Plumbing students at Holmesglen Chadstone TAFE in Melbourne learn practical money skills with Start Smart facilitator Shane Cliff (from back of room)

Start Smart beyond schools

In 2016, our Start Smart Pathways program for vocational education students expanded with the launch of two new small business workshops aimed at third-year apprentices. There are now six workshops available for young adults through their vocational educational institution covering a range of money management issues.

Norman Colling, carpentry teacher at TAFE, Victoria University, Sunshine shared his thoughts on the program:

"I am writing to thank you Start Smart and your employer, the Commonwealth Bank, for running a very organised and informative workshop on banking for the students at Victoria Polytechnic recently. You not only engaged the students but were of great benefit to their future understanding of managing money and budgets. As our students are from lower socio-economic backgrounds I feel that this was especially beneficial as a lot of them have very little understanding of how to make the most of their meagre incomes.

I would recommend this workshop to others, as it had a great impact and lasting ramifications. Some of my students already have made good decisions on getting car loans through banks instead of high interest car yards. Others have opened bank accounts and tell me they are reaping the benefits from following your advice.

Thank you again for attending and hope that you will be able to continue the good work with our students as I can definitely see the advantages for their future.”

Plumbing students at Holmesglen Chadstone TAFE in Melbourne learn practical money skills with Start Smart facilitator Shane Cliff (from front of room)

Plumbing students at Holmesglen Chadstone TAFE in Melbourne learn practical money skills with Start Smart facilitator Shane Cliff.

Image of Adele Salleo, a teacher who previously received a Commonwealth Bank Education Award

Adele Salleo, teacher who previously received a Teaching Award

Impact of teaching awards

Adele Salleo, teacher at Hampton Park Primary School in Western Australia shared her experience of receiving an Education Award: “It has been an amazingly positive experience with so much support. I have received a letter of congratulations from the Western Australian Education Minister, Peter Collier, and he came into my classroom two weeks ago to meet me and hear about our program. The local Member of Parliament also came along. Just yesterday I was congratulated on my award by the School Reviewers. It has built such a positive response from the whole School Community and word of our program has been spread around.

The money is being wisely used. I have been busy purchasing our materials for our Financial Literacy kits and I am hoping to get them set up and in use very soon. I have a kitchen designed and we are working towards construction.

We run a Technology and Enterprise Day which we prepare for all year and the award inspired the staff to make last year's day at the end of October an amazing event with even more emphasis on the Financial Literacy for our students with business stalls run by the students. The emphasis continued long after the day with an incursion from Start Smart. This year the classes are building on last year's knowledge already and we are trailing the new Start Smart incursion in June."

Image of two people from Sovereign in New Zealand receiving a certification from Rainbow Tick

Rainbow Tick achieved in New Zealand

In August 2015, Sovereign became the first insurance company in New Zealand to be awarded the Rainbow Tick. The Rainbow Tick is a certification mark awarded to organisations that complete a process which tests whether a workplace understands, values and welcomes sexual and gender diversity.

Within the audit report, Rainbow Tick said “We believe Sovereign is a company that is showing true leadership and commitment to this ideal in the New Zealand workplace. We know that when people can be themselves at work without fear of negative reactions they are better able to work, happier and more productive.

This was not just a box-ticking exercise, but a reflection of Sovereign’s culture. Sovereign has set a great example for others to follow.” Rainbow Tick Programme Director, Michael Stevens.

82% of people agree that people are treated equally and fairly at Sovereign regardless of gender, age, ethnicity, disability, religion, or sexual orientation

Image of a wind turbine

Supporting the growth of the renewable energy sector

To help manage the transition to a more renewable energy future, Commonwealth Bank not only lends to the renewable energy sector in Australia but we also support the sector in New Zealand,the UK, Europe and North America.

The UK's share of generation from renewables increased from 19.1 per cent in 2014 to a record 24.6 per cent in 2015 1. Below are three case studies that demonstrate how we are navigating the complexities of meeting the UK Government’s renewable energy targets to help limit global warming and carbon emissions. These examples span offshore wind farms (Beatrice), onshore wind farms (Greencoat) and solar projects (Magnetar).

More electricity is generated in the UK from offshore wind than any other country and Commonwealth Bank is an active financier in this space. We provided financing for the construction of what will be the UK’s second largest offshore wind farm to date. The 588 MW Beatrice Offshore Wind Farm will be built 13.5 kilometres off the Caithness Coast in Scotland. It is expected to be fully operational in 2019 and to meet the needs of up to 450,000 homes across Scotland and the UK.

We are one of the mandated lead arranger banks, along with the Danish Export Credit Agency and the European Investment Bank, providing finance and hedging for the construction of the Beatrice offshore wind farm. The total funding requirement is £2.6 billion of which we are providing £100 million. The debt has a tenor of up to 19 years fully amortising.

The UK Government granted the Beatrice project an Investment Contract (an early stage under the Contracts for Difference (CfD) that was implemented as part of the UK’s Electricity Market Reform programme. The CfD de-risks projects by removing electricity price risk which attracts more investment into the sector. Investment leads to scale, efficiency and a reduction in costs, as demonstrated by more recent CfD auctions in Europe where similar subsidy regimes are available.

The UK Government and European counterparts are focused on meeting green-house gas emission reduction targets. The UK has set a target of 15 per cent of final energy consumption and 30 per cent of electricity production to come from renewable sources by 2020.

Offshore wind presents significant potential for renewable energy deployment given investment in the sector to date and supportive European regulatory regimes. Germany, The Netherlands, Denmark, Belgium and France each have significant project pipelines, supportive regulatory regimes and stable political outlooks. The potential offshore wind pipeline comprises over 30 projects requiring financing of ~A$60 billion between 2016 and 2018 across the UK and the other jurisdictions mentioned.

Commonwealth Bank is proud to be a key relationship bank of Greencoat. When Greencoat UK Wind debuted on the London Stock Exchange in March 2013 it became the first listed so-called renewable energy 'yield co'.

Greencoat successfully demonstrated that renewable energy projects could access an untapped source of financing beyond the small pool of funding provided by balance sheet-constrained utilities and private equity. As a result, billions of dollars have flowed into Greencoat and the many other listed renewable energy vehicles that were launched in the trail that Greencoat blazed.

Greencoat's renewable energy investment solution is simple enough in concept but had a considerable impact on the industry. Greencoat’s innovative platform attracts broader institutional equity interest found by matching long-term equity with long-term assets. This enables efficient large-scale renewable energy deployment by recycling developer capital.

Commonwealth Bank leveraged our expertise in the UK renewable sector to help Greencoat establish an innovative and flexible debt financing platform that responds to its unique needs and requirements. The single bank term financing solution of £100 million we provided comprises a seven-year interest-only loan and associated interest rate swaps. This financing platform allows all commercial lending to sit on a paripassu basis at holding company level with underlying investments left unlevered.

This financing strategy helped optimise Greencoat’s cost of capital and enhance shareholder returns. Additionally, it enables flexible capital deployment for future growth. In the last financial year Greencoat acquired three wind farms for around £310 million while delivering a 6.34 pence dividend to its investors.

Greencoat's investment portfolio currently comprises 19 operational UK wind farms, predominantly onshore, with an aggregate net installed capacity of 420 MW. The estimated installed capacity of onshore wind in the UK stood at 9GW in 2015 with offshore at 5GW. By 2020, offshore wind installed capacity is expected to equal that of onshore wind at 12GW. Hence, investment focus will increasingly shift to offshore wind development, and Commonwealth Bank is well positioned to support this.

In recent years Britain has installed around 10 gigawatts of solar power, enough to power more than 2,000,000 homes2. This is another area of renewable energy Commonwealth Bank is supporting through its involvement with companies like Magnetar Solar (UK), a leader in the investment and management of large-scale solar parks in the UK.

Since its incorporation in May 2014,Magnetar Solar (UK) has built a portfolio of 32 photovoltaicsolar assets in the UK through a series of acquisitions, amounting to 344MW of installed capacity.Most of the assets qualified for the Renewable Obligation certificate (ROC), which provides an attractive subsidy for up to 20 years. Since 1 April 2015 new projects larger than 5 MW are no longer eligible for the ROC scheme. Instead these projects must compete with other renewable projects for subsidy support via the Contract for Difference (CfD) programme.

The UK Government's development of a strong market to support its goal that solar energy should be a significant component of the UK’s mix of energy sources makes these assets appealing to a growing pool of investors. They're attracted by the assets’ relative stability of cash-flows and inflation-linked returns. Solar generation also offers greater predictability and less volatility than wind generation.

Commonwealth Bank is one of six banks providing £300 million of senior debt finance to Magnetar Solar (UK)'s portfolio of solar assets. The package comprised a £284 million 18-year fully-amortising term loan and a £16 million debt service reserve facility. The long-dated amortising debt is considered the optimal financing structure for the closed-end Magnetar fund.

By providing investors like Magnetar with long-term financing for renewable assets, Commonwealth Bank is enabling capital recycling for investment in new renewable energy projects, whether they be solar, wind or possibly new technologies such as tidal/lagoon and battery storage.

Image of new Commonwealth Bank branch at 200 George St, Sydney

'The Commonwealth Bank of Australia is the first bank to get a Green Star-accredited design template that it will roll out to branches, ensuring a saving of up to 40 per cent in energy use.'

First to achieve Green Star for branch design

Earlier this year, we became the first Australian financial institution to receive a 5 Star Green Star assessment from the Green Building Council of Australia (GBCA) for the 'standard design' of our branches. The design was assessed across nine impact categories and incorporates a number of sustainable elements including low chemical paints, Forestry Standard certified timber, reduced water consumption and energy savings of around 40 per cent when compared with existing branches.

The assessment represents ‘Australian Excellence’ and makes our innovative branch 'standard design' one of the most sustainable fit outs in Australia. This reflects our commitment to creating healthier workplaces for our people and being a productive member of the communities in which we operate.

In July 2016, our new branch at 200 George Street in Sydney became our first individual branch to be assessed for certification by the GBCA. In addition to the 'standard design', we will take it a step further with an aspirational target of a 6 Star Green Star rating. This higher rating can be achieved by a number of additional elements such as being located in a sustainable building, improved air quality, maximising natural light and views, acoustic control and the use of plants.

Image of four people, one man and three women, gathered around a table in discussion and looking at documents

Skilled volunteering in action

Our Skilled Volunteering Program assists community organisations with access to specific skills and expertise that are essential to the sustainability of their business. And the program provides professional development opportunities for our people that are looking to extend themselves beyond their current role.

As part of our skilled volunteering program, employees Tony Petkovski and Fiona Burke, from our Operational Risk and Compliance team helped the Australian Business and Community Network (ABCN) gain a better understanding of their organisation’s key risks and mitigating controls.

ABCN is a not-for-profit organisation that strives to partner businesses with high-needs schools to offer a range of mentoring program to students.

Tony and Fiona facilitated the establishment of a risk management framework for ABCN. This commenced with an education session for the ABCN Leadership Team on the importance of risk management to achieving business outcomes. This session helped ABCN understand the key elements of a risk framework and set an expectation of the commitment required to develop and implement the framework. Having understood the business strategy for ABCN as endorsed by their Board, Tony and Fiona assisted the ABCN CEO, Jacqui Jones, in setting out their risk management plan. Defining risk appetite, facilitation of workshops for risk and control identification and assessment, and development of tools and templates, to assist ABCN were activities that Tony and Fiona co-ordinated for ABCN.

oday, the ABCN Leadership Team is equipped with a comprehensive understanding of their organisation’s key risks and controls, including a defined set of issues and actions that have been identified by ABCN as opportunities to strengthen their internal control environment. The really pleasing outcome is that all members of the Leadership Team can confidently and competently talk to all aspects of the ABCN risk profile, given that it is captured in their language and represents their assessment of risk.

Image of a set of scales with a house on one side and dollar signs on the other side

Image of a Curtin University report called Beyond our means that features an image of eggs in a nest

Investing in research for financial wellbeing

The Bankwest Curtin Economics Centre is an independent economic and social research organisation located within the Curtin Business School at Curtin University. The Centre was established in 2012 with support from Bankwest (a division of the Commonwealth Bank of Australia), with a core mission to examine the key economic and social policy issues that contribute to the sustainability of Western Australia and the wellbeing of WA households.

The Centre's research and engagement activities are designed to influence economic and social policy debates in state and Federal Parliament, regional and national media, and the wider Australian community. Through high quality, evidence-based research and analysis, our research outcomes inform policy makers and commentators of the economic challenges to achieving sustainable and equitable growth and prosperity both in Western Australia and nationally.

The Centre capitalises on Curtin University’s reputation for excellence in economic modelling, forecasting, public policy research, trade and industrial economics and spatial sciences. Centre researchers have specific expertise in economic forecasting, quantitative modelling, microdata analysis and economic and social policy evaluation.

The Centre's research is currently structured around seven major research themes:

  • Economic policy forecasting and evaluation
  • Regional economic policy
  • Trade and industrial economics
  • Labour, workforce and productivity
  • Population growth and dynamics
  • Income, wealth and housing, and
  • Health, wellbeing and disadvantage.

Recent Housing Affordability report titled Keeping a Roof Over our Heads, launched in June 2016 shows low income earners and regional areas are still experiencing pressure. Housing affordability has improved for Western Australian households, however many still remain vulnerable to housing stress and pressures. Keeping a Roof Over our Heads is the second housing affordability report and features findings from a new survey of over 4,000 households across Western Australia, New South Wales and Queensland.

Lead researcher and BCEC Deputy Director, Associate Professor Rachel Ong, said that while the proportion of households that regard their housing as 'unaffordable' fell from around 33 per cent to 19 per cent over the last two years, low income households, especially those in regional areas were still facing pressure. “The typical mortgage cost burden for low income households remained persistent for regional WA over the last two years at around 34 per cent of disposable household income," Associate Professor Ong said.