Chapter 1

Chapter 1

Introduction

1.1        The Green Loans Program was announced as part of the Labor government's election platform in 2007 and commenced in July 2009. In essence, the program involved householders obtaining free sustainability assessments of their homes, following which they may have been eligible to receive an interest-free loan with which they could make improvements, or purchase products, which would improve the energy efficiency of their home.

1.2        However, the program was riddled with problems from the outset, with a lack of forethought given to various important issues including assessor numbers, inadequate controls over the quality of assessor training and no way of monitoring the quality or number of assessments. This led to a blow-out in assessor numbers, which put significant strain on the bureaucrats managing the program, as well as on the program's systems—particularly its assessment booking and processing systems.

1.3        By December 2009 almost 10 000 assessors had undergone training and the government's systems proved unable to cope with the level of demand for assessments that even half this number of assessors generated. Assessors were having to wait on hold for up to two and a half hours to book an assessment and up to five months to receive payment for assessments they had completed, and new assessors were waiting as long as six months to be accredited and receive their government contract. Householders were frustrated by not receiving their assessment reports, and accordingly not being able to apply for loans.

1.4        On 19 February 2010 the government responded to these serious problems by cancelling the loans portion of the program and placing caps on the number of assessors and the number of assessments they could conduct. Assessors who had spent an average of $3000 on participating in the program either found themselves with a greatly reduced income, or with no way of recouping their costs at all. Householders who had received assessments but not reports were no longer able to apply for loans—the very reason for them having requested assessments. On 8 March 2010 responsibility for the program was transferred to a new Minister who recognised the serious problems with the way the program had been planned and managed.[1]

1.5        On 10 March 2010, the Senate referred the matter of the government's Green Loans Program to the Senate Environment, Communications and the Arts References Committee (the committee) for inquiry and report by 21 June 2010. On 21 June 2010 the Senate agreed to extend the reporting date to 6 August 2010. As a result of the prorogation of the 42nd Parliament, the committee tabled an interim report on 6 August 2010 stating its intention to table a final report as soon as practicable in the new Parliament.

1.6        The terms of reference for the inquiry were:

(a) the Government's Green Loans Program (the program), with particular reference to:

(i) the administration of the program from a pricing, probity and efficiency perspective, including:

(A) the basis on which the Government determined the amounts of the loan to be made available and Government subsidy thereof,

(B) regulation of Home Sustainability Assessment practices, including the promotion of assessments,

(C) accreditation of Home Sustainability Assessors,

(D) ensuring value for money for taxpayers,

(E) waste, inefficiency and mismanagement within the program,

(F) ensuring the program achieves its stated aims of improving water and energy efficiency, and

(G) the consultation and advice received from financial institutions regarding their participation,

(ii) an examination of:

(A) employment and investment in Home Sustainability Assessments resulting from the program, including that resulting from Government statements regarding the number of accredited assessors,

(B) the effectiveness of the booking system,

(C) the effectiveness and timeliness of Home Sustainability Assessment reports being provided,

(D) the early reduction by the Government in the number of Green Loans to be offered, and subsequent discontinuation of the loans, including by financial institutions in advance of the Government's announced date of discontinuation,

(E) homeowner actions for which Green Loans have been sought and approved,

(F) the level of evaluation of homeowner action following any Home Sustainability Assessment, and

(G) what advice was provided to the Government on the feasibility and effectiveness of the program, including to what degree the Government acted on this advice, and

(iii) an analysis of the effectiveness of the program as a means to improve the water and energy efficiency of homes, including comparison with alternative policy measures;

(b) consideration of measures to reduce or eliminate waste and mismanagement, and to ensure value for money for the remainder of the program, noting the commitment of funding for an additional 600 000 free Home Sustainability Assessments despite the discontinuation of the loans; and

(c) other related matters.

1.7        In accordance with its usual practice, the committee advertised details of the inquiry in The Australian on 24 March 2010 and 7 April 2010. The committee also contacted a range of organisations, inviting them to make submissions. The committee received 184 submissions from individuals and organisations, listed at Appendix 1, including a large number from Home Sustainability Assessors involved in the Green Loans Program.

1.8        The committee held a public hearing in Sydney on 29 June 2010. Details of the hearing are at Appendix 2. The Hansard transcript is available at www.aph.gov.au/hansard.

1.9        During the committee's public hearing on 29 June 2010, the Department of Climate Change and Energy Efficiency (DCCEE) took 14 questions on notice. Two weeks after the hearing, on 14 July 2010, DCCEE was asked to respond to a further six written questions from Senator Milne. DCCEE was asked to provide responses to these oral and written questions by 15 and 21 July respectively.

1.10      DCCEE provided responses to 16 of the committee's 20 questions on 10 August 2010, almost four weeks after the committee had requested the first responses, and six weeks after the public hearing. Responses to the remaining four questions from DCCEE were received on 22 October, almost four months after the committee's hearing. The failure by the department to prepare responses in a timely manner has significantly hindered the work of the committee.

1.11      Furthermore, many of DCCEE's responses to questions at the hearing itself were uninformative and unhelpful. On a number of occasions departmental officers indicated that they did not have sufficient corporate knowledge to provide responses to the committee's questions.[2] Many of the issues in question should have been the subject of memos and file notes as they related to key decisions, and the committee views it as unacceptable and disconcerting that senior departmental officers claimed not to have corporate knowledge of such matters.

Report Structure

1.12      Chapter 2 of the report outlines the background to the Green Loans Program, including its objectives.

1.13      Chapter 3 discusses the issues that emerged with the household assessments portion of the program. Chapter 4 examines issues related to the design and administration of the loans aspect of the program.

1.14      Chapter 5 outlines the changes made to the program on 19 February 2010, and considers the impact of those changes on various stakeholders.

1.15      Chapter 6 explores three key problems which underpinned the failings of the Green Loans Program: poor planning; the absence of any audit mechanisms; and a lack of communication and consultation at all stages.

1.16      Chapter 7 concludes the report by outlining the transition to the new Green Start Program and making specific recommendations to government regarding its design and implementation.

Acknowledgment

1.17      The committee would like to thank all of the organisations and individuals who contributed to this inquiry.

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