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Creation Date: Thu, 14 Jul 2011 GMT

Carbon tax: the impact on property

The core of the plan is the introduction of a price on carbon pollution.

Treasury’s modelling shows that the construction industry is one of the few to shrink over both the short and long term.

The Government’s own analysis spotlights disturbing risks for the property and construction industry that should be addressed before carbon tax arrangements are finalised.

The Property Council has called for a joint government-business working group to undertake far more detailed modelling of the price impacts of the scheme for the residential and commercial property industries.

Comprehensive modelling should show how much abatement the scheme buys over its first three years, and provide a better understanding of the potential price impacts that will occur when the scheme transitions into its full Emissions Trading Scheme (ETS) phase.

Better targeted and designed incentives are also required to encourage building energy efficiency and improve affordability.

The positives are:

• a large commitment to renewable energy programs that could be tailored to promote embedded generation in buildings and precincts;
• an investigation into a national energy efficiency incentive scheme (‘white certificates’) that will tie together and expand existing arrangements; and,
• the potential to rationalise existing environmental reporting arrangements for large investors.

The negatives are:

• a shrinking construction industry (compared to other major economic sectors);
• the absence of any modelling on housing affordability – which is likely to decline as construction costs rise;
• the absence of transition arrangements for fixed price contracts, such as leases; and,
• the lack of protection from unwarranted energy price increases flowing from the electricity sector.

source: The Property Council of Australia.