City Of Melbourne Amendment (Environmental Upgrade Agreements) Bill 2012

I have pleasure in rising to make a contribution on behalf of the opposition to the debate on the City of Melbourne Amendment (Environmental Upgrade Agreements) Bill 2012. I indicate at the outset that the opposition will be supporting this bill, because this was a bill, as members will recall from the history of it, that was an initiative of and represented a partnership between the City of Melbourne and the Labor state government to undertake quite an ambitious program of refurbishment of commercial buildings within the Melbourne municipality.

The state government was approached by the Honourable Robert Doyle, the Lord Mayor, seeking its support for this initiative as part of a broader package of initiatives that the City of Melbourne was seeking to implement. That package was to lead, I am advised, to the quite ambitious target that the city would be carbon neutral by 2020. It is a fantastic ambition, it is a fantastic target and it is fantastic leadership by the Lord Mayor.

This particular refurbishment program of 1200 commercial buildings is merely part of a broader suite of strategies that the city council has been seeking to implement. As members will be aware, this was, as I indicated, an initiative that was initially passed through the Parliament when I was the Minister for Local Government. It was dealt with expeditiously and in a bipartisan way because I think the then opposition, now the government, was also very supportive of this initiative.

What we have found in its implementation is that a number of issues have arisen. That is in some respects not surprising. There are two aspects to this bill. The first is to resolve a problem that the Melbourne City Council has identified and indeed has approached the government to rectify — that is, as I am advised, that in the order of 40 per cent of commercial buildings in the city of Melbourne are held in trust arrangements. I will come back to how the tripartite arrangements for the establishment of environmental upgrade agreements occur, but in broad terms what we have is a situation in which about 40 per cent of commercial properties are held in trust arrangements. Not surprisingly, some of those are very substantial trusts. Many are owned by superannuation funds or other various forms of investment vehicles, and there are a number of circumstances in which private individuals own these properties and have owned quite a suite of them over a long period of time.

The difficulty the city council has confronted has been in seeking to have clarity and transparency in the financial arrangements of these trusts. In a trust arrangement there may well be a whole different set of financial instruments that the trust employs to go about its business, and it has proved difficult for the city to engage with these trust arrangements where they are in effect part of a conglomerate.

What the council is seeking through this amendment is a clear and transparent way in which it can engage with and reach an agreement with the property owner. For the property owner that would be by way of a statutory declaration — in some respects not dissimilar to what we do with residential properties, whereby you declare the particular circumstances that you find yourself in — so that from the points of view of the buyer and the seller, people are very clear about any encumbrances that may be over a property. In the residential context it is things like road widenings and any orders that might be on the property, so it is analogous to that: there will be a requirement upon the property owner who seeks to engage in an agreement with the city and the lending institution that they provide a statutory declaration as to the financial circumstances of the building they are seeking to upgrade.

I think that is entirely proper and entirely reasonable, because nobody wants to be in a situation, particularly the lending institution and indeed the city itself as one of the co-partners, where the property owner has an indebtedness which is clearly above and beyond their capacity to repay it. It is in that context that the original tripartite arrangement was put in place. It is a very clever proposition: you have the City of Melbourne, which is in effect, for the sake of this debate, a sponsoring body of this initiative; you have a number of lending institutions, and in this circumstance the National Australia Bank was the market leader, but by no means is it the only financial institution that has taken an interest in this particular environmental initiative; and of course you have the property owners themselves.

I am advised by the department there have been three environmental upgrades to date. They are properties in Queen Street, Melbourne, 460 Collins Street, Melbourne, and 100 Dorcas Street, South Melbourne.

I thank the department for that advice and for the usual courtesy and thoroughness of its briefing, and I thank the minister for the timely arrangement of that briefing for me. However, I think there is quite a challenge ahead: we only have three properties on the books to date and the council has a very ambitious target of 1200 properties it is seeking to have renovated.

In addition to the environmental outcome that the council and indeed the property owners are seeking to deliver, from the point of view of the tenants the whole concept is to also lower the running costs of these properties for them. That it is what is called a win-win situation. You get the environmental upgrade of the building and you get a lowering of costs for the owner of the building, but you also get a lowering of costs for the tenants of the building, and it is a much better environmental outcome for the tenants as well.

The City of Melbourne really has led some of this debate in terms of the environmental design of its buildings. Members will well recall Council House 2, which is the City of Melbourne’s 6-star — at least — commercial office administration building in Little Collins Street, Melbourne. It is some years old now, probably seven or eight years old, but at its time it was right out there on the cutting edge of environmental design, including everything from greywater recycling to different forms of heating and cooling of the building. It was a very interesting design of the building by the city.

I think one of the more interesting aspects of it was the outcome for the staff working in the building. The council had the interesting ambition of ensuring that the building and its environment were themselves healthy, so that that would decrease illness and absenteeism, particularly in the winter months when you have recycled air conditioning and so forth, which often leads to a spike in absenteeism and illness.

Some of the advice I am aware of is that there has been a very significant reduction in absenteeism and illness at the city due to this new environmental design. I think that is an excellent outcome.

I have been to a range of council buildings right across the state, and I am sure the minister has visited many of them, where local government not only has taken up the cudgels but has in fact shown some fantastic leadership in saying, ‘We think it is right and proper that local government should show leadership — —

Mr Foley — What’s a cudgel?

Mr WYNNE — The member for Albert Park.

The ACTING SPEAKER (Mr Languiller) — Order! The member will continue.

Mr WYNNE — What do you do, Acting Speaker?

The ACTING SPEAKER (Mr Languiller) — Order! And he will ignore the member for Albert Park.

Mr WYNNE — If he doesn’t know what a cudgel is, I’ll help him out a bit outside later. Perhaps he needs a bit of a cudgel.

An honourable member — A cuddle.

Mr WYNNE– I said ‘cudgel’. He has completely thrown me now. Where was I?

The ACTING SPEAKER (Mr Languiller) — Order! Even the Acting Chair would be interested in knowing.

Mr WYNNE — He is supposed to help me; what does that tell you?

Local government I think is playing a fantastic role. You can point to numerous examples right across the state where councils are right out there on the cutting edge of design when they are redoing their municipal buildings and right out there in a leadership role saying, ‘It is incumbent upon us as local governments to demonstrate these things to our local communities in the construction of our new buildings, particularly our administrative buildings’.

Often they are contested spaces where citizens ask, ‘Why are you building these new buildings for your administrations?’ and so forth, but councils can demonstrate that they are showing leadership and that clever building design and sensitive environmental outcomes really ought to be part of the broader landscape and conversation for local government more generally. That leadership role I think is a really important one that councils need to play and in fact are playing.

In relation to the actual financial mechanisms of these environmental upgrade agreements, I have indicated that they require a statutory declaration from the building’s owner. Essentially the proposition is that you have the city, the financial institution and the building owner. Because the council garners — —

Honourable members interjecting.

Mr WYNNE — I am assisted by the government. I am advised that a cudgel is a ‘short, thick stick used as a weapon’. Thank you so much. I thank the minister at the table, the Minister for Gaming, for his contribution. I maintain my position that the — —

Mr O’Brien interjected.

Mr WYNNE — A shillelagh? Yes, I have a shillelagh at home, which is used for a number of persuasive purposes. It belonged to my father.

The financial mechanism is quite important, because the financial instrument is underpinned by the City of Melbourne in terms of its capacity to garner the repayments. In fact there is a security over the property, and the financial instrument made available to building owners is very sound. We think that is a very important thing.

Because there is such a strong financial underpinning of it, I am advised that there is a capacity for there to be a slightly better rate of borrowing than might be offered on the commercial market; obviously that becomes an incentive to the building owners as well. I am not absolutely clear what that differential rate might be for the building owner, but when this is taken up in a much more systematic way presumably it will become an attractive proposition for building owners.

We very much hope this initiative will be taken up by more than the three building owners who have already done so. Yes, 1200 is an ambitious target, but we applaud the city for setting that ambitious target. Through this amendment today we hope we can smooth out the process and facilitate the meeting of this ambitious target.

I turn now to a second aspect of the bill.

In the second-reading speech the minister stated that the bill also amends section 5 of the City of Melbourne Act 2001 ‘to remove a conflict with section 6C, which was inserted by the City of Melbourne Amendment Act 2011’. That is very nicely put, it is very elegantly put. Can I say — —

Ms Beattie — You can say anything you like.

Mr WYNNE — It is so eloquently put that some of us might argue that it is somewhat obscure. But the bottom line is that there has been a mess-up with section 5. There has been a mess-up somewhere between — —

Mrs Powell — Are you seeking to offend parliamentary counsel?

Mr WYNNE — The minister at the table, the Minister for Local Government, asks if I am seeking to offend parliamentary counsel. No, I am not. Potentially there are three culprits in this section 5 matter: it is either the department, parliamentary counsel or — heavens above! — it is the minister. I do not know who it is; it is one of the three — or it could be all three. But we will acknowledge the fact that we have a problem with section 5, which the minister in the second-reading speech suggested is a conflict. As members will recall, the minister moved an amendment last year to bring the Melbourne City Council into any decision made by the Victorian Electoral Commission. It brings the Melbourne City Council back into the broader remit of the Local Government Act 1989 and, through an order in council, the minister of the day would be able to agree to the recommendations of the VEC in relation to the current review of the City of Melbourne.

As is my wont, I have had a look at the nature and form of some of the submissions to the VEC, which are published on the website. The closing date was only a very few days ago — submissions closed on 23 February. As I recall, the public hearings will be held in about a week’s time when people can go along, speak to their submissions and argue their case. Members of the house will be aware that this is a pretty hotly contested matter. I must say I was a bit surprised that there were only about a dozen submissions; I thought there might have been more. As we would expect, a number of community organisations and resident associations made submissions to the review. That is how it is. It was an open process and a good one. People have had an opportunity to have their say.

The VEC will deliberate on them.

A number of options were put forward by the VEC — as I recall five or six options were put forward, ranging from the current position, the unsubdivided position, which is the current arrangement with the City of Melbourne, through to a number of others. Obviously the minister will receive the report some time in March, deliberate on it and make a decision in relation to the VEC’s recommendations to her.

I should acknowledge that the current arrangements for the election of the Lord Mayor and the deputy lord mayor remain the same, which I point out is different from the circumstance with the City of Greater Geelong. The Geelong circumstance is different from that of the City of Melbourne, and we await with interest the opportunity to see how the City of Melbourne elections roll out at the end of October this year — and indeed how the City of Greater Geelong elections unfold at that point.

But I acknowledge that the stability of the Melbourne City Council was, as I have previously indicated, enhanced by the election process that we have in place at the moment. However, I also acknowledge the significant tension that exists with a number of resident groups and a number of residents feeling there is a lack of attachment to what we would always have understood to be the ward councillor — ‘This is my ward councillor. This is the person I go to when I need to have some of my local concerns addressed’. This is a fundamental tension that both the VEC and the minister will need to grapple with.

Those who remember the history of the City of Melbourne will recall that we have tried a range of different propositions over the journey. We have had the unsubdivided arrangement for some years now and we have had the cocktail of some councillors being elected through wards and some being elected at large. I do not think there is a particular formula that is a magic bullet to solve this conundrum.

My plea to the minister is that she listen to what I think are very genuine concerns raised by residents who say, ‘Yes, it is important that we have stability and good governance at the City of Melbourne’, but express concern about a lack of connection. I would argue that good governance is not precluded by seeking to address the question of wards and the question of how that fundamental relationship between ratepayers and their elected representatives is established, because I think there is an argument — and there is evidence now to suggest this — that the councillors, because they are elected at large for the whole municipality, do not have a particular and specific relationship to their wards. Frankly, the way portfolios have been divided up has resulted in councillors working essentially on a portfolio basis.

There is nothing wrong with that, but it does suggest that the crucial day-to-day interaction that is required in dealing with a whole range of ward issues for residents, small businesses and large businesses has taken a secondary role to that of — to put it in context — the broader senatorial-type role that attends to the current structure. That is quite a difficult issue, and I acknowledge that I do not think it is easy to resolve. It is quite a contested space, and one has to try to balance out some competing demands. But it is not impossible to do so, because if you look at some of the proposed options that have been put forward by the VEC in terms of different structures, you see it has sought to try to address this question, particularly in relation to the establishment of a central city ward.

Certainly in my former life at the Melbourne City Council there was a clear understanding that elected councillors in that central city ward came almost exclusively from a business background or had a particular interest and commitment to the central city itself, which is not to say that those councillors from residential wards, like me, did not also have the same interest in the broader aspects of the governance of the city and the CBD itself.

This is not an easy task for the minister. It is a difficult task to balance up those competing demands, but the opportunity to do so will present itself in March or April when she will receive the VEC’s recommendations as to how she will seek to balance out those competing demands. In that broader context it is worth acknowledging that the stability of the council can be maintained, and we should not forget that at the City of Melbourne both the mayor and the deputy mayor, whoever those candidates may be, are essentially elected on a ticket. It would not be unreasonable to assume that even in a ward structure a number of councillors may choose to go on to that ticket, or at least be supported by a ticket, and get themselves elected. I do think there are the possibilities they are in a ward structure — —

Mr Newton-Brown — Which bill are we on?

Mr WYNNE — It is a delight to hear the member for Prahran. As always he is up to speed on these bills. Perhaps I will — —

The ACTING SPEAKER (Mr Languiller) — Order! The member for Richmond will ignore interjections and continue making his contribution.

Mr WYNNE — I will ignore the interjections, because the member for Prahran obviously has read the bill in great detail!

If he had actually read clause 5 of the bill, he would know that it goes specifically to addressing the powers of the minister to implement the recommendations of the VEC in relation to the current review of the City of Melbourne. It is always good to see the member for Prahran up to speed, on the job and fully briefed on the bill! I very much look forward to his contribution, because obviously he has done a lot of work, as he usually does, in understanding what is going on here in the Parliament! It is all a bit of a mystery. He has only been here 10 minutes, and he will only be a oncer. He will only go around the block once, but that is all right. He can have a bit of fun on the way around. He will only be here as a oncer but that is okay.

Mr O’Brien — You reckon? Do you want to take a bet on that?

Mr WYNNE — I can guarantee you on that one.

Honourable members interjecting.

The ACTING SPEAKER (Mr Languiller) — Order! The member for Richmond will resume his contribution.

Mr WYNNE — Speaking specifically on the bill, as I have been for the entire time of my contribution, I say that for the minister this is going to be a very interesting couple of months in trying to address the question of how to manage these competing demands in relation to the City of Melbourne, and this goes to the very heart of clause 5 of this amending bill.

In conclusion, we support this bill. It was proposed by the previous government, and I am very pleased that the minister has continued to take up this very important initiative by the city. I commend the Lord Mayor and the councillors.

This has been an important initiative and important leadership has been shown by them. It is an ambitious target — 1200 buildings — but it would make a fundamental difference to the way our city operates. If we could find ourselves in a circumstance where 1200 of our major commercial buildings were renovated, refurbished and brought up to 6-star or 7-star environmental standard, it would show that yet again Melbourne is at the cutting edge of leadership on environmental outcomes. It is a very ambitious target to be carbon neutral by 2020.

My colleagues who will speak after me will indicate in their contributions what we regard as some of the very significant deficiencies of this government in relation to the built environment, and indeed the natural environment. We believe the government’s performance in this area is a fundamental deficiency and one we would seek to hold the government accountable for. This is an important initiative.

We support this amendment, and we wish the bill a speedy passage.