Penny Wong (SA, Australian Labor Party, Minister for Climate Change and Water) Share this | Hansard source

I seek leave to make a statement on the Green Loans Program.

Leave granted.

I thank the Senate. As the Senate would be aware, some two days ago I was sworn in as the Minister for Climate Change, Energy Efficiency and Water, adding energy efficiency to my existing portfolio responsibilities. This change recognises the inextricable link between the challenge of becoming more energy efficient and the challenge of tackling climate change. The change also means that the energy efficiency programs previously administered by the Department of the Environment, Water, Heritage and the Arts will now be delivered by the new Department of Climate Change and Energy Efficiency.

One such program for which I am now responsible is the Green Loans Program. This program recognises the public benefit in helping households identify how they can improve their efficiency and reduce their impact on the climate and the environment. There has been strong demand for this. Australians want to do their bit. We should be finding ways to help them. Nevertheless, there have been problems with this program. Given that reality, I have asked my new department for a frank assessment of the program’s status and design. In the meantime, I am conscious of the concerns that have been raised by the community, and by members and senators. I therefore believe it is appropriate to update the Senate on the current situation with the Green Loans Program.

When the Green Loans Program was launched in July 2009, it was intended to have three components aimed at assisting Australian households to improve their energy and water efficiency. The first was a free home sustainability assessment. A trained assessor visits the home and talks with householders about the sustainability of the home and their current practices. The assessor then compiles an assessment report indicating what the householder might do to save energy and water, and to improve their sustainability. The second was a $50 Green Rewards Card for households who had participated in a home sustainability assessment. This was for the purchase of small items to improve efficiency—for example, energy efficient light globes and the like. The third was access to an interest free green loan, for amounts of up to $10,000 over a maximum period of four years.

The experience of the first six months of the Green Loans Program led the government to announce significant changes to the program on 19 February 2010. These were:

• An additional 600,000 assessments, on top of the 360,000 assessments already available under the program;
• A cap of 5,000 on the number of assessors who would be contracted to deliver household sustainability assessments under the program;
• A weekly cap of 15,000 assessment bookings and a daily and weekly cap per assessor of three and five assessments respectively;
• Changed booking arrangements such that each booking call to the call centre can only be made by or on behalf of individual assessors; and
• Discontinuation of the loans component of the program.

The government began implementing these changes from 19 February 2010. In line with agreements between the government and relevant financial institutions, loans under the program will be discontinued from 22 March 2010.

As I said, there have been a number of problems with this program. It is apparent that the program had a number of design flaws, and that aspects of the program have not been administered to the standard that the government and community expect. Since assuming responsibility for this program, I have put in place an immediate process to fully identify and get to the bottom of these problems. My priority in the coming weeks and months is to deliver on the fundamental policy objective: to provide high-quality, timely and useful sustainability assessments to Australian households. In order to do that, it is important to address the issues with the program—issues that have become evident to me over the past week through the complaints I have heard from households and green loans assessors. I will deal with each of these issues in turn.

First, to the issue of household sustainability assessment reports. As at 28 February 2010, 305,327 home sustainability assessments had been booked and, of these, 210,864 had been completed. This is clearly a very popular element of the program. However, only around 84,000 reports produced as a result of those home sustainability assessments had been sent out to households as at 28 February 2010. There are currently around 100,000 reports that have been submitted to the Department of the Environment, Water, Heritage and the Arts but which had not yet been sent out to households at the time responsibility moved to the Department of Climate Change and Energy Efficiency. The remaining reports have not yet been submitted to the department by assessors following completion of the home sustainability assessment. The delay in sending reports is unacceptable. Performance, in terms of the time it takes for households to receive their report after having an assessment completed, must be significantly improved. I have asked my department for further advice on what actions can be taken to improve performance in this area.

Second, to the number of assessors. Currently, there are around 4,000 assessors contracted to the department to conduct home sustainability assessments under the Green Loans Program. The government’s changes to the program on 19 February indicated that the number of assessors to be contracted under the program would be capped at 5,000. For an assessor to be contracted under the program, they must first complete a set training course and seek accreditation through the Association of Building Sustainability Assessors, or ABSA. They can then apply to the department to be contracted to take part in the Green Loans Program.

I am advised that ABSA’s figures indicate that there are approximately 7,500 people, including those already contracted, who have completed assessor training and been accredited with ABSA. I understand ABSA figures estimate approximately a further 1,800 people have completed training but have not been accredited. Clearly, this is a very difficult situation, with more accredited assessors than available contracts. It is a hard fact that there are going to be people who are accredited who will not be contracted under the program.

Third, the prompt payment of invoices is another area that has attracted criticism. I understand there are more than 1,500 invoices currently in hand and that work is underway to process those quickly. In line with government requirements, my department will be working toward having all correctly submitted invoices paid within 30 days. I am advised that only a very small percentage of correct invoices received to date from assessors—that is, less than four per cent—have been paid outside the 30-day period. However, it is apparent that many assessors are experiencing delays in payment. It is also clear that part of the problem appears to lie in ensuring that each invoice contains the correct information so it can be processed.

Around 50 per cent of invoices received by the Department of the Environment, Water, Heritage and the Arts have been incorrect or incomplete when first submitted, creating delays in payment. This figure, while still too high, is an improvement on earlier figures indicating that around 70 per cent of invoices were incorrect or incomplete when first submitted. The 30-day timeframe for payment applies from the date at which a complete and correct invoice is received.

To address the problems with invoicing, the Department of the Environment, Water, Heritage and the Arts developed a template for assessors to use, along with a step-by-step guide to filling in the template. Departmental staff have also been contacting assessors directly if they have submitted an incorrect invoice to explain what needs to be fixed. These practices will continue under my new department. Given the large number of invoices currently on hand and expected in coming weeks, I have asked my department to provide additional resources to ensure that correct invoices are paid within the required timeframes. I have also asked my department to hold discussions with ABSA about how it can assist its members to submit correct invoices.

Fourth, when the Green Loans Program was rolled out in July 2009, households receiving a home sustainability assessment were eligible for a $50 Green Rewards Card. However, no Green Rewards Cards have been distributed to households to date. I have asked my department to provide further detail on how this might be addressed quickly, and will consider this matter further when I receive that advice.

Fifth, there is the issue of the loans themselves. In the first six months of the program there was a low uptake of loans. This was due to a number of factors, including the slowness with which assessment reports were made available to households and a potentially lower appetite to enter into debt in the latter half of last year given the global financial crisis. As at 28 February 2010, participating financial institutions advised that they had received 2,864 applications for green loans and had approved 1,705.

DEWHA has been working, and my department will continue to work, with the financial institutions to assist in processing applications before 22 March 2010, which is the cut-off date for loans to have been approved and contracts signed, in line with the government’s announcement on the discontinuation of this component of the program. I am aware that a number of financial institutions have stopped taking new applications for green loans, instead choosing to focus on processing the loan applications they already have to hand ahead of the 22 March 2010 deadline. As at 28 February, I am advised that all correct invoices received from the financial institutions had been paid.

Sixth, the government understands that there are many households and assessors seeking information on the Green Loans Program at the moment. There are currently two call centres operating for the program. The booking hotline receives bookings for assessments from assessors and households, and provides advice to financial institutions. As at 3 March 2010, the average wait time for the booking centre was less than 10 seconds for all categories of callers, and the maximum wait time was less than two minutes.

A second hotline was established on 20 February to provide information on the changes to the program. On 20 and 21 February, the call centre performed outbound calls to inform assessors of the changes to the program. Since 22 February, the call centre has been receiving inbound calls. The demand for information through the information hotline has been considerable. I understand that the average wait time for callers is down to less than three minutes at this point in time.

The department has also set up a centralised process for dealing with written enquiries, via the ‘contact us’ tab on the green loans website. Unfortunately, due to the volume of written enquiries received, particularly since the program changes were announced, the time taken to respond to these enquiries has been considerable. To give the Senate some sense of the scale of this, the Department of the Environment, Water, Heritage and the Arts received more than 7,500 written enquiries over the period 25 February to 9 March 2010—that is significantly more enquiries than were received over the course of several months previously.

I understand that people may be frustrated about the timeliness of responses to email and online queries. I have asked the secretary of my department to consider the need for additional resources in this area to ensure enquiries are responded to within reasonable time frames. I would ask households and assessors to bear with the government as we work through the many outstanding inquiries. The government will endeavour to make information on the program available via the internet, the information line, and via direct communications with assessors as we work through the implementation issues associated with this program.

Seventh, it is important that this program has a stronger compliance and audit component to ensure that assessments have been properly completed. I have asked the secretary to ensure that existing compliance and audit activity for this program is expanded and fast-tracked and that further advice be provided to me on this issue as soon as possible. We have an obligation to ensure that public funds are being used responsibly, and for the intended purpose.

Eighth, there has also been some criticism of the quality of training provided to assessors by training organisations. This is of particular concern to me because it goes to the public confidence in the quality of the assessment reports which households are receiving, and in the program itself. The compliance regime which I have directed the department to expand will be focusing on the quality of assessment reports provided by assessors. This will be important information to help us identify the risk of assessors not meeting their obligations under their contract.

I have also asked my department to provide me with options to assure and improve the professional standard of assessors contracted to the program. Work is already in train to put in place a nationally accredited training module for assessors. The timing of this is subject to Commonwealth and state and territory processes in the training sphere and is likely to be some months away. Because this accredited training module is still some time away, I intend to explore interim mechanisms to improve confidence in assessors’ professional standards as soon as possible.

It is obvious, from the information I have provided to the Senate today, that the challenges for the Green Loans Program are many. The government acknowledges these challenges. The problems which exist are not acceptable and that is why I am taking steps to address them. As I have indicated, I have asked my department to provide significant additional resources to:

• address the backlog of assessment reports not yet provided to households;
• reduce any delay in payment of correct invoices from assessors, and ensure assessors are informed of correct invoicing techniques;
• expand and fast-track the compliance regime for the program to ensure quality assessments are being provided;
• provide me with advice on interim steps to assure and improve the professional standards of assessors;
• provide me with advice regarding the Green Rewards Card; and
• further improve customer service standards by ensuring the wait times on telephone hotlines remain as low as possible, and that there is significant improvement in the time taken to respond to email and online enquiries.

These are significant problems to overcome, and they may take some time to address. However, I have made it clear that these problems should be rectified as soon as possible. Addressing these issues is only the beginning of a process of improvement in this area. There are a number of reviews currently underway which will provide additional information to the government on what further action, if any, ought to be taken.

I will shortly be meeting with representatives from the assessor industry body, ABSA, for the first time to discuss this program. I will also be meeting with assessors to discuss their concerns. I want to signal now that the way in which I intend to address the many problems with this program is to engage fully with its stakeholders. I want to work with them to help resolve these problems.

I want to turn now, in closing, to a number of reviews which are currently underway in relation to this program. Prior to the Green Loans Program moving into my portfolio, Minister Garrett had instructed the Secretary of the Department of the Environment, Water, Heritage and the Arts to immediately implement an independent external process of inquiry in relation to all contractual agreements and procurement processes entered into during the final design and implementation of the Green Loans Program. This inquiry is underway and will report in April 2010.

Minister Garrett also initiated an audit of the assessor accreditation process and adherence to the terms of the Protocol for Assessor Accrediting Organisations between the department and ABSA as the accrediting organisation. This is being conducted by external audit firm PricewaterhouseCoopers. This audit is due to conclude shortly. Further, the Australian National Audit Office has started a performance audit of the Green Loans Program. The Auditor-General currently expects to complete this audit in the second half of the year.

Management of this program in the short term needs to have regard to both the timelines of these reviews and the issues these reviews have been set up to consider. Approximately 4,000 assessors are presently contracted to take part in the program. As I have outlined, the government is reviewing the relevant contracts and processes to ensure assessors currently contracted to conduct assessments are meeting all of the program requirements, and will take further action as is necessary. I also intend to take the opportunity to consider the findings of the reviews into contractual arrangements and procurement under this program, and into accreditation processes, before proceeding to finalise additional assessor contracts. This will enable the outcomes of the reviews to inform both subsequent and current contracting arrangements. In the meantime, new bookings will continue to be accepted, existing assessors contracted under the program can continue to complete assessments in line with the cap of five assessments per week and three assessments per day, and households that have booked assessments will continue to receive their assessments.

In closing, I make clear again that the government is committed to delivering programs that are effective and deliver value for money. In regard to the Green Loans Program, I will be working quickly to achieve these objectives. I thank the Senate for the courtesy of allowing me to make this statement.