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Explosive report lifts the lid on Australia’s building energy performance sham

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The Fifth Estate  3 Feb 2015

There is “a pervasive culture of mediocre energy performance across the Australian building industry”, according to a damning review by pitt&sherry and Swinburne University that the government has sat on for months and only released just prior to Christmas. It’s what the industry has long turned a blind eye to, but now it’s finally written in black and white.


The National Energy Efficient Building Project engaged with more than 1000 stakeholders to look into the systemic weaknesses and widespread non-compliance regarding energy efficiency requirements of the National Construction Code.

The review, led by the South Australian government on behalf of all states and territory governments, found “a very large number of concerns” around the effectiveness of current energy performance requirements. Many of those interviewed believe that amidst “a culture of sign-offs” and a lack of oversight and enforcement, non-compliance is rife across the entire building supply chain. This means higher energy use, higher carbon emissions and bigger bills.

In the residential market  – where many of the problems were reported – the six-star NatHERS energy efficiency requirement is routinely not being met.

Lower and mid-grade commercial buildings are also reportedly not meeting minimum standards. And the problems lie across multiple stakeholders, with consumers, industry, regulators and the government all playing a part in below minimum-standard product being produced.

“These concerns appear systemic in nature, in that they cover all aspects of the building supply chain and regulatory process and all building types,” the review said. “Further, there was a remarkable degree of consistency in the views expressed and issues raised in all states and territories, despite widely varying building markets and conditions.”

Consumers don’t care, apparently

Corner cutting in the industry has been fuelled by a total lack of oversight compounded by a widespread view that consumers just don’t care about energy performance.

“The risks of corner-cutting are likely being raised by a widespread view… that house buyers are largely uninterested in energy efficiency outcomes… Many industry professionals noted that this routinely translates into energy efficient designs or inclusions being ‘traded away’ during the design process, or not being specified in the first place,” the review said.

Instead of interest in lifecycle costs, homeowners were more interested in aesthetics, resale value and size, stakeholders reported.

Consumers were also seen as having limited understanding of thermal comfort, and therefore could not discern between good and bad advice, and had limited willingness to pay extra for these features.

In short, there’s no market pressure for energy efficient features. The review did note, however, that the market environment was affected by policy and regulatory practices, with consumers relying on market participants for energy efficiency advice and appearing to trust that the regulatory process would work to protect their economic interests.

But it seems they’re wrong.

We can get away with it

A key view uncovered was that there was a sense of “impunity” in the building sector around meeting energy efficiency minimums, as there was little risk perceived regarding being discovered cutting corners and, if discovered, little chance of any serious repercussions.

The reasons for the low risk included that energy performance measures like insulation and double glazing are difficult for non-professionals to discern and expected energy performance is not made clear, so most home owners are none the wiser.

No enforcement

There was also a widespread belief that the responsible state government regulators were not enforcing energy performance requirements. These regulators reported a shortage of funding to undertake key enforcement activities like audits, and also consistently reported energy efficiency and climate change (the objective being to reduce greenhouse gas emissions) as the lowest of priorities, behind more immediate concerns like health, structural integrity and bushfire safety.

“The review team formed the view that regulator, industry, consumer and government views appear to be reinforcing each other and contributing to an overall culture of low energy performance: no one party can be singled out as particularly or solely responsible for this situation.”

Issues with the code

As described by the Building Verification Forum in our previous article, one concern raised was a focus on “as designed” rather than “as built” performance. This encourages the regulatory system to focus on documentation rather than actual buildings.

On top of this there were poorly justified variations from state to state, deemed to satisfy and modelled solutions leading to different, non-equivalent outcomes, gaps in the code related to energy performance (such as commissioning, maintenance and ventilation), and complexity and confusion regarding the code.

Substitutions abound, and there’s a lack of performance verification

Substitution of low efficiency products and systems was reported to be high, with high-efficiency glazing most commonly reported to be switched out. Generally cost savings were passed back to home owners, though there were also reports where this had not happened.

There was also concerns regarding quality of products and systems, which lacked certification, performance testing and appropriate labelling as occurs with consumer products such as whitegoods.

“The lack of energy performance verification for building products (and indeed for whole buildings) compares poorly with the regime that has applied for decades to washing machines, refrigerators and the like,” the review said.

“In the case of many energy using appliances it is illegal to sell products that do not meet Australian minimum energy performance standards. In addition requirements are regularly enforced, with numerous successful prosecutions of those breaching standards. Buildings, by comparison, are many orders of magnitude more valuable, more energy intensive and longer lived, yet the buildings themselves, and the building components, have no mandatory energy performance verification.”

Problems span across all industry groups

There were problems across all stakeholder groups involved in construction, from planners through to building surveyors.

Planners and councils

Issues included planning schemes rarely taking into account passive solar design including block orientation and solar access. It was also uncommon for efficiency of distributed generation benchmarks to be set as is common in Europe.

Many councils professed an interest in sustainability but had little concrete knowledge, actions or budget. Few audits were conducted by councils, but where done so the rate of non-compliance was great – the highest being 70 per cent reported in Adelaide. This was not just for energy performance, though does point to the fact non-compliance with planning permits is endemic.


Designers and architects were seen as the group pushing hardest for energy efficiency, though they noted a lack of consumer interest in energy efficiency, with even zero-cost or cost-saving measures often rejected.

Designers also noted “poor attitudes and low knowledge” among other parts of the building chain, particularly amongst builders, who were frequently removing energy efficiency measures both before and after certification. Other problem stakeholders were real estate agents and product suppliers/retailers, who were influencing consumer views.


Builders and energy assessors, however, were often critical of designers “preparing plans and specifications with insufficient detail to enable accurate assessment/construction, or that were ‘patently unbuildable’.”

For example, plans containing excessively thick walls or ceilings to accommodate insulation, or expensive glass to accommodate for an excess of glazing were often substituted, but were necessary to achieve the performance requirement, leaving the “as built” performance well below the design performance.

“Any design changes post certification trigger a requirement to re-certify the building, but this is understood to very rarely occur in practice, due to a lack of mandatory inspections and/or post-hoc compliance audits.”

However, their key issue was a lack of interest and willingness to pay for efficiency measures on behalf of their clients.

Energy assessors

Energy assessors noted they were often brought in too late to be able to influence design decisions, and were seen as a regulatory burden rather than an opportunity to improve building outcomes.

Assessors reported a culture of shopping around for those who give “generous” assessments. There was also “unfair” competition from non-accredited and even offshore service providers undermining assessors’ work, with no discipline placed on the non-accredited providers in the regulatory system to ensure correct ratings, undermining confidence in the whole profession.

There too was concern at the lack of investment in research and maintenance of NatHERS rating tools, with many files “years out of date”.

Building surveyors

There was a conflict of interest for building surveyors, as many states had building regulations that made it clear surveyors had a duty of care to building owners, however most were contracted by developers and builders.

“Surveyors operate in an intensely price-competitive market, and risk losing their future income if they develop a reputation for being ‘difficult’. The phenomenon of ‘shopping around’, noted for energy assessors, may also apply to surveyors.”

Surveyors too lacked training in energy efficiency, and the code only requires certification of designs, with surveyors relying on sign-offs by other building professionals. Only one state – NSW – requires a single inspection of an efficiency feature.

Despite concerns around costs, many stakeholders said without mandatory inspections or an audit program there would be no confidence appropriate outcomes are being achieved.


The review found that the market, policy and knowledge management frameworks across the building industry, together with administration of regulatory frameworks, were not encouraging good energy performance in buildings, and in many cases were undermining compliance with energy efficiency requirements.

Lack of awareness, understanding and concern among consumers and industry participants; a regulatory system with no bite; and insufficient government resources have led to “a pervasive culture of mediocre energy performance across the Australian building industry”.

The way forward

A comprehensive, long-term reform program is needed to combat the widespread, systemic nature of problems identified, the review said.

It noted that because the problems were spread over stakeholder groups and seemed deeply engrained, it would take significant effort and time by state and federal governments to rectify the situation.

It is worth doing, though.

“The building sector accounts for some 10 per cent of the Australian economy, and buildings are very long-lived assets. At a personal level, houses are often the largest single investments that Australians will ever make. Therefore, efforts to improve the policy, regulatory and knowledge management frameworks that impact on building energy performance have the potential to create social, economic and environmental benefits that are lasting and cost-effective.


The review team made a large number of recommendations to address the problem, including both short-term and long-term measures, though pulled out some of particular importance.

Key systemic and process reforms:

  • mandatory inspections of energy efficiency features and inclusions, identified as a key reform by many stakeholders, helping to reverse a culture of non- or minimal-compliance
  • ensure that building industry professionals are subject to mandatory accreditation and continuous professional development regimes in all states and territories, as voluntary approaches are held to be undermining those professionals who are trying to do the right thing by consumers, such as with energy assessors
  • comprehensive documentation of the benefits and costs associated with building energy efficiency regulation
  • making clear the level of ambition that is expected in building energy performance standards through time, which could occur by amending the objective and functional statements in the Code to require that buildings ‘use energy efficiently [or reduce greenhouse gas emissions] to the extent cost-effective’, and by putting in place effective governance and review arrangements that ensure this outcome is achieved through time
  • for building officials to engage with the ACCC and fair trading commissions, as well as building commissions, to strengthen consumer protections for building owners

Short-term opportunities:

  • engage with fair trade and consumer protection agencies to identify pathways for improved consumer protection in cases where energy efficiency features present at design, specification and/or approval are compromised or absent in the finished building
  • the Commonwealth national home energy efficiency (building seal) inspection project will collect and interpret recent building performance data from all Australian capital cities. Findings will be interrogated and used to develop industry and consumer information and to recommend a regulatory (or alternative) implementation pathway for nationally-consistent building seal, minimum performance standards
  • engage state and local governments to review compliance audit records and undertake a representative sample of on-ground inspections and alternative assessments of residential buildings, underway or recently constructed, to quantify and communicate the level of non-compliance with energy efficiency requirements and calculate consequent (comparative) operational costs to consumers
  • local government-based pilots to demonstrate effectiveness of an “Electronic Building Passport” to enable long-term controlled access to and management of building documentation from planning, design and assessment to building and operation
  • develop a draft 5 year (to 2020) Strategic Plan for key activities Australia wide in policy, regulatory areas, and in knowledge management, that will harmonise and deliver improved compliance with energy efficiency provisions of the National Construction Code
  • Provide industry feedback and web-based materials to communicate with and provide an overview of Phase 1 outcomes and Phase 2 projects to all industry and other stakeholders who engaged in Phase 1 of the NEEBP
  • Seek improved consistency across all jurisdictions in the application of the energy efficiency requirements in the NCC to alterations and additions and the use of rating tools in assessing alterations and additions

What’s next?

According to lead author of the report, pitt&sherry’s Phil Harrington, phase 2 is getting underway and it’s all about quantifying the extent to which the problems are occurring. There are three projects being run.

“The first one is an actual audit that will include onsite inspections of residential buildings being constructed around Australia,” he told The Fifth Estate. “It’s a snapshot to say, ‘Is there evidence on the ground to support what stakeholders told us during Phase 1? And how bad is it?’

One of the key recommendations of the Phase 1 report was that there needs be hard numbers around the level of non-compliance in the industry. And while the project will focus on residential, Mr Harrington said the evidence so far suggested the state of play in the commercial sector was just as bad as with residential.

Other pilots include testing an electronic building passport that would capture all relevant building documentation, and a further investigation around compliance issues to do with alterations and additions.

In an encouraging sign Mr Harrington said that the Australian Building Codes Board was currently considering the report. And while it is the states that deal with compliance, the idea is that the ABCB could coordinate a “sensible response” from the states and territories.

Industry responses are still rolling in, and we will update the story as we hear from more stakeholders.

Key findings:


  • Planning: Little attention to orientation or master planning for energy efficiency
  • Design: Designs not optimised for energy performance or low running costs. Issues with rating schemes and rater errors. Low detail in plans
  • Certification: Sign-off culture, with no physical inspections
  • Construction: Poor practices (insulation, sealing, etc.). Product substitutions and divergence from approved designs
  • Commissioning: Not a Code requirement and not done well
  • In use: Actual energy use often higher than designed. Low awareness of energy issues among building users
  • Knowledge management: Skill and knowledge gaps throughout the chain. No mandatory accreditation or CPD in most jurisdictions

Strategies for change:

  • Being clear what’s at stake: remake the case in public policy for effective energy performance regulation of buildings, and communicate this to stakeholders
  • Getting the incentives right: clarifying the Code’s intent. Lifting ambition levels. Closing gaps in Code coverage and addressing stakeholder concerns with performance of tools
  • Delivering quality outcomes: increase training and knowledge – mandatory accreditation and CPD. Product register, labelling and testing
  • Empowering the community: Strengthening and widening awareness of consumer protection frameworks. Information campaigns on all aspects of building energy performance

NEEBP’s Vision:

  • Planning: Explicitly recognises energy efficiency
  • Design: Energy efficiency a core design objective and quality attribute. Enhanced skills and product quality
  • Certification: Evidence based and drawing on cost effective new technologies
  • Construction: Practices reflect new skills and awareness. Building performance lifted as a result
  • Commissioning: Routinely achieved with excellence, and a culture of continuous improvement
  • In use: Building users adopting energy efficient practices based on heightened awareness
  • Knowledge management: Whole industry is approaching world best skills, knowledge and practices