Housing industry backs scope 3 rollback to ease growing compliance burden

HIA Chief Executive Industry and Policy, Simon Croft, said builders, manufacturers, suppliers and tradies were facing an increasing number of reporting and compliance obligations that often duplicate existing requirements and impose costs on businesses with little capacity to influence the outcomes.

"Red tape is stifling businesses and hitting margins. Removing the requirement for Scope 3 reporting is the right thing to do for the economy and will help businesses along supply chains reduce reporting complexity.

"It is a practical measure to reduce regulation and would help free up businesses to invest and grow."

Mr Croft said Scope 3 reporting would have added to a growing list of requirements already impacting businesses throughout the residential building supply chain.

"Over recent years businesses have seen a steady increase in compliance obligations relating to energy efficiency standards, timber sourcing requirements, environmental approvals, product certification, modern slavery reporting and broader supply chain due diligence requirements.

"While these measures arise from different policy areas, they often require businesses to provide similar information through multiple channels, creating duplication, increasing costs and diverting resources away from productive activity."

Mr Croft said the practical effect of Scope 3 reporting was that obligations imposed on large organisations would inevitably flow through to thousands of smaller businesses.

"What starts as an obligation for a large company quickly becomes an obligation for manufacturers, importers, suppliers, builders and subcontractors.

"Small businesses find themselves responding to data requests, declarations and reporting requirements generated by obligations that sit elsewhere in the supply chain.

"Many of these businesses have limited ability to influence the information being requested, yet they bear the cost and administrative burden of supplying it."

Mr Croft pointed to recent comments from former Chief Scientist Alan Finkel which showed there were broader concerns about the practicality of extending obligations beyond the emissions that a reporting business can directly control.

"Alan Finkel has noted that it made no sense to require consideration of Scope 3 emissions generated by entities that are not owned or controlled by the reporting business when emissions from legally operating industrial facilities are already accounted for at the source and should be addressed through established government policy and regulatory frameworks.

"That observation reflects a practical reality for many businesses in the housing supply chain. Scope 1 and Scope 2 reporting already capture emissions generated within a company's own operations and from the energy it purchases.

"As reporting obligations extend further through supply chains, businesses can find themselves being asked to account for activities that sit well beyond their direct operations or control."

HIA said the housing industry was increasingly concerned by the cumulative impact of regulation on business productivity, investment and housing supply.

"The issue is not any one regulation in isolation. It is the growing stack of obligations that businesses are required to navigate every day.

"Whether it is Scope 3 reporting, energy efficiency requirements, timber sourcing obligations, environmental approvals, anti-illegal logging requirements, modern slavery reporting or other supply chain due diligence measures, businesses are increasingly being asked to provide similar information through multiple frameworks and to multiple parties.

"For many manufacturers, suppliers, builders and tradies, the challenge is no longer any individual regulation. It is the cumulative impact of overlapping compliance requirements that continue to flow through supply chains.

"At a time when governments are looking for ways to improve productivity and boost housing supply, reducing unnecessary duplication should be a priority."

Mr Croft said governments should carefully assess the broader impacts on supply chains before introducing new reporting requirements.

"Builders, suppliers and manufacturers want to focus on delivering products, materials and homes, not becoming compliance officers for multiple layers of reporting obligations.

"The Opposition's proposal is a sensible step towards reducing unnecessary red tape and recognising the practical realities facing businesses across the housing sector," concluded Mr Croft.