
Though payment of an infringement notice within 28 days
discharges any liability of the person for the alleged
contravention, the Act does not impose an obligation on the
Secretary to require an infringement notice to be issued to a
person. Further, if the Secretary subsequently chooses to withdraw
an infringement notice (and refund any money already paid), civil
proceedings can still be brought against the person in respect of
an alleged contravention.[103]
Proposed clause 65 obligates the Secretary to
maintain an online Energy Efficiency Non-Disclosure Register. This
register appears to be designed to ‘name and shame’
people who continually demonstrate a disregard for the requirements
of the Act and will thereby ‘discourage industry from
discounting the cost of penalties as a minor transaction
cost’.[104]
Where there are two or more instances of non-disclosure in
twelve months the Secretary may record the number of
instances of non-disclosure and the date on which each instance
occurred or began. An ‘instance of non-disclosure’ is
triggered if a person is issued with an infringement notice or the
Court makes a civil penalty order against a person for a
contravention.[105]
The Secretary may withhold or delete an entry on the register if
he/she are satisfied that the instance is not part of a continuing
pattern of conduct demonstrating a disregard for the requirements
of the Act. The Secretary must also remove an entry if infringement
notice is subsequently withdrawn or a court order is subsequently
overturned on appeal.[106]
Proposed clause 67 sets out what types of
decisions under the scheme are reviewable internally by the
Secretary.[107]
Proposed clause 69 provides that the
Secretary’s decision may be reviewed independently by the
Administrative Appeals Tribunal (AAT) as can the reviewable
decisions set out in clause 67 which are made by the Secretary
personally.
Proposed clause 71 enables the Secretary to
delegate any or all of the Secretary’s powers or functions
under the Act (other than those listed in paragraphs (a)-(k)) which
include such things as determining assessment methods and
standards, determining manner of advertisement, and internal review
of certain decisions.
Proposed subclause 71(2) enables the Secretary
to delegate to the issuing authority any of the Secretary’s
powers and functions under Part 3 (Accreditation of assessors) but
in exercising such delegated powers or functions, the delegate must
comply with any directions of the Secretary.[108]
The broad objective of this Bill is to improve the energy
efficiency of large commercial office buildings and thereby reduce
Australia’s greenhouse gas emissions. The mandatory energy
disclosure scheme proposed in this Bill will, to a certain extent,
achieve this goal. As an information-based scheme, the Bill makes
public the sorts of data needed to assist the market in
transitioning to a lower-carbon future. However it is only a first
step. To become a fully market-based instrument and thereby take
advantage of the efficiencies offered by the market, this Bill must
be accompanied by real and measurable incentives. These
complementary measures must impart confidence to the sector and
provide the motivation needed to stimulate innovation and
transformation in the building industry.
The concerns about the ability of this scheme to be effectively
implemented are legitimate. The Committee inquiring into the
provisions of the Bill has, in response to industry concerns,
recommended that the lighting component of the disclosure regime be
delayed to enable an appropriate assessment tool to be rolled-out.
There is some unease over the tools and systems proposed for the
energy efficiency assessment. These are yet to be tested and in the
case of NABERS, still under review. This puts into question the
impact analyses undertaken in the preparation of the Bill.
Finally, there are many uncertainties caused by existing and
potential exemptions and exclusions from the obligations under the
scheme, and as a result of the Bill leaving much of the detail of
the scheme to subordinate legislation.
Members, Senators and Parliamentary staff can obtain further
information from the Parliamentary Library by telephoning Anita
Talberg on (02) 6277 2421 or Elibritt
Karlsen on (02) 6277 2759.

Anita Talberg and Elibritt Karlsen
27 May 2010
Bills Digest Service
Parliamentary Library
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