Chapter 2

Background to the Green Loans Program

2.1        The Green Loans Program (the program) formed a part of the Labor government's 2007 election commitment, titled Solar, Green Energy and Water Renovations Plan for Australian Households.

2.2        Funding for the program was included in the 2008–09 Budget and the program was originally intended to run for five years from 1 July 2009.[1]

2.3        There were three interrelated components to the program:

• household assessments;
• green loans; and
• $50 green rewards cards.

Household Assessments

2.4        The first step of the program was for householders to obtain free sustainability assessments by accredited assessors. In announcing the program, the (then) responsible Minister, the Hon Peter Garrett MP, Minister for the Environment Heritage and the Arts, stated:

The report will contain information on green home improvements, estimates of how much money could be saved by households implementing the ideas in the report and details of the benefits these changes will have for our environment.[2]

2.5        Home sustainability assessments were undertaken by trained and accredited Home Sustainability Assessors (HSAs) using the 'home sustainability calculator' computer program supplied by the Department of Environment, Water, Heritage and the Arts (DEWHA).

2.6        Once an assessor had conducted an assessment, a report was sent electronically to DEWHA, which then dispatched the report to the householder. DEWHA did not check the content of the reports, but simply matched them with the assessment booking number for the purposes of record-keeping and payment.[3]

2.7        In order to become an assessor under the program, a person was required to undertake the Professional Home Sustainability Assessment course and register with an assessor accrediting organisation. In February 2009 the Association of Building Sustainability Assessors (ABSA) was appointed as the 'sole assessor accrediting organisation' under the program.[4]

2.8        Following accreditation, assessors were required to sign a contract with DEWHA in which they agreed to:

• provide assessment services according to relevant standards and code of practice; and
• provide those services at the rates set by DEWHA.[5]

2.9        Bookings for home sustainability assessments were managed by DEWHA through an outsourced call centre. They could be made either by an assessor, or by a householder. In the case of the latter, DEWHA would assign that booking to an appropriate assessor.

2.10      Assessors were to invoice DEWHA for the cost of each assessment and were paid directly by DEWHA. Throughout the program, the government paid assessors $200 per assessment, comprising a $150 assessment fee and a $50 self-assessment fee. It was initially intended that householders could complete a self-assessment, in which case the assessor would only receive $150. However the self-assessment tool for householders was never developed.[6] In instances where the householder was not present at the confirmed time, the assessor would be paid $50. In addition, assessors were entitled to travel fees for travel to households more than 50 kilometres from the nearest post office.[7]

2.11      The number of household assessments was initially capped at 200 000, but this was increased to 360 000 in May 2009, prior to the commencement of the program.[8]

Green loans

2.12      Once a householder received their assessment report, they could apply for an interest-free loan of up to $10 000 in order to implement recommendations made in the report. Minister Garrett stated that the loans were specifically intended 'for the installation of solar, water and energy efficiency products in their homes'.[9] The loans would be interest-free for up to four years.[10]

2.13      The government entered into agreements with 24 financial partners to provide loans under the program.[11]

2.14      Although Minister Garrett originally announced in May 2008 that 'up to 200 000 working families would be eligible for Green Loans...'[12] when the program commenced on 1 July 2009 the number of loans was capped at 75 000.[13] The Minister stated that this change was introduced 'in light of the Government's $4 billion investment in energy efficiency, lower interest rates and major shifts in the global financial markets...to ensure [the program] is better focussed'.[14]

Green Rewards Cards

2.15      The third element of the program as announced was a $50 green rewards card intended to enable participating households with completed assessment reports to purchase low-cost items to improve home energy efficiency, such as compact fluorescent light bulbs.[15]

2.16      This element of the program never eventuated while the program was under DEWHA's management. However at Senate Estimates in May 2010, Dr Martin Parkinson, Secretary, Department of Climate Change and Energy Efficiency (DCCEE) stated that the government had:

[P]ut in place arrangements to ensure that all eligible households will be able to receive their $50 green rewards from July [2010].[16]

2.17      However, despite this assurance, in June 2010 Mr Malcolm Thompson, Deputy Secretary, DCCEE informed the committee:

The challenge that we face in establishing a green rewards card which could be redeemed at particular retailers selling that sort of merchandise was that there was such a significant and large range of products that people could redeem on that made it difficult to organise and arrange a card that would be redeemable at a large number of retailers...in the end the government decided that it would deliver it through households providing invoices.[17]

2.18      As the green rewards cards had not been delivered at the time of drafting this report, no further consideration is given to this aspect of the program in this report. Instead, this report focuses on those aspects of the program that were implemented: household assessments and green loans. Furthermore, there has been an extensive examination of the government's failure to roll-out Green Rewards Cards through the Senate Estimates process.[18]

Objectives of the program

2.19      At its inception, the stated objective of the program was to:

...provide people with easy access to practical household improvements that combined could reduce Australia's gas emissions by more than 600,000 tonnes of carbon dioxide equivalent every year.[19]

2.20      The Department of Climate Change and Energy Efficiency's (DCCEE) submission to this inquiry stated that the key objectives of the program were to:

• encourage wide-scale improvement of energy efficiency in the existing housing stock;
• provide sound advice to households on the most appropriate actions to reduce the environmental impact of operating their home;
• provide financial assistance to household to gain access to the resources they need to invest in energy and water efficient technologies; and
• reduce annual greenhouse gas emissions.[20]

2.21      The DCCEE submission suggests that the changes announced in May 2009 reflect a change in the objectives of the program to:

...place a greater emphasis on trained assessors to provide:

• face-to-face advice on the best energy and water efficiency actions which householders should take;
• professional home sustainability assessment reports;
• advice to direct households to existing rebate assistance schemes; and
• advice on accessing loans to achieve enhanced energy and water efficiency in the home.[21]

Operation of the program

2.22      The Green Loans Program commenced on 1 July 2009.

2.23      The committee received evidence from a range of stakeholders who were involved in the program including: approximately 150 assessors who performed, or were trained to perform assessments under the program; householders who received assessments; and industry bodies representing financial institutions some of which offered loans under the program.

2.24      These stakeholders identified a range of problems and issues with the design, implementation and administration of the Green Loans Program. Chapters 3 and 4 discuss the issues related to each of the two aspects of the program that were implemented: household assessments and green loans, respectively.

Changes to the program since commencement

2.25      A number of important changes have been made to the Green Loans Program since its commencement in July 2009:

• Minister Garrett announced the cancellation of the loans portion of the program; an increase in the number of assessments to a total of 960 000; and caps on the number of assessors and the number of assessments they could perform on 19 February 2010;[22]
• responsibility for energy efficiency measures, including the Green Loans Program, was transferred to Senator the Hon Penny Wong, Minister for Climate Change, Energy Efficiency and Water, and to her department, DCCEE from 8 March 2010 (announced 26 February 2010);
• the government released three reviews into various aspects of the Green Loans Program on 8 July 2010;[23] and
• Minister Wong announced on 8 July 2010 that the Green Loans Program would be phased out and transition to a new Green Start Program.[24]

2.26      On 25 February 2010, the Australian National Audit Office (ANAO) commenced a performance audit of the program. The ANAO tabled its report on the audit on 29 September 2010.[25] The ANAO's findings are discussed throughout this report, primarily in chapters 3 and 6.

2.27      Chapters 3 and 4 discuss the program as it was rolled out, and as it operated between July 2009 and February 2010. Chapter 5 considers the impact of the February 2010 changes. Chapter 7 outlines the transition to the Green Start Program.

2.28      The changes made in February and July 2010 mean that the Green Loans Program today bears little resemblance to that which was in operation between July 2009 and February 2010. Accordingly, the committee feels that it is not beneficial for it to make recommendations as to how various aspects of the program might have been improved were the program to continue. Instead the committee considers it much more useful to draw more general conclusions as to the underlying reasons for the failure of the Green Loans Program, and to make specific recommendations for the transition to the Green Start Program. Accordingly, all committee recommendations are made in chapter 6 and 7 of this report, and reflect on the entirety of the Green Loans Program, lessons from that program, and the future of transitioning to Green Start.

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