The Strata Schemes Management Amendment (Sustainability Infrastructure) Bill 2021 was passed on 16 February 2021 and received assent on 24 February 2021, thereafter becoming the Strata Schemes Amendment (Sustainability Infrastructure) Act 2021. The new provisions on sustainability infrastructure have been inserted into the Strata Schemes Management Act 2015 and are in force. You can read more about what sustainability infrastructure is and how installing it has been made easier in Allison’s previous blog post here. This article will focus on the pros and cons of the new provisions.
The new provisions are a good effort in the fight against climate change, especially given the rapid growth of strata schemes in New South Wales. By switching to renewable energy sources, there will be a reduction in air pollution, greenhouse gas emissions, environment footprint, carbon footprint and waste while providing power and water to lots and common property more efficiently and cleanly.
The use of renewable energy should also result in a reduction of power and water bills which would mean a saving to owners corporations and lot owners in bills for the common property and individual lots.
The main concern with switching to sustainable infrastructure is the cost factor – this includes the installation costs, running costs and maintenance costs. The affordability levels of lot owners in strata schemes will obviously differ, and what is affordable to some lot owners will not be affordable to others. This could be especially worrying given the reduced votes required to pass a sustainability infrastructure resolution.
The new provisions address this to some extent by requiring an owners corporation to consider certain factors before approving a sustainability infrastructure resolution. These are – the cost of the sustainability infrastructure and works including any expected running and maintenance costs; who will own, install and maintain the sustainability infrastructure; the extent to which the use of the sustainability infrastructure will be available to all or some of the lots in the strata scheme; and any matter prescribed by the regulations. These requirements direct the owners corporation to consider essential matter such as costs and will assist the owners corporation in making an informed decision. Ideally when considering the cost of sustainability infrastructure, owners corporations should also consider the financial implications on all lot owners.
Further, Mr Kevin Anderson, the Minister for Better Regulation and Innovation, noted the concern expressed in respect of the potential impact on owners who are experiencing financial hardship during the second reading speech for the Bill and stated that the Government will monitor the impact of these changes to ensure they do not have adverse impacts on owners. He also noted that the Bill includes a regulation‑making power to allow the Government to prescribe additional factors if further accountability measures are needed in the future.
Other notable cons to sustainable infrastructure are that in some cases supply may depend on the weather and maintenance may be difficult.
So, is it good or bad?
The pros for sustainable infrastructure clearly outweigh its cons, especially in relation to its global effect. This is not to discount any prohibitive costs that lot owners may face, and in this instance, we suggest that owners corporations start small and formulate their yearly budgets to cater for increasing sustainable infrastructure in their strata schemes and implement it over the course of time to minimise the initial financial impact.
Authors: Jasmin H.Singh & Allison Benson