Chapter 7


Chapter 7

The transition to Green Start

7.1        On 8 July 2010, the Minister then responsible for the Green Loans Program, Senator the Hon Penny Wong, then Minister for Climate Change, Energy Efficiency and Water, announced that the Green Loans Program would be phased out.[1]

7.2        Minister Wong announced that the end to the program 'follows consideration by the Government of a series of reviews, including the inquiry by Ms Patricia Faulkner AO into the Green Loans program'.[2]

7.3        According to Minister Wong, the government intends to phase out the Green Loans Program while transitioning to a new program, called the 'Green Start Program'. The Green Start Program will include two rounds of Commonwealth grants:

  • the first will fund energy assessments for households through grants 'awarded to accredited assessors and organisations who can deliver high quality assessments through a competitive process'; and
  • the second will 'seek proposals from community and welfare sector NGOs and other organisations to provide practical help to low-income and disadvantaged Australians to improve their energy efficiency'.[3]

7.4        On 26 July 2010, the Department of Climate Change and Energy Efficiency issued 'Program Guidelines' for round one of Green Start, and opened applications under that program.[4]

7.5        This chapter considers the proposed Green Start Program and makes recommendations on how the government might avoid the recurrence of many problems that resulted in the failure of the Green Loans Program.

Outline of the Green Start Program

7.6        The Green Start Program was first announced by then Minister for the Environment, Heritage and the Arts, the Hon Peter Garrett MP, on 25 November 2009.[5] Minister Garrett stated that the program would include $130 million in funding to 'help improve the energy and water efficiency of low-income and disadvantaged Australian households'.[6] Minister Garrett's proposal included: free supply and installation of energy and water efficiency products; personalised help to access local, state, territory and Australian Government water and energy efficient rebates; and advocacy and support to help householders deal with landlords, real estate agents and tradespeople to implement water and energy efficiency measures.[7] This appears to mirror the second grants round as announced by Minster Wong on 8 July 2010.

7.7        The first round of the program announced by Minister Wong includes none of these things. Instead the first round of Green Start appears to be a simplified continuation of the Green Loans Program which attempts to limit the government's involvement in order to avoid many of the problems that plagued Green Loans.

7.8        In essence, under round one of Green Start, the government is seeking funding proposals from individuals and organisations to deliver home energy assessments to households. The Program Guidelines emphasise a particular focus will be on providing assessments to 'all geographic areas, including remote and regional Australia'...'that were not well serviced under the Green Loans program'.[8] Households which received assessments under Green Loans will not be eligible.[9]

7.9        The proposed Green Start Program will include between 300 000 and 500 000 home assessments, to be completed by 30 June 2011.[10]

Committee comment

7.10      The committee has serious concerns about numerous aspects of the proposed Green Start Program. Chief amongst these concerns is the fact that the various reviews have unveiled serious and endemic governance and communication issues within both DSEWPC and DCCEE. As discussed in chapter 6, the committee is not satisfied that either department's attempts to resolve these problems will be sufficient. Accordingly the committee has grave doubts about the ability of either department to manage programs of the nature of Green Loans and Green Start.

Recommendation 3

7.11      The committee recommends that due to the failures of:

  • the Green Loans Program to realise its goals;
  • the Department of Sustainability, Environment, Water, Population and Communities and the Department of Climate Change and Energy Efficiency to demonstrate a capacity to implement programs of this nature; and
  • the government to manage programs of this nature, such as Green Loans and Home Insulation programs;

the Green Start Program not proceed.

7.12      Should the government disregard recommendation 3 and decide to continue with the Green Start Program, the committee has a number of recommendations as to how Green Start ought to proceed in order to avoid the problems which resulted in the failure of the Green Loans Program.

7.13      First and foremost, the committee has serious concerns that the government is repeating its previous errors in the design of Green Start. The government has thus far failed to demonstrate any benefit that Australian taxpayers have received from the home assessments performed under the Green Loans Program, which are set to continue under Green Start. Evidence to this committee clearly indicates that there were serious problems with the household assessment process under Green Loans, particularly with the home assessment tool and the quality of assessments, which prevented assessments from delivering any real benefits to either householders or the environment, and hence taxpayers.

7.14      Accordingly, the committee urges that prior to implementing Green Start, the government undertake an extensive analysis of environmental, economic and social impacts of the program. After wasting over $2.6 billion on the Green Loans and Home Insulation programs, the committee considers it incumbent upon the government to demonstrate that the net environmental or other benefits justify the price-tag of Green Start.

Recommendation 4

7.15      Should the government disregard recommendation 3, the committee recommends that the government undertake an extensive analysis of the environmental, economic and social costs and benefits of Green Start Program prior to its commencement. If substantial benefits cannot be shown, the committee recommends that Round 1 of the Green Start Program be cancelled so as to avoid further waste of taxpayers' money.

7.16      In the event that, despite the foregoing recommendations, the government decides to proceed with the Green Start Program, then the committee recommends that the Green Start Program proceeds in accordance with recommendations 5 to 15.

Issued identified with the Green Start Program

7.17      Should the government decide to proceed with Green Start, despite the committee's strong recommendation that it not, the committee has identified a range of aspects of the project which must be rectified in order to avoid the government repeating the same mistakes it made with the Green Loans and Home Insulation programs. These relate to the aspects of:

  • audit and evaluation;
  • appropriate timeframes for the program;
  • treatment of assessors;
  • conflicts of interest;
  • the assessment tool;
  • departmental staffing and resourcing;
  • communication;
  • the tender process;
  • bookings and assessment reports; and
  • payments.

Audit and evaluation

7.18      As discussed in chapter 6, had audit and/or evaluation processes been incorporated into Green Loans, many of the serious issues that developed with that program may have been prevented. Accordingly it is absolutely critical that proper audit and evaluation processes are built into Green Start right from its commencement.

7.19      The Program Guidelines state that DCCEE will conduct activities to 'monitor adherence to the funding agreement' by grant recipients. The guidelines state that:

This will include random and targeted samples of various aspects of the program such as quality of the assessments, householder satisfaction, accreditation of assessors and the correctness of the milestone report and associated request for payment.[11]

7.20      Under the draft Funding Agreement for organisations and individuals selected under the first round of the proposed Green Start Program, grant recipients will be required to assist these audits by providing documents and responding to reasonable requests.[12]

Committee comment

7.21      The committee notes, however, that similar audits formed part of the assessor contract under Green Loans,[13] yet this did not mean that audits were conducted. In fact, the committee has found that the government's failure to monitor and evaluate the program was a key reason for its monumental failure.

7.22      Accordingly, the committee urges that before Green Start commences, DCCEE and the Minister for Climate Change, Energy Efficiency and Water publicly provide detailed information on audit and evaluation processes which form part of the Green Start Program.

Recommendation 5

7.23      The committee recommends that prior to commencing any Green Start Program, the Minister for Climate Change and Energy Efficiency and the Department of Climate Change and Energy Efficiency develop and publicly disclose details of:

  • a comprehensive audit process for the Green Start Program, so that the government can effectively monitor the progress of the program; and
  • a comprehensive evaluation process for the Green Start Program, so that the government can measure the benefits delivered by the program.

Implementation timeframe

7.24      The committee is surprised by the government's stated proposal to complete 300 000 to 500 000 assessments in such a short space of time. Applications for grants under Round One of Green Start closed on 20 August 2010. At the time of writing (late September 2010) no announcement had been made on successful applicants. This leaves at best nine months for 300 000 to 500 000 assessments to be completed.

7.25      This compares with the 305 327 assessments that were conducted in eight months of Green Loans between July 2009 and the end of February 2010,[14] which proved to be substantially beyond the government's capacity to manage. The speed at which assessments were conducted under Green Loans is not something that the government should seek to repeat. It is very surprising to the committee, and seems extremely unwise that the government would seek to repeat the Green Loans experience in this way.

7.26      Furthermore, the committee sees absolutely no reason or justification for the speed of the proposed rollout or for the first round to be completed by mid-2011. Accordingly, the committee's primary recommendation with respect to Green Start is that the government spread the program across a more realistic timeframe. After the experience of Green Loans, the committee stresses that it is critical that Green Start not be rushed, and that administrators have sufficient time to plan and operate the program in accordance with Commonwealth laws, guidelines and best-practice principles.

7.27      Furthermore, the proposal to complete such a huge number of assessments in such a short space of time will undoubtedly have significant negative effects on the home sustainability assessment industry. This is an industry that, as a result of the government's mismanagement of Green Loans, has already undergone substantial trauma. To invest in up to 500 000 assessments over only 9 months means that the industry will experience a huge boom, followed by a catastrophic bust when the funding stops in July 2011. The government's proposal to fund so many assessments in such a short timeframe shows a lack of foresight, and a lack of concern for the development of this important industry.

Recommendation 6

7.28      The committee recommends in the strongest possible terms that the government spread Green Start across a more realistic timeframe, in order to:

  • allow time for proper project planning and management;
  • allow time for proper consultation with relevant stakeholders;
  • prevent the program from exceeding the government's administrative capacity; and
  • ensure the home assessment industry does not hit a brick wall when funding ceases on 1 July 2011.

Treatment of assessors

7.29      All assessors performing assessments under Green Start are required to be accredited by ABSA,[15] which means that a substantial proportion of, if not all, applicants under Round 1 are likely to be Green Loans assessors and companies that employed them, like Fieldforce.

7.30      According to the Program Guidelines 'all complete applications that meet the eligibility requirements will be assessed through a competitive and comparative process against the merit criteria of the program'.[16] These criteria include:

  • demonstrated skills, experience and expertise of assessors;
  • demonstrated ability of the proposal to contribute to Green Start objectives, particularly in regional and remote areas;
  • 'demonstrated skill, capacity and experience in delivering projects to agreed timelines and with the allocated budget'; and
  • value for money.[17]

7.31      Organisations and individuals selected under the process will then be required to sign a funding agreement with the government, a draft of which has been released by DCCEE.[18] They will also be asked to provide financial statements and/or a bank bond amounting to 20 per cent of the total funding they have requested.[19]

7.32      In other words, the government is asking Green Loans assessors and companies to now put forward funding proposals demonstrating to how they will deliver home sustainability assessments to households. DCCEE will then choose based on a 'competitive and comparative process' which assessors and companies to fund, and have them sign a new contract with the government to perform these assessments. Funding will then be provided in lump sums in accordance with the agreement reached between the assessor/company and government, on the basis of assessors completing 'milestone' reports.[20]

Committee comment

7.33      While this process seems to involve significant replication of the processes that assessors went through in order to take part in Green Loans, if conducted properly, and on merit, it may be a convoluted way of allowing some of the best and most dedicated assessors to continue performing home assessments. However, the committee has a number of reservations about whether the selection process will be properly conducted, as well as recommendations as to how various problems that arose under Green Loans might be avoided.

7.34      The committee is uncertain whether the government will conduct the procurement process for assessors fairly and based on merit, given its track record on the issue.[21] The committee urges that DCCEE implement appropriate oversight mechanisms at the highest level to ensure that the selection process is conducted fairly and in accordance with relevant procurement and other Commonwealth laws and guidelines.

Recommendation 7

7.35      The committee recommends that the Department of Climate Change and Energy Efficiency implement appropriate oversight mechanisms, at the highest level, to ensure that the allocation of Green Start funding is merit-based and is conducted in accordance with all relevant procurement laws and guidelines.

7.36      The committee also emphasises the importance of no special deals being done under Green Start, which would undermine the integrity of the program from the outset, as it did with Green Loans.

Recommendation 8

7.37      The committee recommends that no preferential deals are done under any Green Start Program, which unfairly give one grant recipient an advantage over any other.

7.38      The committee also has concerns about the requisite training of assessors under Green Start, based on the experience of Green Loans. While the committee considers it appropriate that Green Loans assessors be given the opportunity to receive funding under Green Start, concerns remain as a result of the significant variances between Green Loans training courses. The government's lack of regulation of Green Loans training means some assessors will have received better training than others.

7.39      However, there is no way for the government to determine which assessors have been well trained. Accordingly, the committee considers it would be appropriate for the government to fund further training, to Certificate IV level, of all assessors, including assessors employed by companies, who trained under Green Loans, and are selected to perform assessments under Green Start.

7.40      Noting the fact that the process for nationally endorsing the Victorian Certificate IV course is underway but that it is a slow 'process of going through the state governments',[22] the committee considers this as another reason for the government to delay the roll-out of Green Start.

Recommendation 9

7.41      The committee recommends that, once the national endorsement process for the Victorian Certificate IV course has been completed, for all Green Loans assessors selected to receive grants under any Green Start Program, the government fund an upgrade in their training to Certificate IV level.

Assessors not selected under Green Start

7.42      The funding model for Green Start removes the risk of one of the main problems experienced in Green Loans from recurring—assessor numbers. Because grants are determined before assessments are conducted, there will be a natural limit on the number of assessors under the program.

7.43      However this means that many of the 9500 assessors who paid on average $3000 for training under the Green Loans program will not be funded to perform home assessments under Green Start.

7.44      For those Green Loans Assessor, who are not successful in obtaining grants under Green Start, the government has announced that they 'will receive immediate access to Stream 2 services (or higher) from Job Services Australia under the Compact for Retrenched Workers'.[23]

Committee comment

7.45      It is unclear to the committee whether those approximately 5500 individuals who underwent assessor training, but were not awarded government contracts as a result of the cap on assessor numbers as of 19 February 2010, will be eligible for any assistance. These are people who spent significant resources to train as assessors with an expectation based on government statements that they would be able to work under the Green Loans Program and, because of a government decision of which they had no prior warning, were not able to work under that program.

Recommendation 10

7.46      The committee recommends that the government urgently clarify whether those individuals who trained and were accredited as assessors under Green Loans, but never received contracts from the government, will be entitled to any government assistance.

Conflicts of interest

7.47      It seems that in order to avoid the rorting that went on under Green Loans, the government has included requirements in the Green Start Program Guidelines that any conflicts of interest must be declared,[24] as well as a condition in the funding agreement that recipient must not:

[Direct] the Householder toward a range of products or services developed or supported by an enterprise with which the Recipient or Assessor is associated or from whom the Recipient or Assessor will receive a commission or other benefit.[25]

7.48      Furthermore, assessors and companies will not be allowed to use telemarketing to book assessments. The draft Funding Agreement states that they must not:

...make unsolicited direct approaches to members of the public to elicit assessment business, such as by way of cold-calling, email, door-knocking or any other form of unsolicited direct marketing to potential customers.[26]

7.49      While the committee notes that this removes a key problem with Green Loans, it does raise the question of what will happen if assessors are not able to effectively market the program. The committee heard evidence from assessors that they had significant trouble marketing the program without the green loans component and given the poor public perception of the program (see paragraph 5.9 ff). The committee urges the government to consider this issue, and specifically, to consider what will happen if assessors are unable to perform the work they have been contracted to do. The committee feels that it would be unreasonable if, because of the government's own maladministration of the Green Loans program, assessors are unable to perform as many assessments as they contract to under Green Start, and the government treats that as a breach of contract. DCCEE and the Minister need to work through this issue and develop a clear and transparent policy so that applicants know what they are signing up for before they are awarded grants under Green Start.

Assessment Tool

7.50      The Program Guidelines note that assessments 'must be undertaken, using the Home Sustainability Assessment Tool, and reports prepared for householders using the Home Sustainability Template (both of which will be provided by the department to successful grant recipients)'.[27]

7.51      No further detail has been provided on whether the assessment tool will be the same as that used in Green Loans.

Committee comment

7.52      Given the serious inaccuracies and other problems with the Green Loans assessment tool (discussed in chapter 3), the committee recommends that, in consultation with the assessor industry, the tool be entirely redeveloped, and these issues be addressed prior to the implementation of Green Start. The committee also urges that adequate time be given to the developer of the tool to properly test it and address any issues prior to its national release.

7.53      It is also important to note that the assessment tool for Green Loans was designed with a different objective than what is required for Green Start—Green Loans was designed in large part to give householders an idea of what products they could usefully purchase with a loan; whereas Green Start does not contain a loan component. The difference is important, as without the prospect of an interest-free loan, householders under Green Start are likely to be more interested in free and less-costly products and solutions as to how to save water and energy.

Recommendation 11

7.54      The committee recommends that, in consultation with the assessor industry and other relevant stakeholders, the Green Loans assessment tool be redeveloped to address the different objectives of any Green Start Program, and that the tool be tested properly and problems rectified prior to its implementation.

Departmental staffing and resourcing

7.55       As discussed throughout this report, and in chapter 6 in particular, many of the serious problems with Green Loans, including the long delays in paying assessors, resulted from significant under-resourcing of the team in DEWHA, and later DCCEE, charged with running the program.

Committee comment

7.56      In order to avoid these issues recurring under Green Start, it is imperative that prior to the commencement of any new program, DCCEE undertake an extensive assessment on staffing requirements—including both numbers of staff and project management expertise. It is critical that the team charged with managing Green Start have sufficient skills and resources to properly and professionally manage the project right from the outset.

Recommendation 12

7.57      The committee recommends that, prior to the commencement of any Green Start Program, an audit of staffing requirements within the Department of Climate Change and Energy Efficiency be conducted, including consideration of staffing numbers and expertise required to manage the project. The appropriate numbers of experienced project management staff must be employed to manage any Green Start Program from the outset.

Communication

7.58      As discussed throughout this report, and highlighted in chapter 6, DEWHA's and later DCCEE's lack of communication with stakeholders and within their own departments was a key reason for the failure of the Green Loans Program.

Committee comment

7.59      The government must ensure that the massive communication failures, both between the department and stakeholders and within the department, are not repeated.

7.60      In addition to the committee's recommendation that the Commonwealth Ombudsman consider investigating this systemic problem in DEWHA (which was recently renamed the Department of Sustainability, Environment, Water, Population and Communities) and DCCEE, the committee also recommends that prior to commencing Green Start, DCEEE conduct genuine consultations with the various stakeholders with an interest in the new program.

Recommendation 13

7.61      The committee recommends that prior to commencing any Green Start Program, the Department of Climate Change and Energy Efficiency conduct thorough and genuine consultation with program stakeholders.

Tender process

7.62      Under round one of the Green Start Program companies and individuals have been invited to apply to perform assessments. According to the Program Guidelines:

It is intended that grant funding under the Green Start program will be allocated to a range of qualified, experienced individuals and/or organisations across Australia.[28]

7.63      Applicants were asked to submit funding proposals demonstrating how they will perform assessments. In addition to the cost of performing assessments (specified in the Program Guidelines to $211 per assessment[29]), applications may include funding for administration costs, marketing, equipment, travel and training.[30]

Committee comment

7.64      The committee has very serious concerns about this proposed funding model. First and foremost, the committee questions why the government has specified a fixed rate for assessments ($211), if it intends to undertake a competitive tender process for assessment funding. Why would the government not allow the market to decide the going rate for assessments?

7.65      Furthermore, in addition to this $211 'going rate', the government proposes to allow applications to add on further funding for administration and other expenses. This will make the cost to government per assessment substantially higher than it was under Green Loans. The committee notes that there were no problems in finding assessors willing to work for $200 per assessment, and questions why the government would now pay substantially more per assessment under this new program. The government has failed to demonstrate that spending $200 per assessment delivered any value for money to the taxpayer. How can spending significantly more than this be expected to now deliver value for money?

Recommendation 14

7.66      The committee recommends that the government abandon any fixed rate for assessments of $211 and instead allow the market to determine the most efficient value of assessments.

Bookings and Assessment Reports

7.67      Under the Green Start Program, assessors will be required to take bookings directly from householders, and to provide assessment reports directly.[31] This appears to be a response to the problems experienced under Green Loans in relation to the booking centre and distribution of reports.

7.68      It is proposed that DCCEE will publish the details of assessors on its website, so that householders can contact assessors directly to book appointments.[32] With respect to reports, assessors will be required to provide them in a template provided by DCCEE.[33]

Committee comment

7.69      While the committee acknowledges that requiring assessors to make their own bookings and issue reports will take a significant burden off DCCEE, it appears that the process may result in gaps in audit and quality control. It is critical to the integrity of the program that the government maintain strict checks and quality controls throughout the operation of Green Start, in order to ensure that householders are receiving high quality assessments in a timely manner.

7.70      A recommendation about audit and evaluation was made above (recommendation 5).

Payments

7.71      The Program Guidelines state that the funding agreement between the government and successful grant applicants 'will include a budget and a payment and reporting schedule'.[34] The guidelines state that:

Budgets can include a reasonable advance payment, payable in late 2010. Subsequent grant payments would then be made at intervals based on eligible expenditure incurred, with each payment subject to satisfactory completion of payment milestones, substantiation and compliance generally with the funding agreement.[35]

7.72      In order to receive payment, assessors will have to invoice the department, as they did with Green Loans, along with the relevant milestone report. The draft funding agreement provides that the department will pay correctly rendered invoices within 30 days.[36]

Committee comment

7.73      Neither DCCEE nor the Minister have released any information on how the government will ensure that the problems with payments to assessors that occurred under Green Loans do not recur. The committee stresses the importance of the government honouring its obligations under the contract, particularly with respect to timely payment. As the committee heard in evidence during the inquiry, the government's late and non-payment of invoices resulted in serious financial hardship for many assessors and their families. This is a completely unacceptable situation, which the government must do everything possible to ensure is not repeated.

Recommendation 15

7.74      The committee urges the government to uphold its side of funding agreements under any Green Start Program, including making payments on time, to prevent payments to grant recipients being delayed as they were under Green Loans.

 

Senator Mary Jo Fisher
Chair

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