Pathways for a Just Transition in Melbourne's Built Environment

As the necessity for urgent climate change action is increasingly recognised, what constitutes a ‘just transition’? How can we embed socially equitable climate action into policy and practice? And what does this mean for affordable and sustainable housing provision?

These big questions cannot be answered by singular disciplines or industry sectors. A holistic, interdisciplinary approach is needed. These questions were the focus of a University of Melbourne led research project, Climate Action and Social Justice in the Built Environment for Melbourne, Australia. This research was funded by the Institute for Human Rights and Business (IHRB) as part of a global research project: Building for Today and the Future being undertaken in Prague, Lagos, Lisbon, Melbourne, Copenhagen, Jakarta, Athens and Valparaiso.

The project involved key stakeholders in the planning and development of housing, including representatives from local and state governments, academia, the private sector (developers, architects, urban planning and engineering firms), non-governmental organisations and financial institutions in Melbourne. Through interviews and an in-person workshop, built environment stakeholders were tasked with responding to the challenges of urbanisation, housing affordability, and the need to advance the city’s transition towards (social and environmental) sustainability.

Why is a just transition needed in Melbourne?

One of the most significant human rights risks identified for Greater Melbourne is limited access to adequate housing. Greater Melbourne is Australia’s fastest-growing city, with the population projected to increase from 5 million to over 8 million by 2050. Melbourne is facing a housing crisis, with the city now the 8th most unaffordable housing market in the world [1], and Victoria’s residential sector also responsible for 30% of the state’s CO2 emissions [2].

Melbourne’s housing crisis is also necessarily linked to Melbourne’s climate action. Australia is a signatory to the Paris Agreement, committing to zero net carbon emissions by 2050. Meeting Melbourne’s housing needs must intersect with urgent climate action if Australia is to meet its zero net carbon emissions targets.

A 'just transition' involves a series of aligned and coherent climate actions that effectively fulfil both environmental and social purposes:

• A transition to an ecologically-conscious model that allows societal development within planetary boundaries
• Ensure the benefits of that shift are equitably spread and enjoyed throughout the population and that its costs are not borne by traditionally excluded or marginalised groups [3].

Through this framework, the research identified key priorities for a just climate and housing transition: the right to adequate housing and the right to energy-efficient homes for Melbournians.

The right to adequate housing

In ensuring people have access to affordable and adequate housing, discussions amongst our research participants focused on the lack of a national bill of rights, relying only on the Constitution and legislations by the Commonwealth Parliament or State/Territory Parliaments. This was understood to result in a patchy and disjointed commitment to the right to adequate and affordable housing for Australians.

Contemporary housing policy and government actions such as the National Housing and Homelessness Agreement, which has been deemed “ineffective” [4], fail to respond adequately to the research and evidence base. According to the Australian Housing and Urban Research Institute (AHURI), new housing often replaces lower-priced housing stock, which does not improve the situation for low-income households. This can be seen in programs such as Victoria’s Big Housing Build; an approach which involves demolishing public housing towers and other public housing stock to replace it with a mix of public and privately sold apartments. This means a percentage of public land is privatised, with an associated reduction in public provision of housing. There is an important, ongoing and urgent need for government provision of public housing, yet models that involve privatisation potentially reduce or undermine government’s essential role.

The right to energy efficient homes

Climate policies within Melbourne intersect with the delivery of housing, but often fail to fully address the range of issues that lie at the intersection of housing needs and climate action. Climate policies often focus on new builds rather than the performance of all existing housing stock. This has resulted in the benefits of energy-efficient homes mainly being for new not existing buildings, homeowners not renters, and high-income not low-income residents. This risks climate policies perpetuating or reinforcing the existing inequalities already present in the housing market.

Incentives rather than regulation – ‘carrots’ rather than ‘sticks’ – have largely been the mechanism policymakers have used to drive energy efficiency in housing. The lack of comprehensive regulation across the building lifecycle – on financiers, including private equity, real estate investment trusts, developers, builders and the supply chain – is a key factor in slowing the transition towards energy-efficient homes.

The National Construction Code (NCC), the major regulatory approach, includes minimum standards for Environmentally Sustainable Design (ESD), and the standards have recently been increased to require a minimum 7-star National Housing Energy Rating Scheme (NatHERS) rating. However, the process for recalibration and increasing the NCC’s minimum standards is slow, leading Australia to lag behind global standards.

Opportunities for Melbourne's just transition

The multi-stakeholder approach taken through this research points to 6 key opportunities that could support Melbourne’s just transition for housing:

1. Introduce inclusionary zoning

Many stakeholders highlighted the need for inclusionary zoning to apply to all new developments across Melbourne. Inclusionary zoning is the mandatory inclusion of a percentage of social or affordable housing in all new builds, to ensure that development delivers for diverse housing needs. In cities where this has been used, 5-20% of new development is allocated for affordable housing or sold to the state for public housing. With Melbourne being Australia’s fastest-growing city, introducing inclusionary zoning would allow for the delivery of affordable housing to be coupled with all new developments.

2. Update the National Construction Code (NCC)

It is essential that the NCC is updated to meet the energy standards required for a zero-carbon future, as most buildings constructed today will still be in operation in 2050. The NCC should address both environmental standards and social sustainability standards set out in the Dignity by Design Framework developed by the Institute for Human Rights and Business (IHRB).

3. Refurbish for energy efficiency

The City of Melbourne has recognised that at least 77 buildings need to be retrofitted each year to meet its CO2 reduction targets [5]. Estimates suggest that in 2040, 90% of the housing stock will be made up of buildings that already exist today. Through refurbishing or retrofitting for greater thermal mass, energy efficiency and human comfort, housing stock can be retained and embodied energy (associated with existing building materials) can remain low.

4. Foreground energy justice in local government policies

The costs of retrofitting can contribute to socio-economic disparities, as interventions for energy improvements (i.e. solar panels, electric hot water systems, heating and cooling system upgrades) can create a cost barrier. Renters have little capacity to initiate these changes to their homes, though they typically will be the ones bearing the energy usage costs.

A just transition to net-zero carbon emissions would ensure that the most vulnerable households are not disadvantaged further. In addition to understanding the housing dimensions of energy stress, it is also necessary to focus on sustainability beyond the dwelling, for example accessibility to public transport, health, education and other services. Housing and climate programs devised today should ensure that lower-income households are prioritised to ensure policy interventions do not disadvantage these groups further.

5. Densify within existing infrastructure

As Melbourne expands, new dwellings are being constructed in peri-urban areas with poor access to transport and services. By increasing the density of established suburbs, residents can access existing public transport networks and local amenities. Plans to meet sustainability and liveability goals within the urban growth boundary should be combined with other social programs and city government engagement, to strengthen a sense of community in changing neighbourhoods.

6. Diversify housing and tenure

In the delivery of housing in Melbourne, there have been two 'missing middles' identified:

• A lack of housing typologies between a detached house and high-density apartment blocks
• A lack of tenure models between government-funded public or social housing and developer-led housing for the private market

Melbourne would greatly benefit from a broader range of housing typologies and tenure models that would help increase diversity, especially in peri-urban areas. For the government, one suggested solution was to create a cross-subsidy model for government-owned mixed-income housing that could enable the government to provide and manage housing for a broader section of society.

Roles and responsibilities towards a just transition

How can we together address both climate and housing crises in a way that maximises socially positive outcomes for current and future populations? Findings from our research focused on three key domains for future action - research, policy, and finance, as well as the power of collaboration between by governments, developers and financiers, and researchers to unlock opportunities for a just transition.

Research

Utilising research in the development and application of housing policies is critical for evidence-based rather than market-led policy. Research can provide the evidence base to demonstrate how increased investment in social housing and infrastructure can generate tangible long-term benefits across society. 

Policy

Updates to policy specifications - both mandatory requirements for minimum energy standards (in the NCC and through NatHERs) as well as voluntary rating tools such as Green Building Council of Australia’s Green Star, paired with financing mechanisms such ashousing impact fees, subsidised loans and grants, land banking and land trusts, and rent control or rent stabilisation, may unlock substantial opportunities for affordable and climate just housing provision.

Finance

Investors, lenders, and financiers can prioritise financing for affordable housing projects that incorporate energy-efficient and sustainable features. Financial institutions can contribute to environmental stewardship and lower operating costs for affordable housing properties by incentivising energy efficiency and sustainability. Likewise, a focus on options for low interest loans and flexible financing options, such as longer loan terms or deferred repayment schedules, to accommodate the unique financial challenges of affordable housing projects could promote the sustainability and long-term viability of affordable housing initiatives.

The provision of property tax exemptions or rebates for affordable housing developments or properties could be dependent on the inclusion of more sustainable features. Property tax incentives could encourage developers to deliver affordable housing projects and increase their financial viability, encouraging the construction of more affordable and sustainable housing options. Financial incentives for retrofitting and repurposing existing buildings, and disincentivising demolitions could drive an increased focus on diversifying housing options and improving existing stock.

What next?

The response to Australia’s housing crisis must intersect with climate action to achieve Australia’s net zero carbon emission targets in a just way. Collaboration between governments, financiers, developers and researchers provides opportunities for innovative responses to underpin a just transition – a transition that is increasingly urgent and requires deep changes and everyone’s contributions.

Project researchers included Natalie Galea, Judy Bush, Dan Hill, Joanna Tidy and Lucy Lyon, from the University of Melbourne, Faculty of Architecture, Building and Planning, in partnership with Alejandra Rivera from the Institute for Human Rights and Business (IHRB).

Climate Action and Social Justice in the Built Environment for Melbourne, Australia

Dignity by Design Framework