Energy efficiency for residential buildings: Nathers heating and cooling load limits Consultation ris

Appendix AGAssessment of Market Impacts

The likely impact of the proposed options is explored in this section.

Section 4 examined the costs and benefits of the proposed options; this section contains an assessment of whether market dynamics would be significantly altered by either of the options is provided. Some questions that are explored include:

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  Will the type of services offered by industry significantly change?
  
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  Will the number of businesses that offer services change?
  
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  Will competition between businesses alter?
  
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  Will compliance costs for business increase?
  
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  Will consumers be impacted in areas of choice, cost and market power?
  

These questions are best addressed with an understanding of the operation of the housing market – this context is provided below in Section 5.1.

AG.1Market Circumstances

The ABS report that there were 209,783 businesses in 2011-12 making up Australia’s construction industry. 25,686 of those businesses were mainly focused on residential building construction. A much larger number of businesses provide a huge variety of construction services. There were 172,697 businesses providing construction services to residential, non-residential and heavy construction firms in 2011-12. These services include carpentry, HVAC technicians, civil works contractors, etc along with design services such as architecture, drafting and energy assessments. The vast bulk (97.7%) of these businesses employed less than 20 people but accounted for about 49% of income. ⁴⁶

The general market landscape can be seen to be one of very many companies offering a wide range of building services, yet a relative few larger companies are managing to capture a significant portion of the market.

In the residential building market there can be considered, in general terms, to be five supply chain models that deliver designs and homes. These in practice often overlap, even within a single firm, but for simplicity’s sake are presented separately below.

Appendix AHLarge “one-stop shop” firms (employing 20 people and over) delivering non-customised project homes

This supply chain model offers a complete design and construction service with a single contact point to the customer. The customer normally selects from a wide selection of existing designs and the firm takes care of all aspects of the design and build. These large firms employ designers, either in-house or on a contractual basis when designs/offerings are refreshed. However, the customer does not have a direct relationship with the designer or energy assessor (or electrician, plumber, etc). Designs are not altered significantly on a customer by customer basis.

Appendix AIApartment developments

This supply chain model generally develops an apartment building in isolation from the end customer. A market niche (e.g. high, medium or low end) is identified, then designs are developed according to the intended niche. The customer can select a particular apartment, but has no direct influence on design.

Appendix AJLarge and medium one-stop firms delivering both non-customised and customised project homes

This supply chain model similarly provides the client with a single liaison point, but offers designs that can be customised according to client wishes. Here a customer might select Design X, but then elect to make various changes to better suit their priorities.

Appendix AKSmall and medium firms delivering individually designed homes

Another supply model is where the customer deals mainly with the builder, but a largely customised design might be developed in collaboration with the client by an architect, designer, draftsperson + energy assessor (or some combination of these).

Appendix ALOwner builders delivering individually designed homes

This model also delivers individual designs where the owner-builder manages the design and construction of their own home. The designs might be developed by the owner builder in collaboration with a designer or energy assessor or they may out-source the design to an architect/designer.

Each of these models can deliver homes that exhibit the problem of very poor heating or cooling load performance. However, non-customised project homes and apartment developments are most at risk. In both these circumstances there is a risk that designs that are well-suited to a certain aspects and climate zone will be sited with different aspects or climate zone. There is also a risk that design changes, such as roof colour will be made without proper consideration of the impact upon thermal performance.

AL.1Impact on the Construction Industry

The overall impact of the proposed Options A and B on the make-up of the construction industry, is expected to be negligible.

The intent of both options is for the construction industry generally, and designers/assessors specifically, to focus on both heating and cooling loads. The designers would then be expected to be in a better position to directly and indirectly (depending on the supply chain model) explain the ramifications of design options and changes to their clients.

The quantity of design work and the delivery of design work would not change under either option to address the problem.

AL.1.1Impact on Competition

Similarly, neither option is expected to have a significant influence on the levels of competition. It is certain that competition would not be reduced by either option.

It is possible that the heightened requirement for precision and clarity combined with improved information quality under Option A would enhance competition. Generally speaking, effective removal of information barriers allows markets to operate more efficiently. An example might be that the “customised” supply chain offerings may offer greater competition to the large-scale non-custom offerings. However, there are a great many factors at play in the construction market that have greater influences on the extent of competition, so a large impact is not anticipated.