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GUEST OBSERVATION
The recent <a href="/expert-insights/investing/pie-face-bakery-chain-collapses-into-administration">voluntary administration of Pie Face</a> has highlighted the uncertainty faced by franchisees if their franchisor goes into administration.
Here are 10 key risks to franchisees of insolvent systems:
1. The risk of little useful information
Many insolvency practitioners do not understand franchising and the nature of the franchise relationship.
Administrators will apply considerable effort to keep staff and creditors informed during an insolvency – the first to ensure they keep the business operating or provide access to records while the administrators sort out the business’ position, and the second to ensure continuity of key supplies. However, franchisees are generally given the bare minimum of information.
Because staff and suppliers are recognised as creditors, they are usually better-informed than franchisees, who may be circulated a form letter when the business is placed in administration, and then hear no further meaningful information until a sale or winding-up announcement is made. Franchisees of insolvent chains often learn more from the media about the future of their livelihoods than they do from the administrators.
2. Loss of consumer confidence
In previous franchise insolvencies such as that of book retailer Angus &amp; Robertson in 2011 and whitegoods retailer Kleenmaid in 2009, the loss of consumer confidence when the businesses went into administration was so great that it accelerated the final collapse.
Angus &amp; Robertson customers were outraged when administrators announced that gift vouchers (many of which were given as Christmas presents only a couple of months earlier) would no longer be honoured, prompting a consumer backlash. During this highly damaging PR, the remaining company-owned and franchised stores were expected to trade on as usual.
When Kleenmaid went under, its franchised and company-owned stores were besieged by angry customers trying to claim the goods for which they had collectively paid more than $25 million in deposits. In rare cases, some were able to buy their goods all over again in liquidation sales to ensure that their newly-built or renovated kitchens or laundries could be completed without further modifications, but many swore they would never buy Kleenmaid again, and actively campaigned against the brand in revenge.
3. Disruption to supply chains
Some franchise systems have preferred supplier arrangements, and others are the primary supplier to their franchisees themselves.
A manufacturer may supply its retail network of company-owned and franchised stores with the majority of their product lines. If the manufacturing facilities are scaled-back, closed or sold separately from the retail network, then a significant risk of disruption to normal supplies exists. A new buyer of the group could decide to close the factory and outsource manufacturing altogether, in which case it is likely that teething problems with a new set of arrangements could also result in supply issues for franchisees.
While it is possible for a franchisee to continue to operate when a franchisor goes bust in networks that have preferred supplier arrangements, the franchisee might find that creditors will become more risk averse and tighten their credit terms, insist on cash up front, or otherwise cap franchisee purchases to a low limit to reduce future risk.
4. Stock dumping
Franchisees of fashion accessory chain Kleins, which collapsed in 2008, found themselves selling goods at cost or below as the administrator sought to liquidate inventory held by the franchisor that could not be returned to suppliers.
In any group where the franchisor has embedded itself into the supply chain and provides inventory to the franchisees, there is the risk that administrators will seek to liquidate inventory as quickly as possible through the network to generate cash, and this may be done at the expense of franchisee margins or in breach of the brand’s established price positioning.
Either way, this can be damaging to a franchisee’s business.
5. Diminished franchisor support
Administrators will question all costs in a business, particularly labour costs. Franchisor head office staff who survived the franchisor’s descent into administration may still be made redundant by the administrators in an attempt to restore profitability and improve the saleability of the business as a going concern, but in doing so often reduce the very resources for which franchisees pay royalties.
Consequently, franchisees of an insolvent system might find that their field support officer has been let go, or now has two or three times more franchisees to support as his colleagues have left.
A reduction in field support is likely to occur concurrently with a reduction in marketing personnel and other head office functions that directly or indirectly provided support, meaning that franchisees will be left more and more to their own devices, and while some may see this as a good thing, it further exacerbates damage to the brand (and therefore, network value) as inconsistencies develop in the group.
At its worst, this could lead to open revolt by franchisees, as happened with Angus &amp; Robertson in 2011 when nearly half the franchisees sought to leave the group en masse while it was under administration.
This article continues on the next page. Please click below.
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6. Pursuit of outstanding royalties
Administrators have no capacity to offset debts owed by an insolvent franchisor to its franchisees, against the royalties owed by the franchisees.
In other words, franchisees have to claim their debt owed by the franchisor like any other creditor, and end up with whatever cents in the dollar might be paid at some future point, but in the meantime must pay 100% of all outstanding royalties to the administrators on demand without argument.
If franchisors have allowed franchisees to fall behind in their royalty payments, administrators will ditch such arrangements and demand full payment immediately as they scrape together cash to keep the business afloat. Unfortunately, this can result in considerable financial pain to any franchisees who owe royalties, and whose business may also be struggling (the reason why they fell behind in their royalties in the first place).
7. Disclaiming of leases or other agreements
When Kleins was placed into voluntary administration in 2008, it was subsequently revealed that the franchisor held the leases on all the stores in the network, including the franchised outlets. Franchisees would then sub-lease the stores from the franchisor, to whom they would pay rent, and then the franchisor in turn would pay rent to the landlord (many of which were major shopping centres).
However, under this arrangement, the rents paid by the franchisees to Kleins were not being passed to the landlords, and the store rents fell behind.
When the administrators took control of the business, they exercised their unique power to disclaim (i.e. terminate) the leases, to reduce their ongoing liabilities in operating the business. The unfortunate byproduct of this action was that the franchisees in terminated outlets were suddenly left with two choices: close the shop and wear the losses caused by the premature ending of their business, or negotiate new leases directly with the landlords and attempt to continue trading.
Many chose to negotiate new leases with the landlords, but found this to be a double-whammy.
In some cases their rent increased because they were now independent operators, and no longer part of a national chain. In all cases, the franchisee would have had to find the cash to lodge the usual rental guarantee (up to three months rent in advance), plus invest in new signage and fitouts, etc, to trade as independents, while at the same time writing-off as unrecoverable large sums of money owed to them by the franchisor under Kleins’ unique income guarantee.
Administrators can and will disclaim leases and other commercial agreements if they feel it is in the best interests of the insolvent entity, even if it is not in the best interests of the franchisees.
However, the reverse does not apply to franchisees, who usually have no rights to terminate their franchise agreements even if their franchisor is in administration.
8. Loss of business value
It goes without saying that any franchisee who might have been planning to sell their business before their franchisor goes into administration will subsequently find it almost impossible to complete a sale until the system recovers from this emergency.
Such a recovery, if one is possible at all, could take years.
Even if the system does recover, a franchisee’s business in future may be worth less than it would have been prior to the administration. This loss of business value can cause major problems for franchisees who are heavily geared and may ultimately sell at a loss, or who planned to fund their retirement using the proceeds from the sale of their business, which may now be insufficient.
Unless franchisees themselves are creditors (which is rare), this loss of franchisee business value, or the imperative to maintain franchisee business value, is incidental to administrators whose sole focus is to maximise the returns to creditors.
9. Significant ongoing personal liabilities
If a franchisor collapses, franchisees may be left without a business to trade if their supply of unique products ceases to exist.
Because Kleenmaid stores sold only Kleenmaid products, when these were no longer available following the collapse of the franchisor, the stores could not switch suppliers and continue to trade.
If this occurs, franchisees may have no choice but to close their stores, while continuing to pay the significant ongoing costs of shop leases, business loan repayments, and chattel mortgages for shop fit outs, fixtures and fittings. These ongoing liabilities can be a blight that weighs down a franchisee long after the collapse of their franchisor.
10. Radicalisation of corporate culture
If a buyer is found for an insolvent franchisor, the new owner will inevitably want to put their own stamp on the business and make changes to ensure its ongoing survival.
The nature of the buyer, and the changes they will seek to implement, might clash with franchisees and appear at odds with the corporate culture under the former owners. For many franchisees, a change of ownership will require them to adapt to new management and new ways of doing things. These changes can be relatively minor, incremental and easily adaptable, or can be major, radical and disruptive to the organisational culture and brand values.
Conclusion
This is not an exhaustive list, but should give pause for thought to any existing franchisee concerned about the future of their network, any potential franchisee who needs to asses the risks of what might happen in a worst-case scenario, and any insolvency practitioner who might one day find themselves managing a franchise network in administration.
Most importantly, this list should also serve as a reminder to franchisors that an inability to adapt to a changing market and poor management has consequences for those around them, especially their franchisees.
Jason Gehrke is the director of the <a href="https://www.franchiseadvice.com.au/" target="_blank">Franchise Advisory Centre </a>and has been involved in franchising for 20 years at franchisee, franchisor and advisor level.
This article first appeared on <a href="https://www.smartcompany.com.au/" target="_blank">SmartCompany</a>.
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10 risks to franchisees when companies go bust

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For more than a century, Sydney’s Upper North Shore has held an impressive reputation for its stately homes on large blocks of land with established private gardens. 
This week our property contrarians Jonathan Chancellor and Margie Blok peer at grand garden estates in leafy avenues of this peculiarly “Australian Arcadia” and discuss the essential requirements for choosing a trophy home in this rarefied area.
HE SAID:<img src="/images/stories/2013/09/06/jc-silhouette-5.jpg" alt="jc-silhouette-5" width="130" height="195" style="float: right;">
<ul>
<li>
Location is of utmost importance. The upper north shore encompasses suburbs north of Chatswood, south of Hornsby’s northern border and east of the Lane Cove River - but the best estates are on the east side of the Pacific Highway in Roseville, Lindfield, Killara, Gordon, Pymble, Turramurra, Warrawee and Wahroonga. 
</li>
<li>The property must have “the house, court, pool package”, a phrase coined by Julia Burns, the legendary Upper North Shore agent who sold prestige properties at record prices from the 1980s heyday until her retirement about five years ago. For a property to be considered prestigious, Burns insisted it have a big home set in beautiful gardens with a full-size tennis court and swimming pool – and I agree with her. </li>
<li>
A significant architect is essential. And the architect’s name must be included in the marketing of a property to show its quality provenance. Among architects known for designing beautiful homes on the Upper North Shore are Howard Joseland, John Brogan, Augustus Aley, F. Glynn Gilling, Hardy Wilson and Walter Liberty Vernon. It’s no secret I admire the Spanish Mission style, but on the Upper North Shore I also appreciate Stockbroker Tudor-style such the house at 1 Springdale Avenue, Killlara designed by architect John Brogan. 
</li>
<li>
My pick of properties on the market is the Pymble home of dentists Richard Medway and Isabel Silva who are hoping to set a suburb record of more than $8 million for their Spanish Mission style residence on Telegraph Road when the marketing campaign closes on Tuesday November 25 through agent Scott Chadwick. 
</li>
</ul>
<img src="/images/2014/11/24/pymble%20nov%2024%20one.jpg" alt="">
Designed by architect Geoffrey Loveridge, the grand 1930s house stands in manicured gardens with a tennis court and pool. It was built during the 1930s for Carpenter Group chairman, R.B. Carpenter, and his wife, Gladys.
<img src="/images/2014/11/24/pymble%20nov%2024%20two.jpg" alt="">
The subsequent owners include medico Dr John Drummond, architect Steve Gunns and, most recently, property developer David Blaynie and his wife, Joanne, who sold it a decade ago for around $4.7 million.
<img src="/images/2014/11/24/pymble%20nov%2024%20three.jpg" alt="">
I remember when LJ Hooker Pymble’s David Johnson was selling 42 Telegraph Road back in 2004 and successfully advising the then vendor to replace the roof of the home with slate tiles. It cost the vendor more than $150,000, but Johnson suggested it certainly helped achieved the $4.7 million sale price of the 3,389 square metre property.
<img src="/images/2014/11/24/pymble%20nov%2024%20four.jpg" alt="">
<img src="/images/stories/2013/09/06/mb-silhouette-4.jpg" alt="mb-silhouette-4" width="130" height="195" style="float: left;">SHE SAID:
East side of the train line is essential – and not too far east. Be it Killara, Wahroonga, Warrawee, Pymble, Gordon or Roseville, the property must be within easy walking distance of a train station for Mums and Dads who commute to work in the city, and kids travelling to schools.
<ul>
<li>
The house should have at least four bedrooms, as well as huge sitting and dining rooms and a big open-plan kitchen and family living area with easy access to outdoor entertaining/barbecue areas with an outdoor kitchen. 
</li>
<li>While ballrooms and train rooms once were popular with North Shore mansions, these days home theatres and cinema rooms are the go – or a yoga room for mum and her friends. </li>
<li>A huge landscaped garden is de rigeuer – and preferably one designed by Annie Wilkes. While topiary and manicured hedges suit some properties, I prefer rambling gardens. It’s a pity the Upper North Shore doesn’t have any gardens designed by Enda Walling. </li>
<li>The property needs to be close to good primary school given families with young children are predominant buyers for Upper North Shore properties. Burns Road Wahroonga is a fine example of a good east side address, for it has the Bush School and nearby Prouille for Catholic kids. </li>
<li>
Among the best properties for sale, in my view, is “Hazeldean” at 14 Burns Road, Wahroonga. Ticking all the boxes including buxus hedges in the garden, “Hazeldean” has a circa 1898 residence built in the Queen Anne style and updated with an award-winning heritage restoration.  
</li>
</ul>
<img src="/images/2014/11/24/wahroonga%20nov%2024%20six.jpg" alt="">
Described by McGrath selling agents, Phillip Waller and Samuel Lynch, as “presenting unparalleled grandeur and prominence”, it stands in about 3,422 square metres of landscaped gardens with a championship-size tennis court and heated swimming pool.
<img src="/images/2014/11/24/wahroonga%20nov%2024%20two.jpg" alt="">
Designed by architect Varney Parkes (the seventh child of politician, Sir Henry Parkes, and his first wife Clarinda), it has six bedrooms, an expensive designer gas kitchen (by Scullery and Holtz), grand formal sitting and dining rooms (with high ornate ceilings and original circa 1890s embossed wallpaper) and self-contained guest accommodation in a separate wing.
<img src="/images/2014/11/24/wahroonga%20nov%2024%20three.jpg" alt="">
The property is an easy walk to the train station and village shops as well as Knox and Abbotsleigh schools.
<img src="/images/2014/11/24/wahroonga%20nov%2024%20seven.jpg" alt="">
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The Upper North Shore, Sydney trophy home essentials: He Said/She Said

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Airbnb has rolled out <a href="https://blog.airbnb.com/airbnb-host-protection-insurance/" target="_blank">an additional liability insurance program</a> that will provide up to US$1 million (A$1.16 million) worth of protection to Airbnb hosts for their listings in the US.
The company, founded in California in 2008, allows people to list, discover and book accommodation around the world, whether it’s an apartment for the night or a shack for a week.
It already provides hosts and guests with information about how they can make their listing safer and more secure, and a $1 million Host Guarantee provides reimbursement in cases of property damage.
The additional liability insurance program, Airbnb Host Protection Insurance, will provide up to $1 million worth of protection to hosts for their listings in the US if a guest is accidently injured anywhere in a host’s building or property during their stay.
It provides coverage for Airbnb hosts and, where applicable, their landlords. The coverage will be automatic at every stay at a listing in the United States and the company is actively working on ways to expand it internationally.
This article first appeared on <a href="https://www.smartcompany.com.au/" target="_blank">SmartCompany</a>.<a href="https://www.smartcompany.com.au/" target="_blank"></a>
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Airbnb rolls out US$1 million liability insurance for accommodation hosts

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GUEST OBSERVATION
Last week brought the latest instalment in the continuing Australian financial planning industry saga. Senators Jacqui Lambie and Ricky Muir blocked the Abbott government’s <a href="https://www.comlaw.gov.au/Details/F2014L00891/Explanatory%20Statement/Text" target="_blank">rollback</a> of some of Labor’s Future of Financial Advice (FoFA) reforms.
The proposed changes to FoFA watered down some of its more controversial aspects. They included the provisions establishing a “best interests” duty for financial planners and restrictions on conflicted remuneration. Other rollbacks included changes that required fee disclosure statements and the obligation for clients paying ongoing fees to “opt in” by written consent every two years.
The Abbott government maintained the reforms were merely to streamline regulation, prompted by the need to reduce bureaucracy and red tape. However, the recent and continuing <a href="https://www.smh.com.au/business/timbercorp-victims-set-to-sue-financial-planners-while-liquidator-presses-for-loans-to-be-repaid-20140810-102gco" target="_blank">financial planning scandals</a> made such streamlining politically unsustainable.
So we are back to Labor’s original FoFA legislation. But where does this leave the financial planning industry and the thousands of Australians in need of financial advice?
There are claims within the financial planning industry the blocking of the regulation will cause further <a href="https://www.theage.com.au/business/banking-and-finance/fofa-reforms-senate-shock-spurs-financial-adviser-scramble-20141119-11q2te">instability</a>. This is as firms scramble to meet the FoFA requirements, particularly those relating to fee disclosure and opt in obligations.
Yet FoFA has been law since 1 July 2013, so it is difficult at first glance to understand why the blocked rollback would significantly impact the industry.
It seems that large sections of the industry have been operating on the basis the coalition’s FoFA rollback changes would become law.
It is a view reflected by the Australian Securities and Investments Commission. It <a href="https://www.asic.gov.au/about-asic/media-centre/find-a-media-release/2013-releases/13-355mr-asic-update-on-fofa/" target="_blank">said</a> in December 2013 it would take a “facilitative” approach to FoFA enforcement in light of the proposed changes and would “not take enforcement action in relation to the specific FoFA provisions that the government is planning to repeal”.
After the reforms were disallowed in the Senate, ASIC said this week it would take a “<a href="https://www.asic.gov.au/about-asic/media-centre/find-a-media-release/2014-releases/14-307mr-disallowance-of-fofa-regulations/" target="_blank">practical and measured approach</a>” to administering FoFA as it now stands. The regulator says it recognises that compliance with FoFA will require systems changes for many Australian financial services licensees. This facilitative approach to FoFA compliance will continue until 1 July 2015.
It seems unlikely there is any need for panic within the industry as there is still some time before ASIC will enforce FOFA compliance. Nonetheless, those licensees who deferred making costly system changes in line with Labor’s legislation may now find themselves having to make those changes rapidly in a highly uncertain regulatory environment.
In the long run, this situation is likely to lead to less affordable financial advice for Australian consumers.
Despite the reform rollback not going ahead, there still isn’t an easy solution for the financial advice industry. The unchanged legislation now retains greater consumer protection. But it does <a href="https://www.theage.com.au/business/comment-and-analysis/fofa-doesnt-clean-up-the-financial-advice-minefield-20141121-11riwk" target="_blank">little to address </a>what many regard as the fundamental cause of the poor reputation of the Australian financial planning industry – the need to raise the professional, ethical and educational standards of financial advisers.
While consumers will get some greater level of protection through increased fee disclosure, this comes at a price. This protection also relies on consumers taking the time to read and understand the disclosures made by their financial planners. Financial planners can continue to give poor quality advice. What will change is increased upfront fees and greater disclosure around these fees resulting in higher costs. There will be less scope for scaled advice which was part of the Abbott government reforms.
FoFA still fails to set educational or professional standards for financial planners. Until industry entry standards are lifted, FoFA will not deliver accessible financial advice for the Australians who need it.
Absent an urgent rethink by the Abbott government on FoFA, after last week’s events it seems the goal of access to affordable and trustworthy financial advice for Australian consumers is more elusive than ever.
<img src="https://counter.theconversation.edu.au/content/34486/count.gif" alt="The Conversation" width="1" height="1">Julie Walker is associate professor in accounting at The University of Queensland.
<a href="https://theconversation.com/institutions/university-of-queensland"></a>
Julie Walker has previously received research funding from the Institute of Chartered Accountants in Australia. She is affiliated with Chartered Accountants Australia New Zealand.
This article was originally published on <a href="https://theconversation.com" target="_blank">The Conversation</a>.
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FoFA fiasco: No quick fix for the advice industry

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GUEST OBSERVATION
It’s interesting that we’re waiting to see what’s in store for 2015. But it’s us – the buyers, sellers and onlookers – whose behaviour moves our market. In the cycle of Sydney property, it goes something like this…
<ol>
<li>
Street level: The buyers/sellers on the front line, listing, inspecting, bidding and exchanging. 
</li>
<li>
Data reporting: Street level activity is distilled into bite-sized graphs and reports. 
</li>
<li>
Headlines: Data reporting drives what we hear in the media, whether relevant or not. Headlines are formed, as sensationalism fuels speculation. 
</li>
<li>
Fear and optimism: Speculation shifts confidence, and new outlooks and expectations are formed. 
</li>
<li>
Repeat: These expectations change buyer/seller behaviour, and the cycle continues.
</li>
</ol>
In a market sustained with consumer confidence, what is this love of data-cherry-picking actually telling us? Watching at street level cuts out that speculation, providing a better sense of where the market is going.
<div class="aspectRatioPlaceholder is-locked"><img class="graf-image" src="https://d262ilb51hltx0.cloudfront.net/max/1400/1*b9pK2cwYhBhOHIS_Wur3SQ.jpeg" data-image-id="1*b9pK2cwYhBhOHIS_Wur3SQ.jpeg" data-width="2835" data-height="1890" data-action="zoom" data-action-value="1*b9pK2cwYhBhOHIS_Wur3SQ.jpeg"></div>
17 Bridge Road, Glebe  (pictured above)  sold for $950,000, showing inner-city terraces can still be found for under $1 million.
Yet we wait on reports with anticipation. Take clearance rates, we thrive on those.
If they’re above 80% it’s a boom. The minute they dip below we’re destined for gloom. A recent report cited the Sydney clearance rate as below 80% for the first time in nine weeks. But that new figure was 79.3%. The angle was, ‘the end of boom time’.
Perhaps pricing simply outpaced buyers that weekend. Of course, that’s not sexy as a headline.
<div class="aspectRatioPlaceholder is-locked"><img class="graf-image" src="https://d262ilb51hltx0.cloudfront.net/max/1400/1*ya6qXIOdQjlGZUUjKw_jAg.jpeg" data-image-id="1*ya6qXIOdQjlGZUUjKw_jAg.jpeg" data-width="2835" data-height="1890" data-action="zoom" data-action-value="1*ya6qXIOdQjlGZUUjKw_jAg.jpeg"></div>
56 Fitzroy Street, Surry Hills  (pictured above)  sold for $2.6 million, it was one of a string of properties that showed high activity in this luxury price point.
Consider how we found ourselves in this ‘boom’. Demand is what drove the initial heat. We saw value and started buying up. Buyer-enthusiasm outpaced seller-expectations, leading to price increases, rising clearance rates, and juicy headlines.
Vendor hopes skyrocketed with every new headline and they began setting a new level of pricing with their exuberance. Momentum continued while buyers saw value and were happy to accept these new prices as the norm.
Of course, in any upswing, buyers will inevitably reach a point when they say ‘no’. They won’t pay 10%-more-than-next-door forever.
That’s perfect for ‘slower market’ headlines, ‘fewer buyers at auction’ and ‘clearance rates drop’. Then, confidence will shift again.
It’s not always impending doom. The buyers are still there. They wait to identify value each time our market gets overexcited. We often ignore this logic and the fact the market is subtler than reports suggest.
<div class="aspectRatioPlaceholder is-locked"><img class="graf-image" src="https://d262ilb51hltx0.cloudfront.net/max/1400/1*sNG0OP0Z8kTiqz5R69S_ww.jpeg" data-image-id="1*sNG0OP0Z8kTiqz5R69S_ww.jpeg" data-width="3543" data-height="2362" data-action="zoom" data-action-value="1*sNG0OP0Z8kTiqz5R69S_ww.jpeg"></div>
311/1 Marian Street, Redfern (pictured above) sold for $905,000, it’s tipping into that million-dollar-apartment category that is hotly contested.
And let’s not forget our micro market<a class="markup--anchor markup--p-anchor" href="https://medium.com/@BresicWhitneyEA/uncovering-sydneys-micro-markets-d35f2ee3325a" style="line-height: 1.3em;" data-href="https://medium.com/@BresicWhitneyEA/uncovering-sydneys-micro-markets-d35f2ee3325a">s</a>. In certain sub-markets of Sydney real estate, prices outpaced buying long ago. Some executive residences in the Eastern Suburbs have wavered while plenty of entry-level houses in, say, the Inner West continue to rally strongly.
Bystanders will claim to have all the answers in 2015. But if buyers and sellers are shifting markets with their behaviour and sentiment, watching at street level keeps us one step ahead as we look for value and see what’s really happening.
The best buying and selling will still come from players who immerse themselves in their favoured pocket of the market.
<a href="https://www.bresicwhitney.com.au/" target="_blank">BresicWhitney</a> is a boutique real estate group founded in Darlinghurst in 2003.
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How to stay ahead of the pack next year in Sydney's market

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GUEST OBSERVATION
Heatwaves — Australia’s <a href="https://australia.gov.au/about-australia/australian-story/natural-disasters" target="_blank">biggest natural killers</a> — are getting <a href="https://theconversation.com/climate-council-heatwaves-are-getting-hotter-and-more-frequent-23253" target="_blank">more frequent and hotter</a> thanks to climate change. One day cities such as Melbourne may see unprecedented heat, perhaps 48C or higher.
But our research shows that smart urban design can create refuges in cities that could feel more than 10C cooler, and without increasing energy use.
Recently the Victorian Auditor-General released a report that found Victoria is not adequately prepared to deal with <a href="https://www.audit.vic.gov.au/reports_and_publications/latest_reports/2014-15/20141014-heatwave-management.aspx" target="_blank">heat disasters</a>.
While this report focused on the ability of our services to respond to and communicate about extreme heat events, it also raises an important question: how do we better prepare our cities for <a href="https://theconversation.com/climate-council-heatwaves-are-getting-hotter-and-more-frequent-23253" target="_blank">more frequent and hotter</a> heat waves?
<h3>Record-breaking heat</h3>
In Australia, 2013 was the <a href="https://theconversation.com/human-hands-are-all-over-australias-hottest-ever-year-32267">hottest year on record</a>. Globally, 2014 is on course to <a href="https://www.scientificamerican.com/article/2014-on-track-to-be-hottest-year-on-record/" target="_blank">break records again</a>.
With increasing predicted temperatures and the impact of the urban heat island effect (where urban space is much hotter than surrounding areas) to consider, there is increasing pressure on Australian cities to support the health of their populations during extreme heat events.
In Victoria, statistics show that the last two heat waves, in 2009 and 2014, caused as many as <a href="https://www.audit.vic.gov.au/publications/20141014-Heatwave-Management/20141014-Heatwave-Management.pdf" target="_blank">500 deaths</a>. (see also <a href="https://www.climatecouncil.org.au/uploads/9901f6614a2cac7b2b888f55b4dff9cc.pdf" target="_blank">here</a>). This figure is set to <a href="https://www.climatechange.gov.au/climate-change/climate-science/climate-change-impacts/victoria">quadruple between now and 2050</a> (see also <a href="https://www.bom.gov.au/state-of-the-climate/" target="_blank">here</a>)
Whilst it’s important to make sure our emergency services are able to cope in the best way possible, this is a reactive response that will help manage crisis situations. Reinforcing the electricity grid to make sure that outages are minimised is also valuable.
However, proactively dealing with mitigation of extreme heat can take the pressure off services, minimise expense and most importantly, reduce heat stress.
<h3>How do we mitigate extreme heat?</h3>
There is an important body of work on reducing the urban heat island effect, particularly through urban greening infrastructure and building performance. A notable example of green infrastructure is the <a href="https://www.melbourne.vic.gov.au/Sustainability/UrbanForest/Documents/Urban_Forest_Strategy.pdf" target="_blank">Melbourne Urban Forest Strategy</a>.
Urban forests have been found to be very effective methods for city heat mitigation. However, vegetation takes a long time to grow and may not be as appropriate in every part of a city, so we need a greater diversity of solutions.
It is important to design at the street level scale: particularly in those places used the most. The spaces between buildings are necessary to urban functionality and where people spend most outdoor time.
A recent study in Sydney found that streetscapes have <a href="https://www.propertyobserver.com.au/https://www.ccsenet.org/journal/index.php/jsd/article/viewFile/35128/20347" target="_blank">higher minimum temperatures than rooftops</a> indicating the importance of cooling this highly used part of the city. Streets, train stations, even car parks can be designed to contribute towards much cooler experiences.
<h3>Keeping cool on the streets</h3>
Research on urban microclimates from around the world has shown that we can control the thermal comfort of smaller spaces, <a href="https://www.vcccar.org.au/sites/default/files/publications/VCCCAR%20Green%20Infrastructure%20Guide%20Final.pdf" target="_blank">without using more energy</a> (see also <a href="https://www.sciencedirect.com/science/article/pii/S096014811400336X">here</a> and <a href="https://www.sciencedirect.com/science/article/pii/S0169204613002399">here</a>). This is not just about reducing the absolute temperature, it’s also about making people feel comfortable.
The experience of temperature is controlled by both personal and environmental factors. Combinations of air temperature, wind, humidity and radiated heat will change the feeling, or <a href="https://www.bom.gov.au/info/thermal_stress/index.shtml" target="_blank">apparent temperature</a>, of the weather.
We can create spaces with optimum comfort levels through a combination of shading, reduced heat build up in materials, humidity and wind management. Rather than trying to change the temperature of the whole city, we can provide heat refuges at street level to make the city more functional on hot days.
We know that a comprehensive toolkit is needed to understand how we can cool the city in different places. Trees and greening are important but aren’t practical everywhere, and certainly not when they are used in isolation.
Designs that also include redirecting wind, controlling humidity and water and that consider thermal qualities of materials are necessary. There are also further opportunities for enhanced cooling that use virtually no energy.
For example, geothermal cooling (where wind is tunnelled underground and cooled by the earth) and misting are two tools that can actively reinforce cool space within cities.
This article continues on the next page. Please click below.
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<h3>A winning design</h3>
In a recent <a href="https://moorabbinjunction.com.au/tag/street-14-2/">Street14 ideas competition</a> run by the Australian Institute of Landscape Architects and Kingston City council we tested these design ideas on a site in the Melbourne suburb of Moorabbin. Our entry won Best Urban Tactic.
Our research using on site temperature and humidity sensors revealed temperature differences of up to 10C across a small urban block. In addition, whilst exposed sites were the hottest, they were also often the quickest to cool off.
This gives us big clues into designing urban spaces for use across a whole day, where it’s important to minimise heat build-up but also to encourage rapid heat loss.
Key to this idea of designing microclimates is designing responses to the local conditions.
In Moorabbin, having the sensors on site was important because it meant we weren’t designing using generalised ideas, but instead able to work with the specific events on site.
<h3>Global movement</h3>
This kind of work on design with atmospheric conditions is beginning to be explored in cities around the world.
Examples include climate engineers <a href="https://www.transsolar.com/" target="_blank">Transsolar</a>, who were instrumental in demonstrating that Qatar’s 2022 World Cup bid was viable, showing how well designed stadia could mitigate the extreme temperatures of a <a href="https://www.transsolar.com/blog/design-for-outdoor-comfort/index" target="_blank">Qatar summer</a> (see also <a href="https://www.ted.com/talks/wolfgang_kessling_how_to_air_condition_outdoor_spaces" target="_blank">here</a>).
In Taiwan construction is underway on the <a href="/news">Jade Eco Park</a>, a climatically controlled park that works to vary temperature, humidity and to provide clean air within microclimates to counter or enhance <a href="https://www.youtube.com/watch?v=UDr-6UtlUu8" target="_blank">local climactic conditions</a>.
Australian cities, with very particular weather conditions, need responsive design solutions that work with those kinds of factors.
For example, Melbourne’s very dry summers are more suited to cooling tactics that involve evaporation than other more humid capital cities.
Urban design can create spaces of heat refuge at street level within cities. Tram stops, train stations and streets that need to be used even during the most extreme heatwave are places that can be cooled.
If we can drop the temperature of these spaces by even a few degrees, we can <a href="https://wiki.csiro.au/download/attachments/442597561/Thursday%20Chen_1140Th.pdf?version=1&amp;modificationDate=1334212028180&amp;api=v2" target="_blank">save lives</a>.
<img src="https://counter.theconversation.edu.au/content/33246/count.gif" alt="The Conversation" width="1" height="1">Joseph Barrins is senior tutor in environments at University of Melbourne.
Wendy Walls is a PhD candidate at University of Melbourne.
Wendy Walls received prize money from the Street14 ideas competition. She is the recipient of the David Yencken scholarship in Landscape Architecture.
This article was originally published on <a href="https://theconversation.com" target="_blank">The Conversation</a>.
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Smart urban design could save lives in future heatwaves

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GUEST OBSERVATION
Banks borrow short and lend long. So if all of a bank’s depositors suddenly want their money, the bank would be unable to pay them. A bank may have made great loans but it can only unwind these loans slowly over time.
In most situations this doesn’t matter. Banks know their cash flows and play the probabilities, making sure they have a buffer of liquid assets to meet normal withdrawals.
However, a crisis can trigger a run on banks. Every depositor wants to get his or her money out of the bank before everyone else. The bank runs out of cash and closes its doors. It fails.
Bank regulation is at the heart of the current <a href="https://fsi.gov.au" target="_blank">Financial System Inquiry</a> chaired by David Murray. It will consider which regulations are important, which need to be strengthened and how <a href="https://www.bis.org/bcbs/index.htm" target="_blank">international banking rules</a> should apply in Australia.
Our recent <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2478496" target="_blank">research</a> compares some of the different rules that may be used to limit bank risk. We find that increased bank capital requirements are the most effective policy but must be applied across all institutions to stabilise the banking system.
The global financial crisis
The 2008 crisis resulted in plenty of traditional bank runs. In the United Kingdom, retail depositors lined the streets to take their money out of the failing Northern Rock.
We also saw a different type of bank run during this period. For example, a bank run led to the collapse of Lehman Brothers. Yet this didn’t involve retail depositors. It was institutions that stopped lending to Lehman Brothers on the wholesale market.
Australia’s banking system in 2008 was fundamentally sound. Our banks didn’t have abnormal levels of bad loans. Legal differences meant the default issues plaguing bank mortgages in California, Florida and elsewhere in the United States couldn’t occur in Australia.
Yet our banks were still exposed to the crisis through their reliance on imported wholesale funds. The Australian government responded to this risk of an “imported crisis”. In October 2008, it introduced explicit deposit insurance and guaranteed bank wholesale borrowing.
But why did Australia’s sound banking system come under pressure in 2008? Is there potential for Australia to import a banking crisis in the future? And what sort of banking regulations do we need to deal with this possibility?
Importing a banking crisis
Wholesale funds now provide a large part of the total funds available to banks in many countries. This has changed the nature of the risks they face.
<img src="https://62e528761d0685343e1c-f3d1b99a743ffa4142d9d7f1978d9686.ssl.cf2.rackcdn.com/files/63663/width668/sd32vc8q-1415143968.png" alt="">
 <a class="source" href="https://www.rba.gov.au/publications/rdp/2013/pdf/rdp2013-15.pdf" target="_blank" rel="nofollow">RBA Discussion Paper 2013-15 “Trends in the Funding and Lending Behaviour of Australian Banks“ Chris Stewart, Benn Robertson and Alexandra Heath</a>
Australian banks source much of their wholesale funding offshore. This inflow of capital allows Australia to undertake more investment, generating higher levels of growth and enhanced well-being.
Before the crisis, Australian banks were borrowing internationally an amount equal to 5% of our gross domestic product each year. In 2008, international funds flowing though the banks funded about one-fifth of Australia’s total investment.
The flow of international funds did not stop during the crisis. However, they became more expensive, transmitting the pain felt by European and US institutions to Australia.
Banks were not the only institutions affected by the sudden rise in the cost of foreign funds. Foreign direct investment, foreign portfolio investment, offshore capital raisings by Australian companies, and government borrowings were also impacted.
However, the impact on banks was more significant. Unlike other institutions, banks borrow money for relatively short periods but use the money to lend to companies and individuals for the long term. When they depend on short-term international funds, a sudden rise in the price of those funds exposes banks to higher costs and potential failure. Any failure can also have significant economic and political implications. The failure of one bank can lead to a run and the failure of other banks.
This means governments tend to intervene if bank failure is imminent. For example, Bankwest in 2008 was owned by flailing UK bank HBOS. It was facing failure and, following government intervention, was bought by the Commonwealth Bank.
The government’s move to insure bank deposits and wholesale funding stabilised the banking system during the crisis. Yet these were ad hoc policy responses. Australia still needs to develop long-term policies to deal with the next financial crisis.
Article continues on the next page. Please click below.
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Developing the right regulation
Our recent research compares some of the different rules that are used, or might be used, to try to limit bank risk from offshore funding. This research is unique as we consider the consequences of specific policies at times of crisis and also during usual operations.
A policy may be effective at preventing a crisis but if it means that borrowers pay more and depositors receive less most of the time, then the protection provided by the policy may be overwhelmed by the day-to-day cost to the Australian public.
We take it as given that ordinary retail depositors will have some form of implicit or explicit government protection, so our focus is on the risk of bank default on bondholders. A bank fails if an increase in the cost of wholesale funds cuts its cash flows so that it cannot meet its debt obligations.
Regulators can do many things to limit banks’ exposure to imported wholesale funds and maybe make them less exposed to importing a banking crisis.
Regulations may require that banks use limited or no imported wholesale funds at all. Banks would have to be fully funded by domestic savings. Some countries like China have policies like this.
This policy is unlikely to work in Australia because it would significantly limit investment during normal operations. There would be no risk of importing a crisis but there would also be less domestic investment as borrowers would face higher interest rates. India has adopted this type of policy for many years and it has adversely impacted growth.
Depositors may gain from being a source of scarce investment funds but there would also be other costs. The banking sector would contract due to the restriction on fund access resulting in less competition.
Another policy that would reduce the likelihood of importing a financial crisis is for the government to have an explicit or implicit policy of bailing out bondholders. This occurred in the UK and US during 2008.
This policy has undesirable implications. If banks know that taxpayers effectively insure their bondholders, they will reduce the amount of equity issued and increase their amount of bonds. This would result in an increase in new entrants to the market based on excessively risky funding models.
Having a larger number of banks adopting a fragile funding model increases the likelihood of bank failures. If banks know they will be bailed out if they fail, then banks are more likely to fail. A bail-out policy actually increases the likelihood of future crises.
The most effective policy for dealing with wholesale funding risk is to increase the amount of capital banks are required to hold. While regulators have asked banks to hold more equity capital as insurance against lending risks, this policy can also reduce funding risks.
If a wholesale funding squeeze means that a bank cannot pay its bondholders, then the bank fails. If the squeeze simply reduces the dividend to shareholders, then the bank continues to operate. So requiring banks to hold more capital and less debt directly reduces the risk of failure.
While our research suggests that uniform minimum capital requirements can stabilise our banking system, it has been suggested these requirements only apply to “big” banks. Such an asymmetric policy would be undesirable. If there are weak funding restrictions on small banks, this will encourage the entry of a greater number of smaller and potentially more fragile banks. The result is an increased risk of future crises.
An asymmetric policy of increasing the capital requirements on large banks but not on small banks could have a stabilising effect if the government resolved never to bail out the small banks. Small banks could enter and leave the industry as funding conditions allowed and act as a shock-absorber to the system.
Politically, however, this is unlikely to work. Bankwest was not allowed to fail but was folded into the Commonwealth Bank. Even a small credit union like the Fitzroy and Carlton Community Credit Co-operative was <a href="https://www.bankmecu.com.au/why-bank-with-us/news-media/media/bankmecu-and-fitzroy-carlton-community-credit-co-operative" target="_blank">folded into a larger bank</a> last year rather than being allowed to fail.
Any new regulations to deal with the possibility of a future crisis must also deal with political reality. Minimum capital requirements on all banks can stabilise the banking system. However, a policy that just targets the big banks is unlikely to succeed.
Rodney Maddock is Vice Chancellor's fellow at Victoria University and adjunct professor of economics at <a href="https://www.monash.edu.au/" target="_blank" style="line-height: 1.3em;">Monash University</a>.
Stephen King is professor, Department of Economics at <a href="https://www.monash.edu.au/" target="_blank" style="line-height: 1.3em;">Monash University</a>.
Stephen King and Rodney Maddock received funding from CIFR for this project.
This article was originally published on <a href="https://theconversation.com" target="_blank">The Conversation</a>.
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Don’t just target the big banks: Why all banks need higher capital

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GUEST OBSERVATION
Whether it’s your first property or 21st, buying an investment property is a completely different process to purchasing a family home.
Buying the family home is an emotional decision-making process.
“Is the property big enough? Is that the part of town that we want to live? How does it fit in with the kids commute to school? Do we like it?”
These are all emotional questions which are very important in achieving the primary objective of buying the family home – the objective of being happy at home.
The primary objective of investing is different – to make money over the longer term. So, it’s important to totally remove all emotion from the purchase decision and to treat the asset not as a property, but a financial instrument.
The majority of investors purchase properties within 10 kilometres of where they live.  When asked why, these people often say “I know the market”. Knowing a local neighbourhood and knowing a property market are completely different. Buying locally for no other reason or with no other research than it is simply close to where we live, would be like a share investor saying “...Qantas is my preferred airline so I’ll invest in Qantas shares” – the shares have performed abysmally.
Australia is not one single property market; even Brisbane/Sydney/Melbourne have markets within their own market. With over 9.6 million properties in Australia, it is unlikely that you would be lucky enough to have ‘the best’ investment opportunity in your own neighbourhood.
Property investors would do well to adopt a business owner mindset to building and managing their property portfolio.  You’re in the business to make money through providing accommodation to people. You’ll make more money from the growth of your asset value over time than from the net rental income collected each year.
It is irrelevant whether or not an investment property resembles something that you would live in – that’s not the objective, that’s emotions clouding a financial decision. Remember that different people have different preferences for the cars they drive, the food they eat, the clothes they wear, and the type of property they live in.
It is important that an investment property has general demand from a broad market. Demand for accommodation is most influenced by affordability (the more people who can afford it, the higher demand) and where people work. Ongoing demand creates competition and price growth.
I’m not saying rush out and find the ugliest property, but we need to keep in mind that whilst an exceptionally well presented property may look pretty, it will also more often than not come with a larger price tag. The property must be structurally sound and presentable for potential tenants (that means neat, tidy and everything in working order).   
After a few years of tenants occupying a property, the shine will wear off the ‘pretty’ property with the even prettier price tag. We want a property looking its best when it comes time to sell – not when you are buying it.
Purchasing an investment property is a financial transaction; not an emotional one!
Bryan Loughnan is a buyer’s agent with <a href="https://www.propertyology.com.au/" target="_blank">Propertyology</a>. Bryan has a Bachelor of Applied Science majoring in property economics. 
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Make sure property investing is a financial decision, not an emotional one

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GUEST OBSERVATION
Australia’s policies to cut greenhouse emissions have been shrouded in uncertainty over the past few months. The contentious <a href="https://theconversation.com/au/topics/renewable-energy-target-review" target="_blank">Renewable Energy Target review</a> and the swapping of the <a href="https://theconversation.com/search?q=carbon+tax+repeal" target="_blank">carbon price</a> for <a href="https://theconversation.com/au/topics/direct-action-plan" target="_blank">Direct Action</a> have garnered most of the headlines. But another policy, which has quietly been cutting emissions for the past four years, is now also under scrutiny.
The <a href="https://www.cbd.gov.au">Commercial Building Disclosure</a> (CBD) program is the latest federal environmental policy to be placed under review. The scheme encourages energy efficiency by requiring owners to detail whether their buildings are high or low energy users. It has strong support in both industry and <a href="https://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22chamber%2Fhansardr%2Fa275472e-b699-46e7-ac29-bcf2fb8ee942%2F0165%22" target="_blank">politics</a>.
The review creates uncertainty about the future of a proven program which has been effective in improving energy efficiency.
The introduction of the CBD program in 2010 radically improved the visibility of building energy consumption and operating costs to prospective owners and tenants. This has created an effective market-based incentive to improve energy efficiency, without significant regulatory involvement or administrative overheads.
Improving the energy efficiency of existing buildings is one of the quickest, easiest and cheapest ways to cut greenhouse emissions. Some 85% of Australia’s buildings were built before energy-efficiency regulations were introduced, and turnover is slow: just 1-3% of buildings are replaced each year. Commercial buildings account for about 10% of Australia’s greenhouse emissions.
Cutting emissions saves money as well. The Intergovernmental Panel on Climate Change <a href="https://report.mitigation2014.org/drafts/final-draft-postplenary/ipcc_wg3_ar5_final-draft_postplenary_chapter9.pdf" target="_blank">reports that</a> cutting emissions in the building sector by 30% would have net economic benefits. In Australia, commercial building retrofitting is among the most economically attractive ways to reduce emissions.
How does the CBD program work?
The CBD program, also known as “mandatory disclosure”, encourages commercial building managers to drive emissions down. The scheme requires the disclosure of energy efficiency information on a building whenever a commercial office space larger than 2,000 square metres is offered for sale or lease. This includes giving the building a star rating (under a scheme called <a href="https://www.nabers.gov.au/public/WebPages/ContentStandard.aspx?module=10&amp;template=3&amp;id=5&amp;include=HowNabersWorks.htm&amp;side=factsheets.htm" target="_blank">NABERS</a>), detailing the efficiency of its lighting, and making recommendations for further improvements.
<img src="https://62e528761d0685343e1c-f3d1b99a743ffa4142d9d7f1978d9686.ssl.cf2.rackcdn.com/files/64431/width668/vpfdgmzy-1415838189.jpg" alt="">
Example of the signage required for compliance with CBD obligations Australian Government Department of Industry
This empowers potential tenants or buyers to choose more efficient buildings, and thus creates market pressure for owners to improve their energy efficiency. Since the announcement of the program, the average star rating <a href="https://cbd.gov.au/files/files//IPD-Department%20Of%20Industry%20NABERS%20Energy%20Office%20Market%20Analysis%20Q4%202013.pdf" target="_blank">has jumped</a> from 3.3 to 4.1, while the amount of floor area covered by the NABERS rating scheme has almost doubled.
Individual buildings rated more than once whilst CBD has been in operation have <a href="https://www.nabers.gov.au/AnnualReport/2010-14-cbd-statistics" target="_blank">reduced their energy</a> use by an average of 8.6%. This would deliver an almost 1% reduction in Australia’s total greenhouse emissions if implemented across the entire commercial building stock.
The program has been particularly effective at targeting smaller, poorer-performing buildings, in contrast to flagship office buildings where being green is already a key consideration. Compared with <a href="https://www.nabers.gov.au/AnnualReport/index" target="_blank">other schemes</a> targeting this sector the market-based CBD program has been a huge success.
This article continues on the next page. Please click below.
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So why review the scheme?
The CBD program has <a href="https://www.propertyobserver.com.au/https://www.thefifthestate.com.au/politics/government/cbd-program-up-for-review-and-axing/67608" target="_blank">strong support</a> from both the property and sustainability industries, including the companies that work to retrofit old buildings. The Green Building Council of Australia has <a href="https://www.gbca.org.au/uploads/180/35252/GBCA%20Pre-Budget%20submission%20to%202014-15%20Federal%20Budget%20FINAL%20310114.pdf" target="_blank">singled out the scheme</a> as playing an important role in raising awareness and setting minimum standards for energy efficiency.
The <a href="https://cbd.gov.au/overview-of-the-program/cbd-review-201415/terms-of-reference" target="_blank">review</a> will be carried out by ACIL Allen, the company that also provided modelling for the controversia<a href="https://theconversation.com/au/topics/renewable-energy-target" target="_blank">l Renewable Energy Target Review</a>. It will advise on whether the scheme should continue or be scrapped, but will also be free to make broader recommendations that it be broadened out to include smaller buildings or non-commercial properties. This wide remit has <a href="https://www.propertyobserver.com.au/https://www.thefifthestate.com.au/business/trends/behind-the-lines-in-energy-efficiency-land/68141" target="_blank">already been blamed</a> for creating damaging uncertainty in the energy-efficiency industry.
Meanwhile, the federal government has outlined a method for <a href="https://www.environment.gov.au/system/files/pages/a6d1ee7d-2e4d-42b2-b9c8-43a5564c2302/files/commercial-buildings-determination.pdf" target="_blank">including commercial building emissions reductions in the Carbon Farming Initiative</a>, as part of the newly approved Direct Action plan. The proposed method uses the NABERS star rating of a building as a measure of energy consumption.
In some ways the CBD program would be a natural fit with the proposed method. A building owner required to get a star rating under mandatory disclosure could potentially then bid for Direct Action funding to improve it. But Direct Action, which is focused primarily on large projects, requires bidders to achieve minimum emissions reductions of 2,000 tonnes of carbon dioxide per year – 10 times larger than the level <a href="https://www.environment.gov.au/submissions/emissions-reduction/green-paper/263-property-council-of-australia.pdf" target="_blank">advocated for</a> by the Property Council of Australia.
This means that an average commercial building attempting to cut its energy use by a very ambitious 30% would need to have a floor area of at least 18,000 sq m to be eligible for Direct Action. This would exclude almost 80% of office buildings, unless the savings from various different buildings were lumped together to form a bigger project.
It seems unlikely that the CBD program will be entirely scrapped, particularly as it has proved to be effective in cutting emissions without direct government subsidies. Its alignment with Direct Action plan also further strengthens the case for the CBD to be retained in its current form.
But there’s a danger that the large minimum emissions reductions required for Direct Action funding and ongoing policy uncertainty will act as barriers to efficiency improvements being made in much of the commercial building sector.
Daniel Daly is a PhD candidate at the Sustainable Buildings Research Centre at University of Wollongong. He is a current member of The Greens.
Paul Cooper is professor and director of the Sustainable Buildings Research Centre (SBRC) at University of Wollongong.
This article was originally published on <a href="https://theconversation.com" target="_blank">The Conversation</a>.
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Green building scheme review adds yet more policy uncertainty

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GUEST OBSERVATION
The Australian television satire <a href="https://www.abc.net.au/tv/programs/utopia/" target="_blank">Utopia</a> invited the public along for a laugh that architects and planners have been sharing for decades. We laugh at the idea of utopia to disassociate ourselves from the disasters brought on by utopian visions.
Le Corbusier’s is perhaps the most famous. He dreamt of people living in racks of council flats rather than old building stock on the ground.
The only architects who have not gotten too savvy to dream of utopias are men in their 90s who missed the change in public opinion.
<a href="https://www.thevenusproject.com/" target="_blank">Jacque Fresco</a> hopes one day that machines will build mega-structures while we humans relax. Paolo Soleri’s hyper-dense prototype, <a href="https://arcosanti.org/" target="_blank">Arcosanti</a>, remains permanently stalled with 97% of the work incomplete.
These examples are goofy-faced totems for a demon that we actually fear. Serious architectural writers bring up examples like Albert Speer’s plan for Berlin and concentration camps.
Karl Popper cemented the association between utopianism and totalitarianism. Writing <a href="https://en.wikipedia.org/wiki/The_Poverty_of_Historicism" target="_blank">in 1957</a> after making a name for himself as a critic of Marxist epistemology, he said social engineering (especially of the Marxist variety) was despotic, delusional and — you guessed it – utopian. The word has had Orwellian overtones ever since.
Our urban landscapes have utopian pedigrees
That’s fair enough if we’re talking about religious or ideological utopian visions. Urban planning is different. It depends on utopian visions as touchstones. Urban planners need to be granted a unique dispensation and allowed to talk in utopian strains.
One reason was explained by architectural writers <a href="https://books.google.com.au/books/about/Concepts_of_urban_design?id=JKU2AQAAIAAJ&amp;amp;redir_esc=y" target="_blank">David Gosling and Barry Maitland</a>. While acknowledging Popper’s concerns, they argued that utopian visions in urban design are catalytic – never mind the handful of fools who treat them as prescriptions. Utopian visions bring clarity to real-world debates, they argued, “by postulating alternative hypotheses in a pure and crystalline form".
Another theorist, <a href="https://books.google.com.au/books/about/The_Rule_and_the_Model?id=cUlQAAAAMAAJ&amp;amp;redir_esc=y" target="_blank">Françoise Choay</a>, argues the enterprise we call urbanism would not exist without utopian models. All urban theories, she says, have been indelibly stamped by past utopian models.
Surely that can’t be true of urban theories today, when architects and urban planners laugh at a show called Utopia? It is undeniably true. Current urban theories have utopian pedigrees, some now 100 years old.
<img src="https://62e528761d0685343e1c-f3d1b99a743ffa4142d9d7f1978d9686.ssl.cf2.rackcdn.com/files/62809/width237/m24c8x7p-1414374134.jpg" alt="">
We see the mark of Ebenezer Howard’s utopian <a class="source" href="https://en.wikipedia.org/wiki/Garden_city_movement" rel="nofollow">Wikimedia Commons</a>
Take the principle of consolidating development within walking distance of train stations: it has been indelibly stamped by Ebeneza Howard’s <a href="https://en.wikipedia.org/wiki/Ebenezer_Howard#mediaviewer/File:Garden_City_Concept_by_Howard.jpg" target="_blank">circular diagram</a> for transit-based <a href="https://en.wikipedia.org/wiki/Garden_city_movement" target="_blank">“garden cities”</a>.
Less flatteringly, our permissiveness of ongoing sprawl betrays the indelible stamp of Frank Lloyd Wright’s <a href="https://en.wikipedia.org/wiki/Broadacre_City#mediaviewer/File:Wright_Sketches_for_Broadacre_City.jpg" target="_blank">Broadacre City</a>. Wright thought the natural outworking of personal mobility machines (cars) was that every person should get enough land of their own to pretend they are farmers.
Most embarrassing of all are our inner-city apartments. Built over batteries of multi-storey car parking, and beside roads that look like great venues for Formula One racing, most bear the indelible stamp of the General Motors <a href="https://www.1939nyworldsfair.com/worlds_fair/wf_tour/zone-6/general_motors.htm" target="_blank">“Highways and Horizons”</a> pavilion with its Futurama exhibition at the 1939 World’s Fair in New York.
Rarely these days are utopian visions rolled out all at once. They are more typically in the background, like the rules of a game, informing piecemeal implementation.
Many of us will have had firsthand experience with one, the Broadacre game, if ever we have built a house on a large block of land. We would have asked ourselves how the car could be parked between the kitchen and road, and what travel times (never mind distances) that road could promise to roadside amenities.
Velotopia: a new vision
<a href="https://62e528761d0685343e1c-f3d1b99a743ffa4142d9d7f1978d9686.ssl.cf2.rackcdn.com/files/62921/area14mp/ynyj89x5-1414450200.png"><img src="https://62e528761d0685343e1c-f3d1b99a743ffa4142d9d7f1978d9686.ssl.cf2.rackcdn.com/files/62921/width668/ynyj89x5-1414450200.png" alt=""></a>
<a class="source" href="https://cycle-space.com" rel="nofollow">Author/Cycle Space</a>, Author provided
As two authors who choose to rely on our bikes for most of our transport, it bothers us that the rules of our game are not well understood. When we choose where to live, shop, work or send our children to school, we don’t care so much about walking distances, the frequency of public transport or congestion on roads. We want to know where the cycleways are.
Cycleways tend to follow historic rail easements and waterways. This means that as cyclists our cognitive maps of most cities are dominated by the flatlands on the wrong side of the tracks that these cycleways often pass through. Ironically, it is often these very flatlands that, in time, become the new sites for <a href="https://observer.com/2014/06/that-zaha-moment-new-york-finally-gets-the-avant-garde-buildings-it-deserves/" target="_blank">“starchitect” development</a>.
We want to offer a new utopian dream. It is not borne of signature buildings but rather built on a bicycle-oriented lifestyle and informed by a utopian dream we call Velotopia.
In its crystalline form, Velotopia uses pedal power for virtually everything, even <a href="https://www.trisled.com.au/maxi-taxi.asp" target="_blank">taxis</a> and <a href="https://federation.cyclelogistics.eu/" target="_blank">freight</a> — a trend in European town centres already. In this utopia, cyclists cover 10-kilometre trips in 30 minutes of safe and social bliss. There to meet them at both ends are secure and convenient bike-parking facilities inside most buildings; our bikes are as welcome as wheelchairs or prams.
We’re not asking that the rules of our game obliterate those of car lovers, walkers or <a href="https://www.tarasgrescoe.com/straphanger/about" target="_blank">straphangers</a>. We’re simply following the conventions of our disciplines to imagine that our cities could accommodate an extra utopian dream, one that creates a safe cycling space. Put like that, it is a remarkably simple and profoundly utilitarian ask.
Our work is to bring Velotopia into plain view, as a catalytic vision. Some of our ideas for bike-access building types and ground planes designed to prioritise cycling will be on display in the Queensland Museum in Brisbane from November 28, 2014, to June 2015, as part of the National Museum of Australia’s Freewheeling exhibition. In late November we will meet policymakers in Brisbane to explore the principles of Velotopia as a catalyst for bicycle-orientated development.
As Velotopia becomes visible, we envisage a safer and more enjoyable cycling space, which can take its place among other utopias that influence the structure and spaces of our cities.
<img src="https://counter.theconversation.edu.au/content/33358/count.gif" alt="The Conversation" width="1" height="1">Steven Fleming is senior lecturer, School of Architecture &amp; Design at University of Tasmania. Steven is a member of the Reference &amp; Experts Panel of the Australian Cyclists Party.
Angelina Russo is professor of cultural practice at University of Canberra. Angelina has received funding from the Australia Research Council. She is an invited member of the Reference &amp; Expert Panel of the newly formed Australian Cyclist Party.
This article was originally published on <a href="https://theconversation.com">The Conversation</a>. Read the <a href="https://theconversation.com/utopia-seriously-good-urban-planning-should-aspire-to-it-33358">original article</a>.
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Utopia: seriously, good urban planning should aspire to it

Queensland builder-developer MAYD has revealed the first look at its major North Kirra beachfront development, lodging amended plans that reduce the number of apartments and increase the proportion of larger residences.

The project is planned across a substantial 4,742 sqm amalgamated site spanning seven lots at <a href="https://www.apartments.com.au/new-apartments/2-6-pacific-parade-bilinga-qld-4225">2-6 Pacific Parade</a> and 27-33 Golden Four Drive in Bilin​ga, directly opposite Nor​th Kirra Beach.

<a href="https://www.apartments.com.au/developers/mayd-group">MAYD</a> secured the site for $32.5 million in 2025, in what was one of the Gold Coast's largest property transactions of the year.

The development will be delivered across two stages, with the first stage carrying an estimated gross realisation value of around $360 million.

The latest amendments seek to reduce the overall apartment count and shift the project further toward the owner-occupier market, with larger residences designed for buyers wanting considerably more space than traditionally offered in a beachfront apartment.

The residential mix will include townhomes, oversized two-bedroom apartments, substantial three-bedroom residences and four-bedroom homes.

MAYD has appointed Cera Stribley to lead the architecture and interiors, with the Melbourne-based design practice drawing on the beachfront setting through a series of ocean-facing terraces and heavily landscaped balconies.

Strong horizontal forms and curved balconies will define the exterior, with subtropical landscaping integrated throughout the building to soften the built form and increase the connection between the residences and the beachfront.

The project will also include an extensive collection of resident wellness and lifestyle facilities, continuing the broader shift across the Gold Coast's luxury apartment market toward larger homes supported by resort-style amenity.

<img alt="MAYD" data-entity-type="file" data-entity-uuid="d1bcbb05-e659-4b47-8bd4-1e595315e2ad" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-27%20at%202.05.03%E2%80%AFPM.png?VersionId=jj0XEud1X1DuLt7_KyElhjMdZGOXmLHP" />

MAYD Founder Todd Mould said North Kirra was increasingly appealing to buyers attracted to the more established, lower-density character of the southern Gold Coast.

"North Kirra presents one of the most compelling luxury residential opportunities currently emerging in Australia, combining absolute beachfront with the character and authenticity that buyers are increasingly seeking, and the same sense of tight-knit community that defined Burleigh and Currumbin perhaps 10 or 15 years ago," Mould said.

"With Gold Coast Airport on its doorstep, it also offers a level of accessibility that broadens its appeal across almost every market demographic."

The project comes as the southern Gold Coast continues to attract an increasing share of high-end apartment development and buyer activity.

Kirra in particular has emerged as one of the region's more tightly held beachfront markets, with its relatively low-density character, established surf and hospitality scene and proximity to Gold Coast Airport differentiating it from the higher-density markets further north.

Mould said those characteristics had informed the approach MAYD and Cera Stribley had taken to the project.

"We've worked closely with Cera Stribley to create a vision that is deeply connected to its surroundings," he said.

"Inspired by the coastline itself, the architecture has been shaped around space, privacy and resort-style living, creating a collection of homes that reflects the next generation of luxury on the southern Gold Coast."

MOTIV Managing Director Carly Cottam, who has been appointed to market the project, said buyer attention had continued to move south along the Gold Coast.

"Purchasers who may once have defaulted to Broadbeach, Main Beach or Surfers Paradise are increasingly recognising the value of a genuine beachfront location that offers lower density, strong amenity and a more established sense of community," Cottam said.

"Kirra has a powerful combination of growing demand and genuine scarcity. Beachfront supply is inherently constrained, the area remains relatively low density, and buyers are increasingly placing a premium on locations that feel established, uncrowded and authentic rather than heavily developed."

Cottam said the proximity to Gold Coast Airport was also proving increasingly important for interstate and second-home buyers.

"Being minutes from Gold Coast Airport makes it particularly compelling for interstate buyers, frequent travellers and second-home purchasers who can access an authentic coastal lifestyle almost immediately after stepping off a flight."

The acquisition takes MAYD's active development portfolio to more than $500 million, with the North Kirra project representing one of its largest undertakings to date.

MAYD is targeting an early 2027 launch.

Joel Robinson

First look at MAYD's North Kirra mixed-use precinct

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Castle Hill, the longtime hub of the Hills District, has been one of the major beneficiaries of Sydney's Metro expansion, with improved connectivity helping drive continued population growth, development and buyer demand across the Hills District.

But despite that growth, the suburb has seen relatively few major new apartment projects brought to market over the past 18 months.

Hills District developer Reve Group is looking to fill that gap with <a href="https://www.apartments.com.au/new-apartments/nova-r-ve-castle-hill-2-garthowen-crescent-castle-hill-nsw-2154">Nova Rêve</a>, a major new mixed-use precinct on the corner of Garthowen Crescent and Old Castle Hill Road, a short walk from Castle Hill Metro Station and Castle Towers.

[smartcode_project:default project_id=152737 project_image_fid=377679]

The project will comprise three residential towers alongside a hotel, restaurants, cafes and a skybar, more than 1,600 sqm of ground-floor retail and almost an acre of landscaped gardens.

It represents the largest project undertaken by Reve Group, the development arm of the Kassis family, which has been building across the Hills District for more than 30 years through Kassis Homes.

[smartcode_project:default project_id=152737 project_image_fid=377675]

Nova Rêve also represents a significant step up from the family's first apartment development, Grand Rêve, which was delivered nearby on Garthowen Crescent.

Grand Rêve introduced larger, house-like apartment layouts and premium inclusions including Wolf and Sub-Zero appliances to the Castle Hill market.

Nova Rêve takes that approach to a precinct scale, combining the residential component with hospitality, retail and substantial public and resident landscaping.

[smartcode_project:default project_id=152737 project_image_fid=377685]

Reve Group Managing Director Sam Kassis said the project reflected the family's three decades of building in the Hills, which has evolved from trophy homes on quarter-acre blocks to larger-scale apartment development.

"Grand Rêve was our first apartment project here and it showed us what this pocket of Castle Hill could be. Nova Rêve is the refinement of that idea: not just apartments, but a place the whole suburb can use," Kassis said.

A key part of that approach is the hotel, which has been designed to operate as an amenity for the wider Castle Hill community rather than solely hotel guests.

It will include restaurants, cafes, skybars and all-day dining, alongside conference and event facilities catering to business functions, community groups and private events.

At ground level, more than 1,600 sqm of shops and cafes will open onto the surrounding streets and landscaped areas.

Almost an acre of gardens designed by Land and Form Studios will run through the precinct, incorporating pathways, seating, barbecue areas and children's play spaces.

[smartcode_project:default project_id=152737 project_image_fid=377680]

Reve Group's Romio Georges said creating an active ground plane had been central to the planning of Nova Rêve.

"There are gardens with pathways, barbecues, seating and play areas, shops and cafes opening onto the street, and a hotel with restaurants and a skybar that anyone in Castle Hill can walk into," Georges said.

The project's elevated position on one of Sydney's highest ridgelines will also provide apartments with outlooks toward the Sydney skyline, surrounding parkland and the Blue Mountains.

More than 80 per cent of the apartments will occupy corner positions, with Turner responsible for both the architecture and interiors.

&nbsp;

[smartcode_project_cta:default project_id=152737]

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Nova Rêve arrives as Reve Group bets on Castle Hill's next growth phase

A collection of just 25 large-format apartments and penthouses overlooking Goodwin Park is entering the Coolangatta market, with <a href="https://www.apartments.com.au/new-apartments/marea-residences-coolangatta-27-27a-dixon-street-coolangatta-qld-4225">Maréa Residences</a> combining a low-density, residential-only approach with uninterrupted park and Pacific Ocean outlooks.

Located at 27 Dixon Street, Maréa comprises three and four-bedroom residences alongside a limited number of dual-level penthouses, with the project positioned between Goodwin Park and <a href="https://www.apartments.com.au/developments/coolangatta-qld-4225">Coolangatta</a>’s coastal precinct.

Construction has commenced, with completion currently estimated for late 2027. Three-bedroom residences are priced from $1.8 million.

[smartcode_project:default project_id=150999 project_image_fid=374005]

The project has been designed around its northern outlook across the park, with the building’s architecture, landscaping and material palette intended to establish a connection with the neighbouring green space. The residences have been configured to maximise natural light and views across Goodwin Park towards the ocean.

Inside, the material palette incorporates timber, stone and brushed brass, complemented by curved detailing and ambient lighting. Kitchens and bathrooms carry the same natural material approach, while residences also include basement parking, storage and lift access.

Maréa’s penthouses are arranged over two levels and include private pools, adding another layer to the project’s focus on larger-format apartment living. Across the development, residences are configured with three or four bedrooms rather than the broader mix of smaller apartment types commonly found in larger projects.

[smartcode_project:default project_id=150999 project_image_fid=374010]

Resident amenity is concentrated at rooftop level, where landscaped entertaining terraces and pools take advantage of elevated views across Coolangatta and the Pacific Ocean.

The project has so far been particularly well received by local owner-occupiers and downsizers, according to Urban Activation Property Sales and Marketing Director Matt George, with the residential-only format, construction quality and northern park outlook among the features resonating with purchasers.

“The uninterrupted northern aspect overlooking Goodwin Park has been a key point of difference, with buyers attracted to the sense of serenity and open space the park provides, while still enjoying easy access to the ocean and being within walking distance of the lifestyle and amenities Coolangatta has to offer,” George said.

[smartcode_project:default project_id=150999 project_image_fid=374002]

“The combination of high-quality construction, a residential-only building, park outlook and proximity to the beach has resonated strongly with the local downsizer market.”

The Dixon Street address is within walking distance of Coolangatta Beach and the broader southern Gold Coast coastline, including the surf breaks at Snapper Rocks and Kirra. Coolangatta’s cafés, restaurants and retail are nearby, while Gold Coast Airport is also within close proximity.

[smartcode_project_cta:default project_id=150999]

Maréa Residences brings parkside apartments to Coolangatta

Melbourne developer PDG has secured Victorian Government approval for its $1.5 billion Southbank development <a href="https://www.apartments.com.au/new-apartments/the-one-1-queens-bridge-street-southbank-vic-3006">The One</a>, clearing the way for the long-dormant riverfront site opposite Crown to finally be developed.

The Minister for Planning has approved the project at 1-29 Queens Bridge Street, with the Department of Transport and Planning issuing the planning permit following its assessment.

The approval will allow PDG to develop the prominent 5,059 sqm site with a major mixed-use tower comprising premium apartments, including branded residences, a luxury hotel and boutique office space.

PDG acquired the site in late 2024, with its position directly opposite Crown's main entrance and near Melbourne's Arts Precinct making it one of Southbank's most significant remaining development opportunities.

<img alt="PDG" data-entity-type="file" data-entity-uuid="3933013e-6332-4386-b9be-089df05caf17" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-27%20at%209.29.22%E2%80%AFAM.png?VersionId=sITIgBqDL0N3VNSMwWEmF5UA.uvcsRyu" />

Designed by COX in collaboration with ODO and PDG, the tower's architecture draws on the movement of the Yarra River, with six vertical pleats running the height of the sculpted facade.

The project will also see the heritage-listed Queens Bridge Hotel restored and incorporated into the development&nbsp;with new hospitality and public uses, including a rooftop venue.

A significant component of The One will be its residential amenity.

More than 5,000 sqm of resident facilities will be delivered across a single level, making it one of the largest consolidated residential amenity offerings proposed in an Australian apartment development.

The planning approval also incorporates a major upgrade of Queensbridge Square, which PDG will deliver in partnership with the City of Melbourne.

<img alt="PDG" data-entity-type="file" data-entity-uuid="73167fcd-1031-4b6f-a408-a064cfe45ed1" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-27%20at%209.29.17%E2%80%AFAM.png?VersionId=Pf1AEWxw6SNmBqR0zQW5lyEze.MtxgFp" />

The existing square will be revitalised as a new civic and pedestrian space along the Yarra River, strengthening the connection between the project, Southbank and the riverfront.

PDG Founder and Managing Director Vince Giuliano said the approval represented a major milestone for a site which has remained largely underutilised for more than 15 years.

“This is the most significant Planning Permit approval Melbourne has seen in recent years,” Giuliano said.

“For more than 15 years, this site has remained underutilised. This approval enables us to deliver a project that will contribute meaningfully to the revitalisation of Southbank, restore and reactivate an important heritage building, and create a new civic and hospitality destination for Melbourne.”

The latest approval follows an earlier planning permit issued by the City of Melbourne covering demolition works across part of the site at 9-29 Queens Bridge Street. Those demolition and early works are already underway.

PDG has also started generating early interest in the residential component from owner-occupiers ahead of a planned public launch in early 2027.

PDG secures approval for $1.5bn Southbank apartment development, The One

Local developer Harridan is seeking to turn its Woolloongabba apartment project into the first stage of a broader transformation of Burke Street, using a new 16-storey mixed-use building to establish a greener pedestrian connection toward the rapidly evolving Boggo Road transport and knowledge precinct.

The South East Queensland developer has filed plans for 154 apartments on the <a href="https://www.apartments.com.au/new-apartments/4-burke-street-woolloongabba-qld-4102">southern side of Burke Street</a>, where its proposal has been designed alongside a wider vision by LatStudios for the street.

That vision positions the southern side of Burke Street for buildings of 15 storeys and above, while envisaging lower-rise development of up to five storeys on the northern side to transition into Woolloongabba's existing character housing. It also proposes wider pedestrian verges, deep planting, new street trees and upgrades to the pedestrian approach to Boggo Road Station.

The Harridan development itself has been designed by Brisbane-based Arqus Design and will comprise 154 apartments across 16 storeys. The mix is weighted heavily toward two-bedroom apartments, with 121 proposed alongside 10 one-bedroom and 23 three-bedroom residences. There will typically be around 14 units per floor.

A lower-ground car park and three podium levels will accommodate 156 resident parking spaces, along with visitor and commercial parking. There will also be 154 resident bicycle spaces and 40 visitor bicycle parks.

&nbsp;

Harridan is a family-owned developer and part of the Holmwood Highgate Group, with more than three decades of development activity across South East Queensland. Its portfolio spans residential, commercial and industrial property, with current residential projects including Riverbank on Byron in Bulimba, Esperance Residences in Carina and The Precinct at Kinross Road in Thornlands.

Wooloongabba has been popular for apartment developers, particularly since the announcement of the 2032 Summer Olympics games in Brisbane.

While there have been a lot of development applications, it has failed to materialize into real supply.&nbsp;

Sarazin has been the major player in the area. They are under construction at Murcia Residences, on the fringe of East Brisbane and Woolloongabba. They have just launched <a href="https://www.apartments.com.au/new-apartments/the-stanley-residences-woolloongabba-8-trafalgar-street-woolloongabba-qld-4102">The Stanley Residences</a>, in Woolloongabba on Trafalagar Street. They also have Nuage coming soon on the nearby <a href="https://www.apartments.com.au/new-apartments/nuage-woolloongabba-14-wellington-road-woolloongabba-qld-4102">Wellington Road</a>.

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