John Hogg (President) Share this | Link to this | Hansard source

In accordance with the provisions of the Auditor-General Act 1997, I present the following reports of the Auditor-General: Report No. 9 of 2010-11: Performance audit Green Loans Program: Department of Environment, Water, Heritage and the Arts, and Department of Climate Change and Energy Efficiency and Australian National Audit Office annual report for 2009-10.

Christine Milne (Tasmania, Australian Greens) Share this | Link to this | Hansard source

by leave—I move:

That the Senate take note of the document Auditor-General: Report No. 9 of 2010-11: Performance audit Green Loans Program: Department of Environment, Water, Heritage and the Arts, and Department of Climate Change and Energy Efficiency.

The Senate will recall that on 4 February this year I wrote to the Auditor-General asking for an immediate and comprehensive investigation into the gross mismanagement of the Green Loans scheme by the then minister, Mr Peter Garrett, and the Department of the Environment, Water, Heritage and the Arts. I pointed out at the time that the Green Loans scheme was an excellent idea but had turned into an utter debacle through gross mismanagement by the department. I pointed out that the Greens had been and remained the strongest advocates in the parliament for household energy efficiency upgrades and that the Green Loans scheme was based in part on something that the Greens had taken to the election campaign in 2007. Tragically, the way that the Green Loans scheme was administered turned into a nightmare for the people who became assessors and for many householders who sought an assessment and energy efficiency technologies put in their houses.

I wrote to the Auditor-General and pointed out in the letter that the program had gone so badly wrong at every single level. It was not as if one thing happened and the whole thing went as a domino effect after that; every aspect of this program had been mismanaged from the start. I pointed out to the Auditor-General that there had been failure to adhere to the promised 1,000 to 2,000 limit on the number of assessors, failure to deliver on the online booking mechanism, failure to provide or oversee the interim call centre booking process, failure to administer the conditions the federal government placed on its own program regarding conflicts of interest and probity in terms of procurement, and failure to exercise quality control and due diligence in relation to the standard of training provided to prospective assessors and the quality of the assessments provided to consumers. I also asked the Auditor-General to report on the failure to implement an audit facility in the program and on favouritism and discriminatory practices relating to access to work through the program. The Senate will recall that I asked the minister representing the minister at the time, Minister Wong, about how it was that Fieldforce were able to book assessments over the summer when the system was down and the independent assessors were not able to get that work.

Now the Auditor-General has reported, and his report confirms largely all of the criticism that had previously been made by the other assessments of the Green Loans Program, including the Faulkner report. The Auditor-General has said that the problems besetting the scheme were largely due to ‘an absence of effective governance’ in the Department of the Environment, Water, Heritage and the Arts. I will say that again: ‘an absence of effective governance’. This was not just one person. This was systemic lack of effective governance in the department.

What is even more worrying is that there was clearly no oversight in the department at the highest levels; and what I am sure is shocking to people aware of this program is that the former minister—and I quote from the report—‘received incomplete, inaccurate and untimely briefings on program design, features and implementation progress, challenges and risks’. In other words, when the minister sat down to find out from the department how the Green Loans program was going, he was given inaccurate, incomplete and untimely briefings.

My question is: who is to be held responsible here? Clearly, there are real problems with procurement and that goes to the issue of Fieldforce, which I raised in the Senate previously. The Auditor-General finds that Fieldforce did gain market advantage due to the way this program was designed. He also acknowledges that Fieldforce did not seek that market advantage but got it nevertheless by virtue of the failure of a range of things—from the booking program and the failure to have an online booking system and the failure to adhere to proper processes throughout the program.

The Auditor-General’s report goes absolutely into all the problems, as I indicated. It points out the failure to have proper budget oversight of the program. It points out that at the executive level they seemed not to know what was going on and did not take much notice at all. But where I am disappointed with the report is that there was a lack of probity on procurement processes. There is even prima facie evidence of contract-splitting to avoid the mandated requirements of the Commonwealth Procurement Guidelines—if you split the contract you did not have to go through that. A whole lot of these procurements were poorly planned and recorded. There was poor management of requests for quotes. The majority, 96 per cent, of the procurements examined were procured through direct source—that is, without open competition. This is in complete breach of all of the Commonwealth requirements and is very serious.

One of the heartbreaking parts of the Green Loans program is that a lot of people embraced it and thought this was their opportunity to become part of the new green economy. This was their opportunity to get a career path in energy efficiency, recognising that energy efficiency was going to be a growth industry this century—as it ought to be—in the demand management of energy. However, as the Auditor-General says, the majority of assessors have been trained by unregistered training providers. That is the Commonwealth’s fault, because it did not set down that there had to be registered providers training the assessors. There was also the issue of the number of assessors. The assessors were led to believe there would be somewhere between 1,000 and 2,000 assessors. It turned out that almost 10,000 people had either been trained and accredited or trained and then got contracts and so on in the course of all that. Part of the whole debacle here has been: how do you rationalise that many people when clearly there is not that much work for them?

The assessors ended up complaining that the tools they were using to assess energy efficiency were not right. There were real problems with the calibration of these tools. Nothing happened about that. The Auditor-General agrees in the end that these problems occurred for the assessors. But right on the death knell of the election the government requested expressions of interest for the Green Start program. When it abolished Green Loans it went to Green Start, which is being unkindly referred to in the community as ‘Newstart’ because it is not giving any real assistance to a lot of the assessors other than just directing them to income support. The issue here is that the closing date for expressions of interest was the day before the election. I called for that to be extended because it was really unfair on assessors who were submitting expressions of interest not to know what the situation was going to be. However, the government did not extend the period of the Green Start program.

I really want to see this situation followed up because it is an issue of natural justice. The Auditor-General has stopped short of saying there should be compensation. I think there should be compensation and I intend to take this matter up with the new Parliamentary Secretary for Climate Change and Energy Efficiency, Mr Dreyfus, who has been given responsibility for this area of government administration.

I thank the Auditor-General for his comprehensive report. He has found all the problems that we identified some months ago to be valid concerns. He has pointed to systemic governance failure in the department and has said that the department is now taking steps to fix it. But the issue is: who is going to be held to account? If the minister was not given the information he needed, who in the department was responsible? Why did senior management not oversee this? How were the procurement guidelines so easily sidestepped?

There is a real problem in this department and it has to be fixed. I do not think it is enough to just say that it is being fixed. We want to know how it is being fixed. Not only do we want to know which individuals in the Green Loans management sector might now be examined in relation to this matter, but also the systemic failure of the department needs to be explained. The assessors need to know that there is going to be natural justice—that there will be upgraded training for some and compensation for some. Something has to be done about what I believe is a large group of people in Australia who were seriously let down by the government of the day with the Green Loans program.

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

I too rise to take note of the ANAO report into the government’s Green Loans program. Here we are in a new parliament and the Labor government’s failures of the previous parliament continue to dog them. There continue to be hangovers from the previous parliament. Of all the hangovers that the government faces—including the Building the Education Revolution, the home insulation scandal and, in due course, the National Broadband Network—there is no hangover greater than the Green Loans program. The Green Loans program is a great big hangover for this government. It will hang over their heads for the life of the parliament as many thousands of people continue to suffer as a direct result of the Labor government’s mismanagement of this program.

Let us be under no illusions. The government try to explain away the home insulation and BER programs as being rushed because of the global financial crisis. But the Green Loans program was a 2007 Labor election promise. It was conceived before they came into office, and still they totally mismanaged it at every step of the way. This is just the latest damning report—a report into their mismanagement of the Green Loans program. The ANAO has found:

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.

That’s right, the flaws in this program were there from day one, from the very moment the new government came into office. They received the brief: ‘Here are your policies. Here’s what we have to implement.’ The flaws were evident from day one as the department started to implement this program. And yet they were unable to identify or fix the problems at any stage during the process. It was a $300 million program and there were flaws from day one1 but still they could not identify them.

As Senator Milne alluded to, the problems within the department were systemic—so systemic that the Audit Office has found:

Procurement activity in the Green Loans program over a period of approximately 18 months was poorly managed and involved extensive non-compliance with government and departmental procurement requirements (including multiple breaches of the Financial Management Regulations related to the approval of spending proposals and contracts ...

The report found multiple breaches of government financial regulations. That’s right, what we are essentially talking about here are breaches of the law. The program was so maladministered by the former minister Peter Garrett and by that department that it led to breaches of the government’s own financial management regulations tabled and passed through this chamber and the other place. That was the extent of the maladministration in the Green Loans program. The report went on:

Key program management plans, including in relation to risk management, procurement, IT and communications, were never finalised and endorsed by executive management.

That’s right, risk management plans were never finalised for this program. Procurement plans were never finalised. It is no wonder they were breaking the government’s own financial management guidelines. They had not even finalised procurement plans before they went out and spent millions and millions of Australian taxpayer dollars in this wasteful manner that we have come to see so often from the Labor government.

ANAO went out and surveyed some of those who were involved—the householders who participated and the assessors who undertook the assessments and the home sustainability audits as part of the Green Loans program. What did ANAO find? They identified poor assessment conduct practices. That is hardly surprising. As Senator Milne said, there was no registered or recognised training program that the assessors had to undertake. It was all done on a wing and a prayer, with the government setting up a program that did not give them some type of lasting qualifications that might help them in the future. It left the government totally exposed to the waste and failure of this program.

Respondents to the assessors’ survey also expressed a general lack of confidence in the accuracy of the assessment tool. So the assessors were not trained properly and the tool they were using to assess people’s homes from a home sustainability perspective was not up to scratch. They found that some reports contained anonymous results and incomplete cost and savings information. So the whole program, which was based around the idea that a trained assessor would go into your home, undertake an assessment and provide accurate information on how you could reduce your energy usage and make your home more energy efficient, was flawed at every step of the way. The assessors were not trained appropriately and the tool they used for assessment was so flawed that it provided false data.

I come back to the fact that millions of taxpayer dollars went into this program but it has delivered a disastrous, terrible outcome. There has been a terrible human toll for the hundreds of thousands of Australian households who participated, or wanted to get an audit done on their homes and considered taking out a Green Loan. Also, financial institutions were stuffed around and dragged into something which very few people ever cleared enough hurdles to manage to take up. Eventually the axe fell on the financial institutions’ involvement, with no warning from the government.

In particular, there was a toll for the thousands of ordinary Australians who were passionate about the environment and saw an opportunity to help the environment by becoming home sustainability assessors. They signed up for this program believing it would provide them with skills and work. They believed that they would be able to build, in many cases, a small business or an independent contractor operation that was sustainable into the future. What has the Audit Office found? They found:

The number of contracted assessors ... quickly grew to levels significantly beyond what DEWHA had anticipated.

That’s right, they were all contracted to the government, and the department was just contracting all of those who trained. They never set any clear targets or caps, but just signed up far more than they expected. As a result, their entire bookings process and the entire process for considering assessments broke down. But most importantly, the report found that the government’s decisions and mismanagement ultimately ‘left thousands of assessors, who had each invested their time and around $3,000 on training, insurance and registration, with unfulfilled work expectations’.

‘Unfulfilled work expectations’ is the polite way of saying that thousands of assessors were without any work. Many more were underemployed. On a con from this government, these had invested thousands of dollars of their own money, not to mention their own time, in training for this program. They were left with nothing at the end of it—nothing at all—because this government and this minister could not manage to administer this program correctly. The program has been shifted, stripped, from Minister Garrett as so many things have been.

We discovered in the other place today that, even though Mr Garrett is the minister for schools, he has no responsibility for the Building the Education Revolution Program—not just no direct responsibility, not even representational responsibility. The government does not trust him—so much so that they will not let him answer questions on behalf of Senator Evans. No, they now consider it to be part of the jobs area and shunt it off to somebody other than the schools minister. It has been shifted to a different department. But even that different department has yet to determine a methodology for measuring the performance of the Green Loans program against its objective. We have a new parliament and theoretically—as we keep being told—a new government; and the new department does not even know how to measure the success of what everybody knows is a failed program. It really has been a great disaster by this government. The Audit Office report shows systemic failures—from the program design right through to the implementation. It says:

… the former Minister received incomplete, inaccurate and untimely briefings on program design features and implementation progress, challenges and risks—

and that he ‘was not well served by his department’. We live under a Westminster system—or so we are told—so the buck is meant to stop with the minister. Sadly, in this case it has not, and it is a disgrace that the former minister still sits around the cabinet table.

David Feeney (Victoria, Australian Labor Party, Parliamentary Secretary for Defence) Share this | Link to this | Hansard source

I too rise to take note of the ANAO report, and I thank the senators who have contributed. I seek to make on behalf of the government a few remarks pertaining to this report. The government welcomes the release of the ANAO report into the Green Loans program and accepts its findings. It has been my privilege in recent times to have served on the Joint Committee of Public Accounts and Audit, so I am familiar with the work of the ANAO. It is always of the highest standard, so of course we accept this report and its findings.

The opposition, perhaps naturally enough, have tried to use this report to mount an attack on the government and, in particular, on the minister responsible for the program at the time, Minister Garrett. That is to be expected. But, from a careful reading of the report, I do not think it provides the ammunition that the senators opposite seem to think it does to attack the government and the minister.

The report makes it clear that the Green Loans program suffered significant failings in its design and implementation. The government accepts that, and those failings are to be regretted. The report is clear that the failings in the design and implementation of the Green Loans program resulted from deficiencies in the work of the Department of the Environment, Water, Heritage and the Arts. Ministers are of course responsible for the work of government departments, and I am not seeking to blame public servants for the deficiencies that the report identified in the Green Loans program. But I think fairness to Mr Garrett requires that the facts as noted in this report be placed on the record. Both Senator Milne and Senator Birmingham have touched upon a quote which I think will do this debate well if it is used in total. The report says:

… the former Minister received incomplete, inaccurate and untimely briefings on program design features and implementation progress, challenges and risks … the former Minister was not well served by his department in this respect … due to the poor quality briefings he received.

I think it is worth repeating that last line:

… the former Minister was not well served by his department in this respect … due to the poor quality briefings he received.

It should also be noted that the findings of the report largely relate to historical issues with the program. These findings are not exactly news. They were also covered in the report earlier this year by Ms Patricia Faulkner—a report that Senator Milne did refer to—into the administration of the Green Loans program. That is why the Audit Office has not made any specific recommendations to the Department of Climate Change and Energy Efficiency. They have noted that improvements to the structure and delivery of the program’s governance are now being made. In other words, the report identifies problems with this program that existed in the past but accepts that the government is already taking the action required to rectify those problems. As I said at the outset, the government accepts responsibility for the deficiencies identified in the ANAO report. The government has taken note of the lessons identified in this and other reports and is already taking the necessary action to rectify the problems identified in the report. The findings of this report are being used to improve the governance and delivery of the Green Loans program and other energy efficiency programs.

The administration of this program was transferred to the Department of Climate Change and Energy Efficiency in February this year. Following continuing problems with the program, the government took the decision in July to phase out the program altogether. The report highlights the work already being done by the Department of Climate Change and Energy Efficiency to remedy these problems. The minister, the Hon. Greg Combet, has appointed the Hon. Mark Dreyfus QC as Parliamentary Secretary for Climate Change and Energy Efficiency and has tasked him with taking responsibility for existing and future energy efficiency programs and ensuring continuous improvement. I am very confident that Mark Dreyfus will deal with these issues with his customary attention to detail and excellence.

Since those opposite have sought to make some political capital out of this report and the deficiencies it has identified, I will on the way through make some political points in return. The deficiencies identified in both the Green Loans Program and the Home Insulation Program are things the government regrets. But these were ambitious programs intended both to provide support to employment and help reduce our greenhouse gas emissions. In the face of the global financial crisis and the immediate imperative to take action against harmful climate change, it was necessary to roll out these programs quickly. This was the ultimate source of the deficiencies identified by this and other reports. It is of course a matter of fact that the opposition opposed all these programs. They opposed them because they did not believe that the government’s action was needed to protect Australian jobs and Australian businesses in the face of the global financial crisis, and they opposed them because they do not believe the science of climate change and therefore do not believe that any action on emissions is needed.

John Williams (NSW, National Party) Share this | Link to this | Hansard source

Nor do half your mob.

David Feeney (Victoria, Australian Labor Party, Parliamentary Secretary for Defence) Share this | Link to this | Hansard source

Having endured 20 minutes of lecturing on this subject, Senator, I would think that the courtesies would require you to perhaps endure a few more moments in courteous silence. We on this side reject both those propositions. We make no apologies at all for having acted swiftly to roll out our economic stimulus programs and our programs to reduce greenhouse gas emissions. They were both vitally important and they were both necessary actions. On both these issues we were right, and the verdict of history has demonstrated that those opposite were wrong. It is true that there were deficiencies in the rolling out of some of these programs. We have accepted that, and we have taken responsibility both for those errors and for rectifying those deficiencies.

This government was determined to take effective action against the global financial crisis and determined to take effective action against climate change, and they both remain priorities for this government. Those opposite opposed us all the way on both these issues, and no doubt they will continue to do so. We have taken some political heat for the problems identified by this report, and we have to wear it. We take responsibility for our mistakes. But it is about time those opposite took responsibility for their much greater failings of policy and acted with some political maturity in these important political debates before this chamber.

Question agreed to.