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Environment and Communications References Committee
23/11/2017
Current and future impacts of climate change on housing, buildings and infrastructure

MOTTO, Ms Megan, Chief Executive Officer, Consult Australia

[11:12]

CHAIR: Welcome, Ms Motto.

Ms Motto : Thank you.

CHAIR: Information on parliamentary privilege and the protection of witnesses and evidence has been provided to you. I invite you to make a short opening statement if you wish, and then we'll ask you some questions.

Ms Motto : I should say that one of the many other hats that I wear is as the current treasurer, albeit for only a short period of time, of the Australian Sustainable Built Environment Council. I understand that you'll also be hearing from them later today, so I won't go into a huge amount of detail but will just note that there is a lot of crossover with ASBEC's work as the peak body in this particular space.

Overarchingly, climate change will of course impact the built environment, our infrastructure and buildings, but also our buildings and infrastructure impact greatly on climate change, both mitigation and adaptation, as you just heard. Particularly I reference 2008, where ASBEC produced the first of two iterations of what we called The second plank report. Through that investigation, we actually found that commercial buildings alone in 2008 were responsible for 23 per cent of Australia's emissions, so there is an enormous impact that the built environment has on Australia's emissions, and therefore the potential of reducing emissions in that sector is a very large lever that can be pulled in addressing climate change as a challenge for Australia more broadly. There was an updated report on that in 2010.

The built environment is intricately linked to climate change and sustainability more broadly across its life cycle, from concept. We'll often call it cradle to grave. In terms of the location and the decision to build a project, it's about what projects we decide to build in the first place and the governance arrangements around how we decide which projects to build. It's then about—when we've decided on an asset, whether it be a road or a bridge or a building—how it's designed. It can be designed with resilience in mind, or it can be designed stock standard. The design of the asset is important. The way that it's constructed, the materials used, and the methodologies and approaches to construction will impact the performance of the building with regard to emissions. Then, of course, it is how the building is used, or how the asset is used—a road or a bridge—and, in particular, how it's maintained because we need to recognise that these are very long-term assets. Our cities have been around for a couple of hundred years. Obviously, they'll be around for many hundreds of years henceforth, and we need to think about how we maintain those assets along their life cycle right through to decommissioning. We need to think about what the end of the life of that particular asset will be, and how that is recycled—whether the building be decommissioned, replaced or used for a different purpose.

The key decisions that we need to make—and, what I would say are five aspects that are key to addressing the climate change challenge for the built environment sector—are, firstly, to have joined-up policy. As you heard from the previous speaker, we have very disparate knowledge across the sector. ASBEC is a wonderful peak body that brings some of that knowledge together, and it's a really useful tool for sharing information, data, best practice and coming together to do some combined research. But we need much better joined-up policy through the Australian environment, whether that's through levels of government, between private and public sectors or with the industry more broadly—particularly, for example, as you heard, looking for proprietary information and how we can unleash that to the benefit of the broader Australian public. Joined-up policy is a real area of concern for us.

The second is the use of data and the limited amount of data that we have, but making that more readily available and thinking about how we can use the incredible capability that we're developing as a community to capture more data. One of the great challenges, particularly with a risk management response to climate change, is the fact that we don't know exactly what the end parameters are going to be. So an engineering risk management approach, for example, would be to say, 'Tell me what the end point is going to be, and I'll design for that end point.' But because we don't know what the end point will exactly be with regard to temperature rise, sea-level rise, extreme weather conditions et cetera because no parameters have been set at the upper limits, we need to take a precautionary approach rather than a risk management approach because we don't have a defined end goal. We need to think about using data to try and clarify those parameters that we're designing to.

We need to think about how we create methodologies for broader cost-benefit analysis so that we are taking into account resilience, mitigation and broader sustainability in how we design assets and how we measure and monetise, to a degree, those aspects of assets which are not direct financial consequences but broader sustainability consequences. We do need to think about our methodologies for broader cost-benefit analysis with regard to infrastructure and building assets.

We need to consider how risk is owned and properly managed in the design process. One of the great challenges for our sector in terms of design is that all of the risk is placed onto the designers. The designers are, to a degree, designing in a vacuum of knowledge because we don't know, once again, what the parameters are at the end that they're being asked to design to. It's like being asked to design a blast-proof building, but we're not going to tell you the megatons of the blast. So you are in a bit of a knowledge vacuum, and yet the liability and risk that is shafted down to the private-sector designers creates a real consequence of conservatism in approach with less than optimal outcomes. We need to think about how risk, and the risk of adaptation, is managed properly and owned in the sector.

Then, of course, we need to think about how it's going to be paid for. There's clearly an investment that is required to be made and yet, once again, it's almost an opportunity cost that you're paying for here. It's the cost of something not affecting you rather than paying for something when you know what the consequential direct effects are. We need to think about different ways of financing and funding the infrastructure and building assets, particularly the public infrastructure assets, I would say, with resilience in mind. There are some of the challenges that we see. Once again, I've thrown more challenges than solutions, unfortunately. I think that will be a theme of this inquiry.

CHAIR: There are five groups of challenges. You talk about the need for a national adaptation plan. That plan would basically be addressing these challenges?

Ms Motto : Yes. It's pretty clear that more work needs to be done in this area. We need to treat it seriously and we need to have a governance mechanism to be working through some of these very complex challenges. At the moment, we don't have a rigour around adaptation in the same way that, for example, we do with some of the other elements of sustainability that are much closer to mind and much shorter term. From Consult Australia's perspective, we definitely think that we need a national strategy and we need to think about a governance mechanism for being able to work through some of these challenges.

CHAIR: Do you have some thoughts as to what that governance mechanism would look like?

Ms Motto : Not necessarily. That's probably open for a little debate, but potentially an overarching community. I heard the previous speaker talk about the need for a task force or a group that's specifically put together to think about some of these longer term adaptation challenges. They are related to the mitigation challenge, but they're not the same.

CHAIR: In your submission, you talk about the Australian built environment design principles that Consult Australia has developed. Can you give us a bit more detail about those and where they would fit into that adaptation plan?

Ms Motto : Once again, because there is a myriad of data, of approaches, of definitions, of terminologies, we thought it might be quite useful to put together a framework so that everyone in the space is speaking the same language and looking through the same lens, to a degree. That's why we designed the principles, so that, when we are talking together with industry, both the public and the private sector, we're using some commonality of approach in terms of the steps that we go through to discuss some of these challenges and potential solutions. With our design principles, one might say they are actually pretty common sense and fundamental. The principles, as I said, are pretty common sense, one would think, but they do provide a framework for working through these problems and coming to some solutions. The principles ultimately are that any solution or any hypothesis that's going to be tested needs to show benefit to the community, so we need to maximise the skills and maximise certainly the value uplift of any achievement, productivity, environmental sustainability and social benefit. It needs to be beneficial. It needs to be usable and maximise the opportunities for involvement and inclusiveness, in particular. It needs to be deliverable. These are all very practical, as I say. It needs to support innovation, be able to be achieved and have a very sensible risk management approach, in particular. Then we need to make sure that whatever we're designing is accessible so that the benefits can extend to the full relevant stakeholders and community at large, and any of the solutions need to be authoritative, so they need to come from a place of common understanding and they need to be backed up by rigorous approaches.

CHAIR: You have put those principles out in the public space. They are out in the open.

Ms Motto : They've been very well received.

CHAIR: Is it going to be a big change in the way that buildings are designed, to follow these principles, or do you think that, overall, they're being followed but just not in a coherent and definitive way?

Ms Motto : I think that you've hit the nail right on the head, and that is that best practice is sometimes accidental. We've definitely worked through some of these principles in the past on projects, but not in a rigorous and stepped out way, so there are many projects that consider all of these principles, but there are a number of projects that don't. What we would say is that, if you have a process where you've got to think clearly about each of the principles, you'll have a better outcome. Often in the built environment space we rush to predesigned solutions that sit in someone's head and we don't always take a step back and think those solutions through from different perspectives, and what these principles really aim for us to do is to say, 'That's a great idea. Let's test it against these five principles and make sure that we're covering off in a holistic way, rather than an ad hoc way, all of the approaches that we should consider.'

CHAIR: Is it alright for the assessment against those principles to be voluntary? Or should there be some mandatory element to it?

Ms Motto : We would definitely like to see that. In fact, one of the recommendations is that the government endorse those principles and that we see a more comprehensive approach applied with regard to their being milestones that need to be ticked off in projects. Definitely, a more robust framework approach would be very beneficial.

CHAIR: One of your areas of where we need to be doing things better was the use of data. You said that data needs to be readily available. From the perspective of Consult Australia, can you expand on what the problems are with accessing that data?

Ms Motto : A lot of that data is held in disparate locations and places and by different authorities. So you've got some data that's held by local councils, some that's owned by private businesses and some that's owned by the different tiers of government—local government, state government, federal government—and having a platform for being able to access that data comprehensively has been challenging in the past. Currently, I sit on the cities reference group of Minister Angus Taylor. That group is bringing together some of that data, which is really useful, and I think it will be a great tool for both the public and private sectors to use going forward so that we can make informed decisions based on data that has been validated.

The other aspect of the data is the interoperability of the systems and that data being able to talk to other data. One of the other problems that we've got is just that we have so much data. Figuring out what we need, how to make use of it, how to make sense of it, how to analyse it in a way that's useful for us in designing the buildings and roads and rail of the future is going to be a great challenge—such as just synthesising the enormous amounts of data and figuring out what we need to be measuring on an ongoing basis, in particular with regard to things like temperature rise and sea level rise. We need to be measuring data. Of course, some of the trend data of the past will give us pointers to future scenarios, and that is useful, albeit, as I said before, we need to be thinking about scenarios we haven't yet planned for. The one-in-a-hundred-year storm is now becoming a one-in-every-10-year storm and so forth, so the future is certainly uncertain.

CHAIR: You mentioned the problem of data that's held in several disparate locations being hard to find it. How much of an issue is proprietarily-held data? Does there need to be more accessibility to that data if we are going to be managing and planning in an integrated way?

Ms Motto : I wouldn't say that the proprietary data has been problematic per se. What I would say is that, if some of that data were released in a meaningful way, it would create enormous opportunities for us to do more and understand more about what we're designing in the built environment. Having that data in—

CHAIR: Can you give some examples of what types of datasets we're talking about?

Ms Motto : It's performance of buildings—for example, of particular assets. The performance of maintenance in a particular asset might be owned by a state government or an agency within a government, and the use and performance of a road in one jurisdiction may well be helpful in designing a road for another jurisdiction. Sharing across agencies, sharing between the private and public sectors—that sort of information—will be very useful to the design sector so that we can use the lessons that we've already learnt on projects that we've already established.

The other thing that we need to do is actually capture more of the data. We don't do very good postproject reviews in this country. We don't look at what worked well and what didn't work well. There's often the risk of project reviews being sidelined because of the exposure they would give to something that could have gone better, particularly pointing to accountability of some individuals or agencies when things have gone wrong or might have gone better. The risk-averse nature of human beings means that we don't necessarily want those exposed, yet they can tell us so much about how to do things better in the future. So having a better approach to all aspects of post-project reviews would be really fantastic.

CHAIR: You talked about the difficulties where you don't know what the end point is. In terms of how best to respond to that, is it that we need more effort to make sure that Australia is doing its bit to not end up with the three or four degrees of warming that would be impossible to plan for?

Ms Motto : Absolutely. The other thing that it is going to require is leadership, particularly from government saying: 'We expect the industry to design to X. Above that, we're not going to hold you responsible because you didn't foresee an unknown future.' So I think that the government needs to show a little bit of ownership in particular as a great owner and deliverer of assets in the Australian jurisdiction. I think the government needs to take a little bit of ownership of where that line in the sand would be to give industry the certainty it needs to perform to a standard.

CHAIR: So then industry is able to say, 'Okay, we can cope with the risks, deal with the uncertainties and manage where the liabilities should be for two degrees of warming but, beyond that, all bets are off.'

Ms Motto : Correct. At the moment, you are seeing contractors using contracts with unlimited liability. That opens up an enormous exposure to the designer and they may say, 'When my liability is unlimited and I may be responsible for the entire capital value of the project, which my balance sheet finds very difficult to bear, then I will take a very conservative approach in how I design if you are not specifying the level to which you want me to design.'

Senator URQUHART: In your submission you talk about one of the key challenges being the need to find new sources of funding for infrastructure because of government budgets that obviously are constrained. Do you have any estimates about the amount of funding for infrastructure that will be required to address climate change in the next decade?

Ms Motto : I don't have those specifics. I would say to you that the answer to that is probably, 'How long is a piece of string?' It hugely depends on everything I have spoken about prior, which is how many of the assets we need to repurpose, how we need to change our planning and our integrated land-use planning, what areas we are going to decide to build assets on and where we are going to have no-go zones, for example. If you look at the Queensland floods it is a really beautiful example, because we keep designing to the same specifications even though we are replacing things that have been inundated by floodwaters now three times in a decade. We continue to rebuild to the same specifications on the plans. The cost is exponential if you are not really planning for the future, but it depends on what the parameters of the future look like and how bold you want to be in designing for it.

Senator URQUHART: I think you said in your opening statement that we don't know the parameters of the future. It is difficult. So how do you think we should address this issue of trying to move forward in terms of planning?

Ms Motto : As I said previously, there are so many smart individuals, particularly in the engineering and planning space that I work in. If you put them in a room they will come together with scientists, the CSIRO and other authorities, for example, and come up with their best estimations. It is then up to government through its purchasing power but also its management of risk as a major clients to then accept those recommendations and say, 'We will only hold you liable up to those specifications.'

Senator URQUHART: So you think there is some merit in something like a task force, research group or think tank—whatever you want to call it—and getting people with those different areas of expertise who may be able to look at those sorts of things going into the future?

Ms Motto : Potentially we'd be working with Standards Australia to look at the many thousands of standards that exist in the building and construction area and in the building code itself.

Senator URQUHART: Do you think we need new standards?

Ms Motto : There'll most definitely be—

Senator URQUHART: Would they replace existing ones or just be added on top of what we've already got.

Ms Motto : There'd be a combination. There are so many thousands of standards in the building and construction sector I imagine there would be a combination of those two things, that as new information comes to light standards would be upgraded. But that's the case: as technology changes the way we do things the methodologies with which we build change, as well.

Senator URQUHART: In terms of a timeframe, climate change is happening every day.

Ms Motto : Marching on.

Senator URQUHART: Marching on. How important is it for us to address this issue sooner rather than later?

Ms Motto : I would say it's critical to address it sooner rather than later, because the opportunity cost of doing something now is always going to be cheaper than waiting for another five years. It's a matter really of getting onto it and treating the issue very seriously. We don't really have a methodology for cost-benefit analysis that looks at resilience as an aspect of whether or not we design a particular road in a particular place. We need to be thinking about those considerations much earlier, in concept rather than adding as a bolt on: 'Oh, now we need to maintain that road because it's going to be covered by floodwaters every three years.' We need to think about it right at the design phase. With the enormous public infrastructure spends that are going on at the moment, if we could design all of those assets with resilience in mind today, that would alleviate any cost down the track.

Senator URQUHART: Is there a will to do that?

Ms Motto : There's a will from the sector.

Senator URQUHART: It needs to come from broader, doesn't it?

Ms Motto : I think the challenge is leadership more broadly—government leadership more broadly. Understanding the trajectory of when we need to be and how quickly we need to get there is really important. Certainly, the technical understanding is quite well advanced. We have a lot of very smart people in our institutions and in the private sector who are working very heavily in this space. It's a matter of understanding where the line in the sand is and the risks and rewards being appropriate to designing to those specifications.

Senator DUNIAM: There's been a lot of talk about future design and new builds, new infrastructure, but we can't escape the problem of existing infrastructure. In answer to Senator Urquhart you talked about houses that have been rebuilt three times after being inundated. What about those that haven't yet been inundated, that are at risk of being affect by a flood or some other extreme event? How do we deal with those items of infrastructure or private assets and who pays for them?

Ms Motto : It's always a great challenge, because it comes out of a maintenance budget. We've seen as much new infrastructure is being built, unfortunately, no-one wants to announce a nice big shiny budget for a maintenance project. It's not particularly sexy to cut a ribbon on one, quite frankly. So we need to think about how we up our maintenance budgets—this once again goes to the funding and financing issue that I described before—and making those assets a part of the solution rather than a part of the problem. We can do that through retrofitting, whether that be repurposing bitumen on roads or retrofitting buildings with increased insulation, better lighting, building fabric et cetera. There's a lot that can be done, but the real question is: who wants to pay for it? There's no nice ribbon to cut on a maintenance budget.

Senator DUNIAM: That's the public sector example. If you own a home and you have a choice between spending your money on a new pool or retrofitting your house, I would assume most households would go the pool—I don't know.

Ms Motto : Not me, no.

Senator DUNIAM: You've already got one!

Ms Motto : Insulation, every day!

Senator DUNIAM: That's the issue we're faced with. If it's a case of trying to bring the community to a point where they're protecting their assets to mitigate or adapt to a changing set of circumstances, particularly with reference to climate and weather events, how could government and industry play a role in educating and communicating—on bringing people on the journey?

Ms Motto : You've hit the nail on the head. The residential sector, in particular, dwarfs the commercial sector in terms of building assets—single-family homes and multistorey residential. The biggest challenge for bringing the community on board is two levers—information levers and financial levers. Obviously, as the cost of energy goes up and therefore is at the forefront of people's mind in terms of becoming more energy efficient, they can think about how their behaviour affects their energy efficiency but also look at products, retrofitting, insulation, more efficient lighting, changing their lighting to LED, more modern heating systems—all of those things come into play. The real key is creating the right information channels and modes so that it resonates immediately as something that is a longer term issue. For example, if only I had an app where I could say, 'It's going to cost me this much to insulate my house, but the saving I will make over a dividend period of five years will be X.' We need more tools that help the general community make better decisions about what they spend their money on and how they invest. That information asymmetry is quite challenging. Even very simple things—energy companies, for example, could put a smiley face on the bill and say, 'You're a good energy efficiency household.' They could compare you with your neighbours or with households of similar consumption to you and say, 'Another four-person household is using this much energy, whereas you're using that much energy,' and you say: 'Gee whiz, clearly it's doable for my family to use less energy. Let's think about how we do that.'

Senator DUNIAM: Thank you very much. That's helpful.

CHAIR: Ms Motto, given what we know now about what the impacts of climate change with two degrees warming are, are we currently designing infrastructure to meet those challenges?

Ms Motto : Not all of it—some of it, yes. We've got some agencies that are well advanced in their thinking and that are having their infrastructure projects, for example, designed with the Infrastructure Sustainability Council rating tools in mind and are doing great things to think about everything from the embedded energy of materials right through to the aspects of design I was talking about with regard to where the asset is and how highly elevated it is and all of those things. But then you've got a lot of spend still that is just building the basic road or just building the basic building. So there's a huge dichotomy in the industry.

CHAIR: Have you got examples of which specific sectors or segments are currently doing it well and those that are not?

Ms Motto : We don't really have any data on comparability of sectors. We do know that, for example, the water sector is well advanced in its thinking, because it tends to be more at the forefront of the challenge of climate change, whether it be extreme drought or extreme flooding. Because water has an immediately visible impact and is impacted, that sector tends to be well advanced in its thinking and a little bit more sophisticated. But, across all asset classes, I would say to you that there are leaders and laggards.

CHAIR: And basically we haven't got the regulation or the framework to ensure that all sectors are doing what's necessary as yet?

Ms Motto : Indeed, and the knowledge isn't consistent across all of the sectors, nor is it consistent across agencies or departments or jurisdictions or markets.

CHAIR: How about state infrastructure projects? How well do you think they are doing?

Ms Motto : I couldn't answer definitively. I would say to you that most of the state agencies are reasonably well attuned. However, not all states have a very rigorous cost-benefit and particularly broader cost-benefit analysis approach to deciding on their infrastructure. One of the things we're great advocates for is the independent I bodies model—Infrastructure New South Wales, Infrastructure Victoria. Those bodies are really tasked with thinking about these projects holistically, which is very important, and we're great advocates of that approach and in fact are advocating it in jurisdictions that don't currently have those bodies.

CHAIR: Do you think that, where those bodies exist, they are doing a sufficient job to be really incorporating—

Ms Motto : They are doing a reasonable job. I would say to you that there is no currently held, well-defined, replicable methodology for calculating, for example, climate change risks to assets and then building that into the current cost-benefit analysis process. It's one of the challenges.

ASBEC also did a piece of work on infrastructure cost-benefit analysis and how we develop methodologies for broadening the cost-benefit analysis approach, and it did so in conjunction with many of the state agencies and the infrastructure bodies. There's still a piece of work to be done to have a methodological approach for doing that on an ongoing and repeatable basis. So consideration is being given to this but there isn't a defined approach per se.

CHAIR: It sounds like what you're saying is that you'd end up with an economic assessment methodology that is different to what is currently in place.

Ms Motto : Indeed.

CHAIR: One of the issues is where you've got discount rates and the benefits of something in 10 years time basically don't count. But when it comes to dealing what those impacts are going to be, we know that they should be counting more.

Ms Motto : Yes, that's right. Often a cost-benefit analysis is defined by a forward estimates period or potentially even an election cycle, and the benefits from infrastructure are 30, 40 50 or 100 years. And, of course, the impact of climate change—

CHAIR: And building with infrastructure in a way that deals with the impacts of climate change.

Ms Motto : You've talking about an undefined monetary impact and an undefined period of time, which is a potential to happen, and it's too far beyond anyone's thinking to really take consideration in a current cost-benefit analysis approach.

CHAIR: How far off do you think we are in having a good methodology for determining a cost-benefit analysis?

Ms Motto : I would say a reasonable way off. There's a lot of work that needs to be done.

CHAIR: Who is working on that now?

Ms Motto : As I said, we've worked with Infrastructure Australia, and they have been looking at this issue. But it is not an issue that is only defined in Australia, of course. Working with other infrastructure agencies around the world, I have done a little bit of research and there is no methodology that exists and is well accepted by the community globally. So we really are starting from a bit of a blank slate in terms of trying to create such a methodology.

CHAIR: Thank you very much for your evidence today, Ms Motto.