Chapter 6

Conclusions on the Green Loans Program

6.1        Despite the numerous problems with the design and implementation of the Green Loans Program, many of the assessors and organisations that contributed to this inquiry maintained that the program was a good concept. For example, Ms Leanne McIntosh, from the GLACO Assessors Group, told the committee:

It was a very, very good program concept—poor implementation, brilliant idea. It was very effective in our area. Low-income people love it. They absolutely love the concept of saving money and helping the environment—a brilliant concept.[1]

6.2        Ms Carmichael also outlined the benefits of assessments:

I think deep inside most of us is a wish to be more sustainable. How do we do that? You just look at your house and think: 'Where do I start? Where do I start in my life?' By having a green loans assessment, you got a lovely little list of priorities as somewhere you could start, and even a method. The loans were there, so even some funding towards that. That is the sense I got. And also how sustainable am I? How do I rate?[2]

6.3        Similarly, Mr Timothy Ryerson, Executive General Manager of Fieldforce Services, commented:

We want to be clear that we believe that the Green Loans Program was a great idea in principle. It offered a concrete way for people in Australia to reduce their rising energy use and rising energy bills, now and into the future, reduced demand on network infrastructure and cost-effectively tackled climate change.[3]

6.4        The Australian Bankers Association and its members similarly supported the aims of the program:

I would also like to emphasise that the banking industry support the policy objective of addressing climate change, and we believe the Green Loan Program could have been a useful measure to encourage and help households reduce their environmental footprint.[4]

6.5        However, while the policy underpinning the Green Loans Program may have been a 'good concept', based on the evidence received by this inquiry, the three reports into the program that the government has released,[5] as well as the ANAO's performance audit,[6] there were problems at every stage and with every aspect of the program. These problems have: undermined the objectives of the program; wasted enormous amounts of government resources; and detrimentally affected thousands upon thousands of Australian individuals, households and businesses.

6.6        The changes made to the program in February 2010, and the transition of the program to the new Green Start program, mean that the Green Loans Program as it exists today bears little resemblance to that which operated between July 2009 and February 2010. Thus, despite the substantial evidence the committee collected with respect to the flawed design, management and operation of the program, it would be of little benefit for this committee to make recommendations as to how particular aspects of that now defunct program might be improved.

6.7        Instead, the committee considers that it is more useful to draw broader conclusions about the underlying reasons for the failure of the Green Loans Program. By focussing on these underlying problems, the committee hopes that the substantial problems that plagued the Green Loans Program and led to the government wasting huge quantities of taxpayer money might be avoided in the future.

6.8        Based on the evidence found in this inquiry, as well as on the four other major publicly-released reviews of the Green Loans Program, the committee has identified three key problems which led to the failure of the Green Loans Program:

• poor planning;
• the absence of any audit mechanisms; and
• a lack of communication and consultation at all stages.

6.9        While in recent announcements the government claims to have begun dealing with some of these issues, in the committee's view more needs to be done to address these very serious fundamental problems.

Poor planning

6.10      As discussed throughout this report, many of the key problems that arose throughout the operation of the program were a direct result of a lack of adequate planning by the government. The inadequate planning was in part the result of the speed at which DEWHA was required to deliver a large and complex program, without adequate resources or expertise.

Speed of implementation

6.11      The committee heard that there was significant pressure on DEWHA to roll-out the program within a specified time frame.[7] This meant that various aspects of the program were implemented prior to being properly tested or before they were ready, including:

• a sub-standard assessor training program being implemented because the government did not want to wait until the process of developing and accrediting a course to certificate IV could be undertaken;
• the poorly targeted and tested assessment tool which resulted in householders being issued with reports making ludicrous and nonsensical recommendations; and
• the booking system being rolled out before the online portal had been developed, meaning that the system was later not able to handle the number of bookings.

6.12      In addition, the relatively short timeframe that DEWHA was given to develop and plan for the program meant that it was not able to conduct an adequate risk-assessment. This led to aspects of the program which contained significant risks not being given sufficient thought or preparation, such as:

• a lack of fore-thought being given to the likelihood that more than 1000 or 2000 assessors would be keen to take part in the program, which in turn created problems with the booking, payments and report distribution systems; and
• the inadequacy of risk-management strategies[8] which were put in place for the very real and (in the committee's view, obvious) risk that less-reputable individuals and organisations would misuse the program.

6.13      The pressure on DEWHA to roll-out the program in a relatively short time frame was also a direct contributor to the appalling procurement practices which occurred throughout the program. The Faulkner review of procurement processes and contractual arrangements under the program found a huge number of significant breaches of Commonwealth procurement guidelines and laws, notably:

• 96 per cent of contracts being procured through direct source rather than tender processes;
• widespread 'contract splitting' in order to avoid requirements for authorisation/oversight by senior management;
• systemic breaches of the Financial Management Act 1997, Financial Management Regulations 2004, and Commonwealth Procurement Guidelines;
• poor contract management and record-keeping; and
• substantial cost escalations including the service centre contract increasing from $770,000 to $3.4 million and the interim logistics contract increasing from $77,000 to $1.46 million.[9]

6.14      The Faulkner review found that one of the principal reasons for these flawed contract management practices was the tight timeframes DEWHA was given to deliver the program:

The pressure to achieve outcomes within tight timeframes appears to have led to the adopting of "short cuts" to deliver the Program – that is, minimising steps which required approvals outside the program area.[10]

6.15      Had the government not imposed such strict and tight deadlines on DEWHA, which was not experienced in running programs of this kind or size, it is likely that many of the problems that occurred within the program may have been avoided through better planning and practices which did not attempt to 'short cut' necessary approvals. In implementing programs of the scale and complexity of Green Loans, it is imperative to ensure sufficient time is given to prepare, consider and address risks. The lack of effective risk-mitigation strategies was a major failing of the Green Loans Program, and can be directly attributed to the pressure that the government put on DEWHA to roll-out the program quickly.

6.16      In its inquiry into the Energy Efficient Homes Package (ceiling insulation), and specifically the Home Insulation Program aspect of that package, this committee found that very similar issues regarding short implementation timeframes were a major cause of the serious failures that occurred in that program.[11] Clearly, based on the fact that two major programs administered by the same portfolio suffered from similar problems, this is an issue which needs to be addressed at the highest levels of government. It is unacceptable for the government to invest the amounts of money that it did in these two programs—over $2.6 billion on the two programs combined[12]—only to have both programs fail spectacularly as a result of government officials charged with implementing them having insufficient time to work through implementation issues.

6.17      When undertaking programs of the size and complexity of Green Loans in future, the committee urges the government to give project planners and managers sufficient time to develop a sound program which contains robust risk-mitigation strategies.

6.18      The committee acknowledges that there is often a need to roll-out programs quickly, but Green Loans was not such a program. The program was originally designed to run over a five year period, from 2009 until 2013. There is no reason that the committee can see for the strict timeframes imposed on DEWHA. Furthermore, even in the instance of a program that needs to be implemented fast, it is possible for thorough risk-assessments to be undertaken, proper project plans to be developed and for aspects outside of the government's expertise to be outsourced.

Resourcing issues

6.19      A second aspect of the government's poor planning of the Green Loans Program, alluded to above, was the clear lack of thought given to resourcing issues within DEWHA.

6.20      The committee heard from a number of stakeholders that a central problem with the operation of the program was the lack of expertise and staff shortages within DEWHA. For example, Mr Timothy Ryerson, Executive General Manager, Fieldforce, which worked extensively with the department during the development of the program, argued that the key problems with the program were in its implementation rather than in its design:

[W]e believe that the evidence shows that the program was poorly executed by the department, largely because they were asked to go beyond their core capabilities by being required to run a complex operational program...

I think they bit off more than they could chew. They really needed to pull in industry to run a program like this. Nationally, it is a huge task. It is very complex, the training, safety issues, the booking systems and the reports. To try to get feedback through one email address and one call centre number to thousands of people who are engaged in this is not acceptable.[13]

6.21      A similar assessment was given by Mr Wayne Floyd, Chairman of ABSA:

In our view, the program was implemented too quickly, shortcuts were taken, roles were not well defined and the later changes actually damaged the scheme.[14]

6.22      The Faulkner review into procurement processes and contractual arrangements agreed that staffing was a key reason for the poor procurement practices that occurred during the program. The review suggested that the level at which the program was managed within the department (Executive Level 2, that is middle management) was inappropriate, and found that there had been a turn-over of eleven Assistant Secretaries of the relevant area within a 22 month period.[15]

6.23      Furthermore, the public servants managing the program were subject matter experts and 'lacked the suitable procurement and project management expertise and experience to manage this kind of Program...'[16]

6.24      The ANAO reached a similar conclusion, finding that a central reason for the failure of the program was the  lack of effective governance:

The primary cause for the administration problems encountered by the program was, to a very large extent, an absence of effective governance by DEWHA during the program's design and early implementation. DEWHA had no previous experience in designing and delivering a program with features similar to the Green Loans program.[17]

6.25      The ANAO further found that DEWHA's senior management and the then Minister were not fully informed about the design and progress of the program. The quarterly status reports provided to the DEWHA senior executive about the program provided 'a false sense of assurance that the program was being managed within an agreed planning framework'.[18] Additionally and more damningly:

[T]he former Minister received incomplete, inaccurate and untimely briefings on program design features and implementation progress, challenges and risks. Suffice it to say here, the former Minister was not well served by his department in this respect during the period from July 2008 to late 2009 due to the poor quality briefings he received.[19]

6.26      DCCEE informed the committee that it has now addressed some of these shortcomings by providing additional resources to the area responsible for managing the Green Loans Program including an additional division head and three additional assistant secretaries. Mr Malcolm Thompson, Deputy Secretary, DCCEE stated:

The decision to bolster staff numbers reflects recognition of the pre-existing work pressures and challenges which the government has placed an imperative on addressing.[20]

6.27      However, in the committee's view, this is clearly too little too late. In fact, with the phase-out of the program, the committee questions whether the provision of additional resources at this juncture is simply a further waste of government funding.

6.28      This committee found that very similar staffing issues were a key reason for the failure of the Home Insulation Program.[21] Again, given the fact that the same issues arose within DEWHA in the delivery of two key programs, it appears that there may be serious systemic issues within that department that need to be addressed by the government. The committee makes a recommendation on this matter at the end of this chapter.

6.29      The government needs to find ways to be far more responsive and dynamic with respect to resourcing issues, and improve the capacity of government departments and agencies to acquire resources quickly when necessary.

Lack of cost-benefit analysis

6.30      A third element of the government's poor planning of the Green Loans Program, which in the committee's view has wasted up to $175 million in taxpayer funding was the lack of any cost-benefit analysis of the Green Loans Program.

6.31      At no stage before or during the implementation of the Green Loans Program did the government undertake a cost-benefit analysis of the program. This meant that there was no clear and publicly available budget breakdown of various elements of the program, and no assessment of whether the project was a worthwhile investment by government.

6.32      As discussed in chapter 2, the program was changed substantially prior to its implementation and its budget revised down from $300 million over five years in the 2008–09 budget to $175 million over five years. The changes included decreasing the number of loans available from 200 000 to 75 000 and increasing the number of assessments from 200 000 to 360 000. Yet, when questioned on the basis for these changes in targets and budgets Mr Malcolm Thompson, Deputy Secretary, DCCEE stated that '[t]he numbers for assessments and for loans really derive from the total budget for the program...'[22] rather than from any analysis of likely take-up of the program or consultations.

6.33      DCCEE argued that the lack of clear budget breakdown and planning was because:

This was uncharted territory in a sense: we did not know what the uptake of the loans was going to be or how quickly that would roll out. Likewise we did not have a clear, definitive view of how many assessments may occur in any particular period. So we were able to dedicate funds accordingly to where the budget pressures were.[23]

6.34      However, the lack of such controls and planning meant that there were no 'warning bells' when the program began to substantially exceed anticipated demand. Had a cost-benefit analysis been done with a proper breakdown of the program's budget and the projected spending by month, it would have been clear to the government far earlier than February 2010—and likely as early as August or September 2009 when ABSA began to notice the blow-out in assessor numbers—that the number of assessments was significantly outstripping expected demand. This would have allowed DEWHA to introduce mitigation strategies much earlier, and would likely have minimised the substantial problems that later occurred with the booking, payment and assessment distribution systems.

6.35      The ANAO's audit discussed the budgetary impact of this lack of analysis and planning:

An examination of the program's budget in early 2010 led to the realisation that the program had exceeded its 2009–10 program budget and would require an additional $100 million to fully fund the Government's policy commitments over the program's life.[24]

6.36      This issue was exacerbated by the various changes that were made to the program throughout its life, for which no proper funding analysis was undertaken. For example, the ANAO found that when the standard fee for assessors was increased from $150 to $200 as a result of the self-assessment portion of the assessment tool not being developed, 'at no time did DEWHA revisit the program's administered funding budget'.[25]

6.37      Mr Malcolm Thompson, Deputy Secretary, DCCEE informed the committee that while there was no cost-benefit analysis of the program, this is not unusual with respect to election commitments: 'We do not always do cost-benefit analyses of every program that we implement.'[26]

6.38      In fact, Mr Thompson later added, 'it is typical for cost-benefit analyses not to be carried out—especially on election commitments, but on many programs which governments decide on'.[27]

6.39      While the committee does not doubt Mr Thompson's statement in this regard, it cannot emphasise strongly enough the importance of undertaking thorough budget planning and analysis prior to the implementation of a program of the size and nature of Green Loans. The fact that no such cost-benefit analysis was undertaken, in the committee's view, meant that an important control, which may have assisted DEWHA in rectifying problems with the program more quickly, was absent.

6.40      Furthermore, without a cost-benefit analysis of major government programs, Australian taxpayers have no way of knowing that their money is being spent on programs that will have a net benefit to the nation. In hindsight, it is clear that the Green Loans Program did not have such a net benefit. Instead, the government spent up to $175 million on flawed assessments, which provided limited guidance to homeowners, and which were largely not returned in sufficient time to enable householders to obtain a loan. If a cost-benefit analysis had been undertaken at an early stage, this may have become clear to the government, or, alternatively, may have provided a means for rectifying what later became significant obstacles to the program's success.

Absence of audit and evaluation processes

6.41      In the committee's view, the lack of any audits or suitable checks and balances built into the program was another central cause of the serious problems that developed and continued over its life. As Ms McIntosh, a GLACO assessor explained:

When you have no checks and balances put in place before the program starts, you attract every shark and shonk in Australia. You put out the welcome mat and say, 'Come and rip us off.' It is as simple as that.[28]

6.42      The lack of audit processes meant that the government had no controls over various aspects of the program including: the quality of assessor training; the quality of home assessments; and the misuse of the program by individual assessors and companies. As discussed in chapter 3, these issues later turned into significant problems, and undermined the integrity of the entire program.

6.43      For example, had an audit process been implemented at the outset of the program for assessor trainers and the standard of assessments, it is highly likely that less assessors would have been trained, and that the quality of assessments under the program would have been higher and more consistent. Similarly, as Ms McIntosh suggested, even a basic audit of assessment reports and assessors would have identified the 'sharks and shonks' who used the program as a means of making a quick buck or to promote their own products.

6.44      Furthermore, the absence of audit processes meant that there were limited indicators of various aspects of the program hampering its effectiveness, for instance had an ongoing audit process been in place, DEWHA may have had more information indicating that assessor numbers were out of control.

6.45      The review of the implementation and design of the program by Resolution Consulting confirms the committee's views:

The program plan should have specifically designed the audit program as part of the implementation plan with audit services scheduled to provide timely feedback at an early point in the process... Had this occurred, there may have been recognition earlier of faults with the assessment tool and it may have reduced complaints.[29]

6.46      Many of the stakeholders engaged in the program understood that the government intended for auditing and review processes to form part of the program. This is reflected in the Resolution Consulting review of the program which found that it is clear from the government's contracts with assessors and financial partners that audits of assessors were anticipated. That review stated that audit programs are essential to the proper management of any program, and indicated that negotiations were underway at the time it reported in December 2009.[30]

6.47      However, the Faulkner review into procurement practices and contractual arrangements under the Green Loans Program found that no audit program was implemented until 23 April 2010.[31]

6.48      Similarly, the committee notes that no evaluation processes were included in the program's design. This means that not only did the government have no way of monitoring the ongoing progress of the program, but it also had no plans to later assess whether or not the program had worked.

6.49      In June 2010, Mr Thompson, Deputy Secretary, DCCEE, informed the committee that the government was negotiating with KPMG 'to explore options for a monitoring and evaluation program for the Green Loans Program' which would include 'the issues of how households are implementing improvements that have been recommended to them under the sustainability assessment'.[32]

6.50      However, in the committee's view, any such evaluation at this point is too little, too late, and simply a further waste of government resources. In the form that the program was implemented, it would have been possible to evaluate its success based on the loans component, by following up how people used the loan funds. However, under the program as it has operated since February 2010, other than counting the overall number of assessments conducted—which, given the issues with the quality of the assessments, does not say much about value for money—there does not appear to be any way in which the government can measure the impact of the program.

6.51      The committee considers it deplorable that no audit or evaluation processes were implemented as an integral component of the Green Loans Program, and finds that such processes may have prevented the program from wasting significant government resources.  Furthermore, it is simply unsatisfactory that once the need for an audit program was identified in December 2009, it still took DCCEE until the end of April 2010 to implement an audit. It is equally unsatisfactory that the government would now consider conducting an evaluation of the program, when there appears to be nothing meaningful left to evaluate.

Lack of communication and consultation

6.52      The third key issue that, in the committee's assessment, underpinned and compounded many of the problems with the Green Loans Program was the lack of communication and consultation by the government.

6.53      As discussed in chapters 3 and 4, the government's failure to consult and communicate with stakeholders before and during the program meant that obvious flaws with the program design were not addressed. For example, the government failed to take account of the concerns expressed by financial institutions with respect to the structure of the loans under the program and failed to have regard to ABSA's concerns about assessor numbers.

6.54       If the government wishes to engage the private sector in order to co-deliver major programs like Green Loans, it is imperative that there be real and meaningful consultation at the outset. The committee heard from the government's financial partners that no such consultation took place, and that participating financial institutions felt that their advice and concerns were simply not taken into account by the government.

6.55      Similarly, the committee heard that Fieldforce attempted to engage with DEWHA throughout the program in order to develop technical solutions to the IT problems being experienced by assessors. Fieldforce identified these issues well before they became major problems, yet DEWHA did nothing to address them, and according to Fieldforce, even refused their offer of a free technical solution (although it should be noted that DCCEE found no record of this decision).[33]

6.56      ABSA also raised its concerns about issues including assessor numbers and assessor training with DEWHA, which again, they failed to act upon until the problems became so severe as to undermine the integrity of the entire program. The committee considers that this disregard for the experience and expertise of those in the field demonstrates a major reason for the failure of the program as a whole.

6.57      The committee has serious  concerns that the way in which key private sector stakeholders including financial institutions, ABSA and Fieldforce were treated by the government throughout the Green Loans program will make these stakeholders less willing to engage with government in future programs. Mr Mark Degotardi, Head of Public Affairs, Abacus, commented that:

Across the spectrum of participating members, there is certainly a feeling of somewhere between disappointment and modest irritation about the program. I would not categorically say that our members would never do this sort of thing again, because that is just not true. We will always look at proposals. I guess some members will either be a little more reluctant than perhaps they were or seek more assurances about the way the program will run.[34]

6.58      It is essential that where the government wishes to use the private sector to roll out publicly-funded programs, the government have regard to the experience and expertise of the private sector, and take on board their concerns at an early stage.

6.59      According to stakeholders involved in almost every aspect of the program, communication issues with DEWHA persisted throughout the program. Assessors,[35] ABSA,[36] and participating financial institutions[37] all commented that they have had enormous difficulties contacting and communicating with DEWHA.

6.60      The committee heard that DEWHA frequently failed to respond to emails and return phone calls, which caused a great deal of frustration for stakeholders. In the committee's view, this lack of communication compounded many of the problems with the program, for example the frustrations experienced by assessors and financial partners with late payments and invoicing.

6.61      The committee was informed that with the shift in responsibility to Minister Wong and DCCEE, communication improved.[38] However serious issues still remain, for example, Ms Leanne McIntosh, a GLACO assessor, stated:

[DCCEE] do not talk to us. We get emails demanding endless amounts of information, probably six or seven difference formatted invoices of the same information, and that is it. They do not share information with us, they just demand...[39]

6.62      It is also clear that serious communication issues existed between officers within DEWHA, and between DEWHA and the Minister's office. For example, Ms Anne Leo's comment that while members of the Green Loans team had been aware of GLACO's financial situation from early March 2010, she, as Acting Assistant Secretary, had only become aware of GLACO's situation on 2 April,[40] demonstrates a shocking lack of communication within the DEWHA and later DCCEE.

6.63      The ANAO found numerous examples of poor communication within DCCEE and DEWHA over the life of the Green Loans Program, particularly from the Green Loans team to senior management regarding the state of the program.[41] Perhaps most worryingly, the ANAO found that the Green Loans team 'at times, took steps to avoid' the 'involvement or intervention' of specialised central units of the department that oversee issues such as procurements and contracting, IT, finance and legal aspects of projects.[42] The ANAO also uncovered serious problems with the departments' record-keeping procedures such that it was difficult to identify when decisions were made and by whom.[43]

6.64      The Faulkner review of procurement practices and contractual arrangements found that the lack of communication between the Green Loans team and DEWHA's executive, as well as between DEWHA executives and the Minister's office, was a reason for the poor procurement practices that occurred throughout the program.[44] That review found that various issues and concerns had been raised at the Assistant Secretary level and not passed on, and no appropriate actions were taken. The review also found that DEWHA's senior executive failed to pass on concerns that the program's outcomes could not be realistically achieved within the deadlines to the Minister's office. These issues were not raised until July 2009, when the program had already begun. Furthermore, the review found evidence of DEWHA having provided incorrect information to the Minister about budget issues.[45]

6.65      The same communication issues within DEWHA and between DEWHA and Minister Garrett also plagued the Home Insulation Program and meant that many of the risks that resulted in the tragic outcomes of that program were either never communicated to, or never acted on, by the highest levels of government.[46]

6.66      DEWHA has responded to the findings of the Faulkner review, including its findings as to the underlying causes of the problems with the Green Loans Program which include poor communication. DEWHA's Response to the review of...the Independent Inquiry into the Green Loans Program (the Faulkner review)[47] contains a table which sets out 'key DEWHA reforms' against issues raised in the Faulkner review. The table suggests that all of the underlying causes for the procurement and probity failures identified in the Faulkner review have been dealt with through the creation of a Management Board with three committees—a Finance and Operations Committee, a Workforce Management Committee, and an Information Management Committee. DEWHA also suggests that it has 'clarified and strengthened' the 'roles and responsibilities of the central DEWHA corporate functions'.[48]

6.67      In the committee's view, this response is completely inadequate and does not treat genuinely the very serious issues identified in the Faulkner review. The findings of the Faulkner review, as well as the other reviews of various aspects of the program—the internal audit of procurement practices by Protiviti,[49] the review of the program by Resolution Consulting[50] and the ANAO performance audit[51]—indicate there are serious problems within the culture of DEWHA that have resulted in departmental officers attempting to take short-cuts to avoid scrutiny by senior managers.[52] These findings are corroborated by the fact that the same issues underpinned the failure of the Home Insulation Program. The committee does not see how these serious cultural issues, in addition to the myriad of other underlying issues identified by the Faulkner review, the ANAO audit and this inquiry, can possibly be addressed by a new management board with three committees, and a 'clarification' of roles.

6.68      The committee is appalled by the array of communication problems that plagued the Green Loans Program from its outset. The committee supports the findings of the Faulkner, the ANAO and Resolution Consulting Services reviews in particular, finds that these problems reflect serious systemic issues within DEWHA that have not been adequately addressed. Furthermore, the committee is of the view, having conducted inquiries into both the Green Loans and Home Insulation programs, that widespread and systemic problems exist within DEWHA that were major causes the failure of both programs.

6.69      Furthermore, the committee understands that when the program was moved from DEWHA to DCCEE, many of the DEWHA staff and managers were simply moved across to DCCEE. Therefore, in the committee's view, it is not sufficient for DEWHA alone to respond to the failures that occurred under Green Loans given the team responsible for the program now works in DCCEE, some of the systemic issues in DEWHA may also exist within DCCEE as well.

6.70      Accordingly, the committee considers it would be appropriate for the Commonwealth Ombudsman to consider conducting an own-motion investigation into these cultural issues within DEWHA (which was recently renamed the Department of Sustainability, Environment, Water, Population and Communities—DSEWPC) and DCCEE.

6.71      While there have already been a number of reviews of the program, the committee considers that an investigation by the Commonwealth Ombudsman is necessary because of the systemic issues identified as existing within DCCEE and DEWHA/DSEWPC. Despite its serious findings, the ANAO chose not to make any recommendations because of the fact that both departments have already announced changes to practices and policies to take account of the myriad of problems encountered during the Green Loans Program.[53] However, as noted above, this committee is not satisfied that the departments' efforts will be sufficient in changing what appear to be wide-spread and deeply entrenched problems within the relevant departments. Furthermore, as will be discussed in chapter 7, DCCEE appears to be repeating many of these mistakes in the new Green Start Program, in particular rolling out the overly ambitious phase one of the new program out in a very short space of time. Accordingly, the committee considers it would be appropriate for the Commonwealth Ombudsman, who is expert in advising government on matters of administration, to inform DCCEE and DSEWPC about how to address the administrative failings identified in this and other reviews.

Recommendation 1

6.72      Given the publication of the Auditor General's report into the Green Loans Program and subsequent to the conduct of this inquiry, the committee recommends that the Commonwealth Ombudsman consider conducting an own motion investigation into the administrative actions and arrangements within the Department of Sustainability, Environment, Water, Population and Communities and the Department of Climate Change and Energy Efficiency, that resulted in the serious problems with governance and communication endemic throughout the Green Loans Program.

6.73      Perhaps the key problem within DCCEE and DEWHA/DSEWPC identified by the numerous reviews of Green Loans was the lack of budgetary and other controls over the program. The lack of any form of budgetary evaluation or analysis of the program means that no proper assessment was ever done to determine whether the environmental and other benefits of Green Loans justified its $175 million price tag.

6.74      The lack of any form of analysis of the environmental, economic and social costs and benefits resulted in the objectives of the program being unclear. As the program modified, there was no method in place to re-assess those changes in light of their potential benefits to the taxpayer. It also meant that the program lacked important budgetary controls.

6.75      The committee strongly urges that before the government wastes further taxpayer resources on environmental programs so flawed in design and administration so as to deliver little or no benefit to either the environment or householders, an extensive analysis of any proposed new environmental programs be undertaken. Prior to any new environmental program being implemented, the government must demonstrate to taxpayers that the environmental, social and economic benefits delivered by the program justify its cost.

Recommendation 2

6.76      The committee recommends that the government not implement any environmental programs without prior completion of an evaluation which shows either net environmental benefits and/or a program cost which gives taxpayers value for money.

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