Simon Birmingham (SA, Liberal Party, Shadow Parliamentary Secretary for the Murray Darling Basin) Share this | Link to this | Hansard source

by leave—I move:

That the Senate take note of the document.

This document, tabled out of session on Friday last week, is indeed a very clear example of the government’s mismanagement of its Home Insulation Program; in fact, no clearer example could one find. In reading this document, it becomes transparently clear that almost everything predicted by its authors, Minter Ellison, has come true. All the flaws in the government’s Home Insulation Program, which Minister Garrett failed to recognise and adequately act on early enough, were identified. In fact, they were identified and given to the government on 9 April last year. That is before four young Australians lost their lives installing insulation, before 93 Australian homes suffered fire damage because of this insulation program and before tens of thousands of other homes that were identified as possibly at risk were put at risk. All the warnings were contained in this report to the government that the minister miraculously never looked at. From 9 April last year until 11 February this year, he never looked at the report. That is what the minister says. But we know that his department told the Senate inquiry into this matter earlier today that it had briefed him continuously. We know that his department provided him with a briefing on this risk management plan in late April last year. We know that he was told of the risks and the issues in April last year, so, even if he had never seen this report until February and even if its contents had never been specifically quoted to him, we know by the admission of his own departmental officials in a Senate inquiry earlier today that he was briefed on this in late April last year—again, before deaths occurred and before houses were damaged.

This document was not the only one flagging these warnings to the minister; there was another document that the government did not think to table last week. Despite the order of the Senate and despite the request for these documents to be tabled, there was another document produced by Minter Ellison, the same authors, that the government did not think to table. That document is called the Risk Register and Management Plan, and it was delivered by Minter Ellison at 2 pm on 9 April 2009. It is little wonder that the government did not want to release this document voluntarily last week, because this document shows not only that all the risks were there but also that some recommendations were made to slow down the implementation of this program. Those recommendations, which are specifically named in this document, were not acted upon.

Let’s look at a couple of them. In relation to procurement and licensing, Minter Ellison said that there was a need for the entire program duration to be determined and fulfilled by 1 July under the government’s policy. However, they identified that that was unachievable. They suggested that the residual risk for rushing through procurement and licensing arrangements was not tolerable. There is a column in the document: ‘Is the residual risk value tolerable—yes or no?’ In response to this issue the answer is no. That is what Minter Ellison advised the government. Instead, they suggested the government should extend the rebate scheme to 30 September 2009 and consider a possible hybrid model allowing full implementation as planned on 1 July 2009 in metropolitan Sydney and Melbourne. That is right: they suggested delaying full implementation until 30 September. Instead, the government charged ahead without any proper procurement arrangements and without following through what was recommended: the need to identify the most appropriate procurement licensing model and the need to consider staged implementation of residual procurement needs to reduce time pressures. Without recognising any of these concerns, the government rushed ahead and implemented its scheme on 1 July.

Indeed, Minter Ellison noted a more sweeping concern in the report. They said that the time available to develop the program in a properly controlled way may be inadequate to deliver the program in a properly controlled way for the implementation date of 1 July. In detailing this, Minter Ellison again posed the same question: ‘Having looked at the risks of rushing through and implementing by 1 July, is the residual risk value tolerable—yes or no?’ Once again, the answer was no. Minter Ellison found quite clearly that the risk value of rushing ahead with this program was not tolerable and, as a result, once again recommended to the government that they should extend the rebate scheme to 30 September 2009 and consider a possible hybrid model. Did the government do either of those things? No, they did not. They charged ahead instead, recklessly implementing this scheme despite the fact that risks were identified in multiple reports provided by Minter Ellison and despite the fact that those risks went to the safety of installers and the safety of Australian families. This reckless abandon when it comes to the safety of Australians means that Minister Garrett and the Rudd government stand condemned for their failure to heed the advice that was given to them.

We know through evidence that has come out over the last couple of weeks that the government received at least 19 explicit warnings from industry, state governments and stakeholders about the risks that their Home Insulation Program posed—the risks to installers and the risks to homeowners, the risks of electrocution and the risks of fire. They received 19 explicit warnings. But here we have two government documents commissioned and paid for by the department of the environment which, for some strange reason, were kept secret from the minister and that demonstrate the government were warned about the risks. What is more, they were given some recommendations as to how to mitigate those risks. Of particular importance was the recommendation to slow things down and recognise that they were going too fast, and that, as a consequence of going too fast, they would put lives at risk and leave this program not only seeing tens of millions, if not hundreds of millions, of dollars wasted but also seeing Australian homeowners and insulation installers putting their lives on the line as a result of Minister Garrett’s mismanagement.

It is fail, fail, fail for Minister Garrett on all counts in the management of his portfolio. We now have a Green Loans Program that does not have a loans component, we have thousands of assessors under the Green Loans Program finding themselves out of work and we have a Home Insulation Program that has been cancelled for the time being, leaving thousands of installers without the opportunity of work until some alternative is put in place. Many of them are reputable installers who have been doing the job safely and adequately, not just for months but for years and decades. They all find themselves left out in the cold. The government has let down homeowners, installers and the Australian community. Minister Garrett has failed to heed advice on multiple occasions and has failed to heed advice contained in reports commissioned by his own department. It has been acknowledged by his department that they briefed him regularly and that the departmental secretary briefed him on a weekly basis, and yet he seems to have never managed to take the appropriate action. Cancelling the program last week does not absolve Minister Garrett of all responsibility for his past decisions—far from it. Minister Garrett needs to be held accountable for every decision that he has taken or, more importantly, failed to take in the life of this program. That is where the buck needs to stop—with Minister Garrett.

Also, whilst we are looking at where the buck may stop, Minister Arbib, after his performance in question time today, has some questions to answer as well because it was identified in those Minter Ellison reports that he was at weekly meetings. Whilst he told the Senate today that he was never told of the risks of fire or the risks of electrocution, it beggars belief, quite frankly, that he attended weekly meetings and did not hear of those risks. Somehow he claims that he delivered on all of the safety components. Mr Acting Deputy President Marshall, please explain to me how it is that, if he was never told of the risks of fire and electrocution, he could deliver on all of those safety components. Something does not add up in what Minister Arbib said. He stands as condemned as Minister Garrett.

Guy Barnett (Tasmania, Liberal Party, Chairman of the Scrutiny of Government Waste Committee) Share this | Link to this | Hansard source

I stand to speak to the Minter Ellison report that was tabled last Friday in the parliament—in fact, tabled way too late. The minister ended up being forced to table this document, knowing full well that this is a critically important document in this whole housing insulation program fiasco. Surely, the Rudd Labor government has a duty of care to the Australian people. Does it have a duty of care to Australian families; does it have a duty of care to the businesses affected; does it have a duty of care to the people that will lose their jobs, quite probably in the thousands, as a result of its dilatory behaviour—as a result of what I would say is either gross neglect or reckless indifference? Or is the government deliberately hiding the truth? This document was tabled on Friday, but it was tabled without the risk register, which we obtained, excruciatingly. As a result of question after question this morning with the department, we have finally obtained the risk register and management plan, which was part of this Minter Ellison consulting report delivered to the government in early April 2009. Why did it take so long?

We had the Department of the Environment, Water, Heritage and the Arts submission to our Senate committee—of which I am a member, ably chaired by the Senator Mary Jo Fisher, and of which Senator Birmingham and others are members—and we had to ask again and again to get the information onto the table. That should not be required. The submission made no reference to the Minter Ellison report, nor did it make reference to a whole range of other things. But we have learned a good deal today. It appears that Minister Garrett knew about this at the time—in April last year. We were advised of weekly meetings and monthly meetings with all the relevant people, including people from the Department of the Prime Minister and Cabinet. They were aware of the risks that were facing the Australian people as a result of the rushed implementation of this housing insulation program that the government cobbled together in quick time.

The sad thing is that the government is now faced with four deaths—it is very tragic and sad to note that—and today we found that the number of house fires has increased to 93 house fires as at today. What about those families affected, not to mention the people whose homes are now at risk of fire as a result of this dodgy dealing and as a result of a failed government program? We have been advised this morning that, based on an audit report, 7.6 per cent of homes—some 80,000—are at risk of fire and have a safety risk. In terms of those with substandard or non-compliant installation, we are advised that it is some 16 per cent. That is over 160,000 homes throughout Australia—in every state and territory, in every nook and cranny—that are at risk.

Those figures for Tasmania on a population share basis are approximately 2,000 homes at risk of fire and some 4,000 homes with substandard or non-compliant insulation. That is not good enough. I have put the department on notice to be more specific and to provide the exact details, and I hope that those answers can come through very swiftly indeed. These are peoples’ families we are dealing with. You have already got the foil issue, where an audit is being undertaken by the government. Based on current arrangements—on the review and the audit of the last three months—it is going to take some 12 years before that audit is complete and those people can be confident that their house is not electrified. That is just absurd.

I see that the minister has put out a statement this afternoon where he says:

In addition to the existing electrical safety inspection program for foil insulation, the Government will expand its pro-active and targeted, risk based audit and inspection program to 15 per cent of homes with non-foil insulation installed under Home Insulation Program which may have safety risks.

It goes on to say that the program:

… will focus on households where there are significant concerns about safety.

They talk about rolling out a hotline—I do not know how you roll out a hotline—from Wednesday this week.

Mary Fisher (SA, Liberal Party) Share this | Link to this | Hansard source

Part of the NBN, no doubt!

Guy Barnett (Tasmania, Liberal Party, Chairman of the Scrutiny of Government Waste Committee) Share this | Link to this | Hansard source

Probably part of the NBN. We know what a fiasco and a disaster that has been, Senator Fisher. They say that ‘inspections will occur over time’, but there is no time line. Is it 12 years, 12 months, two months, 12 days? How long is it going to be before Australian families can be confident that their own homes are safe? Minister Garrett, you should hang your head in shame as a result of this botched housing insulation program. It is a great shame.

What about the businesses affected? What about the workers who are going to lose or have already lost their jobs? I spoke to Peter Banjanin of Sunshine Coast Insulman Insulation Pty Ltd on the weekend, who, sadly, had to sack his 11 employees over the weekend. He tells me he has stock valued at $150,000 to $200,000 in his business on his premises. He asked me, ‘What am I going to do with it?’ What does Minister Garrett say about that? I asked the department this morning if there would be any compensation available for those businesses that are responsible—that are doing the right thing, did the right thing and met all the requirements, including the safety standards. What is up with them? I was also advised that last Friday the government’s own website was unavailable. There was some sort of meltdown last Friday. Whether that is correct or not, we will need to find out, but that is the advice I received from that gentleman. Clearly this is a dud program and the government must stand accountable.

In terms of the cost, waste and mismanagement of this $2.45 billion program, it knows no bounds. We have asked questions in the Senate committee on imports. Of course, this program was designed to strengthen the Australian economy. We know that a very significant percentage of the insulation has had to be imported from overseas, whether it be the US or China. We were advised last Wednesday in Melbourne that between 30 per cent and 40 per cent of the insulation was non-compliant. The department says that it is about 16 per cent, or 160,000 homes with substandard insulation. The fact is that it is not good enough.

I asked questions this morning about the Australian Communications and Media Authority and the Do Not Call Register. ACMA has apparently had complaints more than double in the past three months as a result of the Housing Insulation Program, so we need to get to the bottom of that and I have asked for a briefing on it. They should come clean and reveal this information now. We should not need to wait. What about the response to the Australian Competition and Consumer Commission? It apparently took several months to respond to the department of the environment’s first letter of 9 May to the ACCC asking for details of those people who may be breaching either the Trade Practices Act or some fair-trading legislation. What about the three businesses that are currently being investigated by the Australian Federal Police? What is happening to them? We asked questions this morning about the audit for those homes that have been affected, the 80,000 that have a safety risk and the 160,000 or thereabouts that have substandard insulation. All we could hear were words, not action; we need action and we need it fast because there are so many people affected.

We heard about the various reports. We have not only the Minter Ellison report but also an Ernst and Young report, a PricewaterhouseCoopers report and a KPMG report—numerous consultants and experts have been appointed to give the department advice. We want to get to the bottom of it and we would like to know what exactly the cost is to the taxpayer for all of this, and a breakdown of those costs. There is apparently an MOU with the state and territory fair-trading organisations. We would like to see that. I know they have been active, including in Tasmania. So there is a lot more to go on this, but the fact is that the Australian people have been let down big time and this government has a duty of care to all of those affected. (Time expired)

Mary Fisher (SA, Liberal Party) Share this | Link to this | Hansard source

I rise to speak in relation to the Minter Ellison risk assessment. I share with my colleagues the concerns that were only exacerbated by the Senate Environment, Communications and the Arts References Committee hearing this morning into the Home Insulation Program. We have confirmed, as my colleagues have indicated, that Minister Garrett’s department commissioned a risk assessment from Minter Ellison that was delivered to Minister Garrett’s department in April last year. And yet we are led to believe that the minister did not see that risk assessment in full until as recently as 11 days ago.

Through the committee process today we discovered that the risk assessment that has been made public is some 20 pages in length, some 10 months late, and bereft of a date. It did not have a covering letter; it came without a date. We had to question the department this morning to work out when the department received it and what went with it. And, yes, we learnt today that what went with it was not a covering letter—presumably there was a bill from Minter Ellison at quite some cost to the taxpayer—but a ‘risk register’. The 20-page risk assessment document itself was tabled late on Friday afternoon. Of course, that was 10 months too late and, conveniently, contemporaneous with the announcement that Minister Garrett’s so-called successful program was so successful that he was shutting it down. But at that time we were not told that the risk assessment was accompanied by a risk register. So when we asked the department this morning where the rest of the 20-page document was, we finally got told, ‘Oh, yes, there’s a risk register that goes with it.’ There was a risk register that went with it to the department back in April last year. ‘But,’ said the department, ‘it’s a live document.’ It, together with the Minter Ellison risk assessment and the risk register, were ‘embedded’—in the words of Mr Forbes of the department—in the department’s processes for managing the risks and managing the Home Insulation Program, as if embedding it somehow puts to bed the concerns about the very risks identified in this report. The department’s secretary, Ms Kruk, reassured the committee, ‘Why would you expect a minister to see a risk assessment when we, as his department, take the risk assessment into account and when we, as his department, as indicated by my colleague, Mr Forbes, embedded those concerns and dealt with them along the way?’ It is as if embedding them puts them to bed and they no longer need to be worried about it.

I ask why Minister Garrett told ABC News radio today:

I only sought that full report—

I am not sure still what the minister meant by ‘full’—

when we were asked about it—

presumably by the opposition—

and it was provided to my office very recently.

He then went on to say:

That is correct. I only saw the full Minter Ellison report and read it in its totality last week.

How can the minister expect Australians to have confidence in his ability to deliver a Home Insulation Program—HIP—which is becoming decidedly un-hip with each and every day? How can the Australian people have confidence in his ability to deliver the HIP when he said what he did on ABC News radio this morning? He said:

Any government department that is embarking on the delivery of a new program will go through a risk assessment process. That is standard practice, and as it should be. On the basis of that work they will provide advice to the minister et cetera.

Why on earth didn’t Minister Garrett ask for a copy of that advice? Why on earth didn’t he ask how it was progressing and if he could see it? And why on earth didn’t he want to see or ask to see the risk register that went with the risk assessment?

I might venture to suggest a reason why, and that would be that the document provided by the department this afternoon, following this morning’s hearing, includes not only the recommendations that were not heeded, as referred to by my colleague Senator Birmingham, but also an extra column entitled ‘Inherent risk quantification’. And do you know what is in that column? The bucks—the cost of what happens if the inherent risk is not addressed. The bucks are quantified. The buck needs to stop with the government and the buck needs to stop with the minister. Bearing in mind these figures were speculation back in April last year, if you go through and add up the figures of inherent risk qualification in the risk register provided by Minter Ellison, you get a grand total of costs, on my reading—I would love to be proven wrong—of anything from $245 million up to $835 million. This is the cost of failing to address the risks inherent in Minter Ellison risk assessment.

Those risks included, for example and most significantly, administrative costs occasioned by, for example, delays in delivery—we have had those; nondelivery—we have heard the stories about that; fraud—I think we have heard about a bit of that; and loss of industry support for the program—well, unfortunately that must be so from an industry largely full of reputable players who find the industry and their image so tarnished by this so-called hip but decidedly un-hip program. So, all of those inherent risks are quantified by the Minter Ellison risk register and for all of those inherent risks quantified by the Minter Ellison risk register—administrative costs, delays in delivery, nondelivery, fraud and loss of industry support for the program—we have $500,000 in administrative costs. If you add up the underside, the cheapest administrative costs up to the most expensive costs of not addressing the risks inherent, as referred to by Minter Ellison, you get costs ranging from $245 million on my calculation to some $835 million. That is as of April last year—the best guesstimate of Minter Ellison, according to what we have, as of April last year.

What has happened since then? I think things have got worse, not better. It is not unreasonable to speculate that, if the upper end of that cost were to, say, double from some $835 million, all of a sudden you have $1.7 billion. And what was supposed to be the outlay of this program in the beginning? It was $2.7 billion. That is not much off par—and this is for a program which was set up not only to create jobs, many of which were lost as of Friday last week, but also to stimulate the economy. So a program that was supposed to inject money into the economy could very quickly be backing money right out of it, on the say-so of the very firm commissioned by Minister Garrett’s own department to warn of the risks inherent in the program and the costs of failing to address those risks. Rather than injecting money into the economy, this program risks backing money out of the economy. Minister Garrett and Prime Minister Rudd could have found that out had they bothered to ask—but they did not.

The department this morning would have had us believe that it was no big deal that the minister did not seek a copy of this report; it was really just routine. According to Secretary Kruk, effectively the risk assessment and the risk register are now out of date because they are live documents. Then why on earth bother to give them to the minister at all, and why bother to give them to him only 11 or 12 days ago, some 10 months after the jolly document came into existence in the first place? (Time expired)

Question agreed to.