Greg Combet (Charlton, Australian Labor Party, Minister Assisting the Minister for Climate Change) Share this | Link to this | Hansard source

by leave—On Friday, 26 February the Prime Minister appointed me as the Minister Assisting the Minister for Climate Change and Energy Efficiency. The government has determined to move the energy efficiency areas of the Department of Environment, Water, Heritage and the Arts into the Department of Climate Change, thereby creating a Department of Climate Change and Energy Efficiency. Within the Climate Change and Energy Efficiency portfolio, I have the responsibility for the wind-up of the Home Insulation Program and the introduction of the new Renewable Energy Bonus Scheme. I am assisted in that task by the member for Isaacs, and I thank him for his assistance.

It is the Home Insulation Program that I wish to address today. The government’s Home Insulation Program was terminated on 19 February as a result of safety and compliance concerns. I am advised that, from 1 July 2009 until the program closed, around 1.1 million Australian homes had been insulated, at a cost of approximately $1.5 billion. In my statement today I want to update the House and the community on the steps being taken by the government to wind up the program. As the responsible minister I have five principal objectives:

• to put in place a household inspection program to identify and address the extent of safety and fire hazard concerns, to mitigate risk, and thereby reassure householders who have had their homes insulated under the program;
• to assist industry and employees adjust to the termination of the program and transition to the new scheme;
• to identify and put in place processes to deal with issues of noncompliance and fraud;
• to identify any failures of administrative processes within government associated with the design and implementation of the Home Insulation Program; and
• to introduce the new home insulation component of the Renewable Energy Bonus Scheme on a sound footing.

In my statement I will outline three particularly significant responses to the problems experienced with the Home Insulation Program:

1. A commitment by the government to remove foil insulation, or alternatively install safety switches, in over 50,000 homes.

2. A commitment by the government to do a safety inspection in a minimum of 150,000 homes, in addition to the action taken in relation to foil insulation. If a risk assessment identifies the need for more inspections, those inspections will be undertaken.

3. A commitment by the government to aggressively pursue those who may have committed fraud. As my statement will make clear, the actions of unscrupulous operators have had a serious impact on legitimate businesses, employees and household safety.

To begin, however, I would like to express my sincere sympathy to the families of the four young men who lost their lives while installing insulation under the program. They were Matthew Fuller, Rueben Barnes, Marcus Wilson and Mitchell Sweeney. These four fatalities are independently the subject of workplace safety authority investigations and reports, police investigations, and will also be the subject of coronial inquiries. The government will do what is necessary and appropriate to support these inquiries.

The deaths of these four young men is a terrible tragedy. Each of them was entitled to a duty of care from their employer. Having spent much of my life representing working people in relation to occupational health and safety, I find these fatalities very distressing. Firms that have flouted their obligations to employees under the program will be a focus of my attention as minister. I will use all of the resources at my disposal to ensure that they are held accountable. The labour movement in this country has long fought for rights to protect employees from unsafe work practices, and these values will inform my own approach to responsibility in relation to the Home Insulation Program and the new Renewable Energy Bonus Scheme. I have spoken with a member of each of the families, and on behalf of the government and myself as minister, expressed my deepest regret and sympathy.

As I stated earlier, the purpose of my statement today is to outline the approach that I am taking to the wind-up of the Home Insulation Program. It is important firstly to place the origins of the program into context.

The program was designed as part of the government’s response to the global financial crisis. In late 2008 and early 2009 the government was implementing measures designed to stimulate and support economic activity and employment. The Home Insulation Program was part of these stimulus measures, which has had a very positive impact on the economy and employment. The environmental objectives of the program were also very important. The energy efficiency of residential buildings can be a significant factor in Australia’s capacity to reduce its greenhouse gas emissions.

On the workforce front, the Home Insulation Program led to the registration at the peak of installation activity of over 10,000 installation firms, employing many thousands of workers. The program delivered the first ever national training program for ceiling insulation employees, and over 3,700 workers have so far completed the new training package. Safety standards, in what has largely been a self-regulated insulation industry, have received long overdue attention and improvement.

However, the dramatic increase in household demand for insulation installations under the program generated significant problems. Longstanding participants in the industry have advised me that the market for the retrofitting of insulation in homes has historically been around 60,000 to 70,000 homes per year. Under the program more than 1.1 million homes were insulated in less than eight months, at an average of over 137,000 per month—that is, twice the previous annual average number of home insulation jobs were completed on average each month under the program. That is an extraordinary result.

These figures I think provide important perspective—the rate of home insulation under the program could not possibly have been achieved without a very dramatic escalation in the supply of household insulation and in the size of the installation industry. The larger longstanding participants in the insulation industry have historically self-regulated in order to build and maintain their business reputation, consumer confidence in their product, and their market share. The entry of many thousands of new insulation installation firms, some of which engaged in unscrupulous conduct, and the probable importation of some poor quality insulation products to meet the dramatic escalation in demand, contributed to many of the risks and problems experienced under the program. Some of the issues include:

• The use of insulation products that failed to comply with Australian standards;
• Poor quality installation of insulation in some homes, including breaches of building regulations and occupational health and safety laws;
• Safety and fire hazards in some homes;
• Breaches of consumer protections; and
• Entry into the installation market of operators intent on committing fraud.

Bob Katter (Kennedy, Independent) Share this | Link to this | Hansard source

Mr Deputy Speaker, I raise a point of order. The claims of misrepresentation here—

Arch Bevis (Brisbane, Australian Labor Party) Share this | Link to this | Hansard source

There is no point of order. The member for Kennedy will resume his seat. I assume he wishes to participate in the debate later. He would be well advised to sit there quietly so that he can.

Greg Combet (Charlton, Australian Labor Party, Minister Assisting the Minister for Climate Change) Share this | Link to this | Hansard source

In stating this, it is important that I emphasise once more that the available evidence indicates that a large majority of home insulation installations have been completed in compliance with the program. Of course, there are many legitimate and reputable companies that operate in the industry and did so under the program as well.

I wish now to address one of the principal priorities of my work, and that is to assure householders that the government is acting to mitigate safety and fire risks.

There has been widespread anecdotal reporting of problems associated with the installation of insulation in homes, centred upon safety and fire hazards. As of this morning, I am advised that 105 fires, including smouldering or smoking insulation, have been formally linked to installations under the program. It is important to note that historically, prior to commencement of the program, there were on average some 80 to 85 fires per year associated with insulation. The government’s approach to the safety and fire hazard issues is informed by the fact that there are two distinct categories of insulation that need to be considered—foil insulation, and other insulation products.

Significant risks have been identified in relation to the installation of foil insulation, a metal product which is in fact highly conductive. I have been advised that foil insulation has been installed in approximately 50,300 homes, the vast majority in Queensland and northern New South Wales. Approximately 85 per cent of these installations are in Queensland.

Because of its conductivity, and its proximity to electrical wiring, it is now held that horizontally laid foil insulation on the ceiling joists is unsafe. Two of the four fatalities, both apparently as a result of electrocution, have been associated with the installation of foil laid horizontally in ceiling spaces. I am advised that foil insulation products, if used and installed correctly, are safe and effective products and that they will, of course, continue to be widely used in the construction industry. Foil product is most commonly used as insulation lining around external walls and roofs, inside the wall cladding and roof cladding during home construction. But the installation of horizontally laid foil across ceiling joists under the program is a safety issue that the government is determined to address.

An initial inspection of around 1,000 homes fitted with foil insulation has found that three per cent had electrical safety risks associated with the installation of foil, including 15 homes with ‘live’ foil. Around five per cent had fire safety risks. The safety inspections revealed that 20 per cent of homes were found to have pre-existing electrical safety risks that were not related to the insulation. Thirty-three per cent of foil installations involved the use of metal staples after this practice had been prohibited under the program.

The government has committed to conducting electrical safety inspections in homes in which foil insulation has been installed under the program. The current interim arrangements enable a householder to arrange for a licensed electrician to conduct an electrical safety test, with the cost to be reimbursed by the government. These arrangements will be replaced in the near future with a program of foil safety inspections funded directly by the government. Householders will be contacted initially by letter and then by telephone to make a booking for a licensed electrician to conduct an inspection. However, the advice that the government has received indicates that the electrical safety inspection, if it finds no risk, will only certify that there is no electrical safety risk on the date of the inspection. The residual risk arises from the potential for foil insulation laid in proximity to electrical wiring to become live at a subsequent point in time through degradation of wiring by ageing, heat exposure and moisture, vermin damage, or by damage caused by tradespeople or householders entering the ceiling space. This is an unacceptable risk.

The Electrical Safety Office in Queensland is recommending that horizontally laid foil insulation be removed or, alternatively, that safety switches be installed in household electrical circuits. On 23 February this year the ESO issued a safety alert on managing foil ceiling insulation risks which included the following statement:

The Electrical Safety Office considers that the safe removal of foil from the ceiling space provides the greatest level of electrical safety. Alternatively, householders should consider the installation of safety switches for all final sub-circuits and sub-mains located in the ceiling space by a licensed electrical contractor.

This specific ESO advice postdates the termination of the program and was not therefore available to the previous minister, Peter Garrett, during the operation of the program. As a consequence of this and similar advice recently received from organisations including Master Electricians Australia and the National Electrical Contractors Association, the government is as a matter of urgency preparing a plan for the safe removal of foil insulation or alternatively the installation of safety switches. In the meantime the government will continue with its commitment to electrical safety inspections. An announcement concerning the further measures to deal with foil insulation will be made as soon as possible.

The removal of foil insulation may be the most appropriate safety measure in houses where electrical wiring is old, degraded or damaged, or cannot be inspected because a blanket of insulation has been laid over the wiring. If the wiring is visible and in good condition and the insulation is installed correctly, safety switches may be a safe alternative. We are currently seeking the input of industry bodies and regulators in relation to these and other issues associated with foil insulation. The Australian government will fund the foil removal or safety switch installation program.

In relation to the more than one million households which have been installed with non-foil insulation products, the government is committed to a large-scale home inspection program to identify and mitigate risks. Non-foil products include glasswool batts, polyester and cellulose products.

Although the Home Insulation Program has been terminated, a number of risk mitigation measures previously initiated remain in place. This includes an inspection regime which has so far completed approximately 15,000 roof inspections and over 1,000 desktop audits. I am advised the analysis done on inspections completed to date have shown:

• 66 per cent of installations were fully compliant;
• 7.6 per cent had fire safety hazards;
• 16 per cent had other quality issues including non-compliant insulation product and incomplete installations;
• 0.5 per cent involved potential fraud; and
• 9.5 per cent were unable to be completed for various reasons.

I am advised that caution must be exercised in extrapolating the results of this sample, as it may not be representative of all homes insulated under the program. That is because the inspections to date have to some degree targeted installations by firms with a poor compliance record. However, on the basis of these results, the potential for safety and fire hazards, I can confirm that the government will inspect a minimum of 150,000 homes installed with non-foil insulation under the program. Taken in addition to the inspections of foil insulation, this means that a minimum of 200,000 homes will be inspected. As minister, I am working with the Department on the development of this inspection program as a matter of very high priority.

The proposed inspection program will involve a targeted, risk-based audit and inspection approach. If a risk assessment indicates that additional homes should be inspected, further inspections will be undertaken. However, there can be no guarantee that all risk will be eliminated. The inspection of houses installed with insulation by companies with known non-compliance problems will be a priority. In developing the inspection program, the involvement of longstanding, reputable firms with strong brands, who are prepared to stand behind their products, and the quality of their installation, will be a foundation for the restoration of confidence. The inspection program will be overseen by a newly established Home Insulation Program Review Office within the Department of Climate Change and Energy Efficiency.

The scale of the task to inspect a minimum of 150,000 homes with non-foil insulation is immense, but it must be undertaken. As I stated earlier, the Australian government will continue household inspections if necessary. Some further time is needed to develop and implement the inspection program, and to build into it appropriate safety and risk mitigation measures. The government will announce the program once this work is completed. To ensure industry and regulatory involvement in the design and implementation of the foil and non-foil inspection and risk mitigation programs the government has appointed an advisory panel comprising a number of industry, employee and regulatory representatives. They include:

• Dr Ron Silberberg, ex-Managing Director of the Housing Industry Association;
• Mr Peter Tighe, National Secretary of the Electrical Trades Union; and
• Mr Tony Arnel, Victoria’s Building and Plumbing Commissioner and Chair of the Green Building Council of Australia.

In addition to the minimum 150,000 non-foil inspections that will be undertaken, I want to emphasise that householders with concerns are able to contact the safety hotline on 131792, which is already operational. Until the new inspection program is in place, the current arrangements enable householders who have safety concerns to ring and request a safety inspection, which will be carried out as soon as possible. In relation to callers with other concerns, names and details are taken and they will be contacted once the new inspection program is finalised. The scale of the task at hand has presented some operational difficulties at times for the hotline. But all efforts are being made to ensure that up-to-date and accurate information is available to callers in a prompt manner.

The second major issue surrounding the program has been the impact it has had on the industry and workers. The government acknowledges the impact that the program’s termination has had on the industry, and we are committed to helping industry and employees manage the challenges over the coming months. While the program has ended earlier than anticipated, it is important to recognise that it would have concluded in some months time when the limit of allocated funds was reached. Industry adjustment was always therefore due to occur at the conclusion of the program, as demand returned to pre-existing levels. The decision to terminate the program prematurely has been influenced by the conduct of a number of unscrupulous operators. Their behaviour has resulted in widespread harm to legitimate businesses and the redundancy of many employees. For the hardships caused, for the loss of value of legitimate businesses, for the extent of safety and fire hazards, for the loss of consumer confidence and for the failure of duties of care and regulatory compliance, the government attributes a burden of responsibility to the minority of companies in the program that cut corners to achieve a quick buck.

On 24 February 2010, the Prime Minister announced a $41.2 million industry assistance package for insulation workers. The government’s commitment is that displaced workers will receive either:

• support to retain their current job until the new Renewable Energy Bonus Scheme begins; or
• assistance to find alternative jobs; or
• a relevant training place where appropriate employment opportunities are not available.

The government is currently examining other mechanisms which may be of assistance to insulation manufacturing and installation firms. However, the best assistance government can provide is to help restabilise consumer confidence and a return to normal business activity levels and stability in a timely way. This objective is central to my approach in working with the longstanding reputable industry participants.

As I have previously outlined, the low barriers to entry to the insulation installation market, in combination with the extraordinary demand created by the program, led to the registration of many thousands of new installation companies. Despite the measures put in place to ensure companies met and complied with program requirements and their broader regulatory obligations, some unscrupulous operators became involved. One consequence was the potential for noncompliance with program guidelines and relevant legislation and regulations, including occupational health and safety laws. Claims have been made not only of non-compliant and potentially hazardous insulation installations but also of fraud.

It was initially estimated that approximately 90,000 installations would occur each month after the launch of the program on 1 July 2009. In fact, by November 2009 demand had reached almost 180,000 installations that month—almost double the anticipated monthly demand. On average, 4,566 claims were received per day since 1 July 2009. The level of demand created significant difficulties not only for the administration of the program but also for the management of audit and compliance. During the program design process, potential risks were canvassed in the Minter Ellison report received by the department in April 2009. Attached to each of the risks identified in the report were proposed mitigation actions. The risk register tracked these actions. I am advised that this information, along with other inputs, informed the overall program design. Notwithstanding the best endeavours of those responsible for the program design, the behaviour of unscrupulous operators led to the realisation of a number of these risks in the delivery of the program—most notably concerning the quality of installations and fraud.

In light of this experience it is appropriate that, with respect to the design and administration of the Home Insulation Program, the government has appointed former senior public servant Dr Allan Hawke to conduct an independent review. This review, to be completed prior to the end of March, will advise the government of the lessons to be learnt in the design and administration of the Home Insulation Program. Apart from the administration and design issues there are other issues related to the program that need to be addressed. One obvious issue concerns safety for both households and employees and how it was dealt with.

The government, through former Minister Garrett and the department, took a number of important steps to mitigate safety risks. Program requirements built upon the pre-existing frameworks for standards, quality, safety, training and consumer protection. These were added to by Minister Garrett and the department from time to time in response to experience. From the outset, products installed under the program were required to comply with the Building Code of Australia and the Australian Standards. A national compliance and audit program was put in place. Specific installer training was developed, incorporating workplace health and safety components. These training materials were developed in conjunction with industry, professional associations and installers.

Following some serious workplace safety incidents, the training program was enhanced with more information on site risk assessments, the identification and control of electrical and other hazards and assistance for workers with lower literacy levels. A new unit of competency specific to residential ceiling insulation was also developed. The first approved list of products that met Australian standards for insulation was promulgated. The government announced additional safety precautions on 1 November 2009. These included:

• a ban on metal fasteners for foil insulation such as metal staples or nails;
• mandatory installation of covers over downlights and other ceiling appliances, which although commonly used, are not compulsory under the Australian Standards; and
• a targeted electrical safety inspection program of Queensland homes with foil insulation installed under the program.

In addition, from 1 December 2009, a mandatory formal risk assessment for every installation was required before any work could commence. Minimum training requirements announced in December further strengthened the requirements of installation firms. On 9 February this year, following safety concerns, the use of foil insulation was suspended under the program. This was largely because there was evidence that measures to prohibit the use of metal fasteners for foil insulation in November last year were not complied with.

In relation to foil insulation safety concerns, interim arrangements were put in place so that any householder with immediate safety concerns could engage a licensed electrician to conduct a safety inspection and undertake any necessary rectification work. A more stringent set of registration requirements for the overall program was put in place, with effect from 12 February. The number of registered installers then fell to approximately 2,500, with approximately a further 950 firms partially fulfilling the requirements. At the peak of activity more than 10,000 firms had been registered.

Despite the intent of changes to strengthen safety under the program, the government made the decision to close the program on 19 February due to the risk of further poor quality installations leading to safety concerns. Household safety and risk mitigation will be addressed through the foil and non-foil insulation inspection programs for households that I have already outlined.

Beyond these safety issues, it is also apparent that fraud has been committed. This was one of the risks identified during program design. Steps taken to mitigate this risk included the following:

• Every insulation installer that was registered to be part of the Home Insulation Program had to comply with the rules of the program.
• These included requirements that an installer must get a work order form signed by the householder following installation of insulation. This form was to be produced on request.
• Every installation was also followed up with a letter from the department to the householders confirming the installation.
• In addition, the government had a program of targeted and random audits including ceiling inspections, desktop audits, field audits and business profiling.

Since the termination of the program, the department’s compliance activities are continuing. The department will continue to work closely with the Australian Federal Police, as well as state and territory police. I am advised that three cases of alleged fraud have been referred to the Australian Federal Police. As minister, I am disgusted that any fraud may have been committed by firms under the program. I will ensure that investigation of fraud is appropriately and diligently pursued.

I wrote to the Auditor-General on 3 March requesting that he consider the commencement of an audit of the Home Insulation Program as a matter of priority. The Auditor-General has agreed to conduct an audit. I have also taken advice from the department as to the appropriate way to evaluate the scope for fraud that may have occurred, and to identify cases so that such matters may be referred to the AFP or other relevant authorities. The department has advised me of its intention to appoint a firm to conduct a forensic audit of the program for this purpose. The department has moved to conduct a new fraud risk assessment and to move additional staff and resources into audit and compliance work.

In what have been termed phantom installations, fraud could have been committed by registered installers claiming payment for installations not actually undertaken. In the seven days following the termination of the program, I am advised approximately 107,000 claims were submitted. Many of these remain to be processed. However payments will not be made until the department is satisfied that actual work has been completed. This will unfortunately cause cash flow pressures for legitimate businesses, but is important if further fraudulent conduct is to be prevented. Legitimate claims will be processed as soon as possible and I am advised that further staff are being employed to help process these claims. Any householder who believes that they may have been a victim of fraud should contact the Energy Efficient Homes Package Hotline on 1800 808 571.

As an example of the nature of the compliance issues being dealt with by the department, one company in northern New South Wales which has claimed $9.6 million under the program is being investigated in relation to over 100 complaints concerning electrification of foil insulation, dangerous electrical practices, damage to ceilings and roof coverings as well as phantom installations. I am advised that all payments to this company have been suspended and action is being taken to rectify safety matters and to reclaim government funds.

All installers registered at any time under the program are warned that they must retain all records of all installations and claims, including the worksheets. As minister, let me assure all those who may have participated in non-compliant or fraudulent behaviour in connection with the Home Insulation Program that we will track you down. The Australian government will not tolerate this conduct, and we will work with all relevant authorities to investigate and prosecute individuals and companies that have engaged in such behaviour. They will be pursued with rigour.

As the government has already announced, a new Renewable Energy Bonus Scheme will replace the Home Insulation Program. Under the Renewable Energy Bonus Scheme, households will be able to receive a rebate for the installation of ceiling insulation or a solar hot water system or a heat pump. $1,000 rebates will be available for ceiling insulation and solar hot water systems, and $600 rebates for heat pump systems. The new rebates for solar hot water systems and heat pumps are already available for systems installed after 19 February 2010.

It is intended that the insulation component of the scheme will be ready for commencement by 1 June 2010. However, I want to emphasise that, notwithstanding this intention, the design of the insulation component of the scheme will be informed by the lessons of the Home Insulation Program. I am determined that these lessons be properly applied, and will take the necessary time to do so.

The new scheme at the very least will institute several key changes. Firstly, householders will arrange for quotes for insulation to be installed, make the payment directly to the installer upon completion of the work, and then claim a rebate of up to $1,000 directly through the Medicare system. Householders will incur any cost in excess of $1,000. Secondly, a new registration scheme will be introduced requiring installers to reregister, pay a cash bond, show evidence of meeting the training and skills requirements, provide certified quality assurance for the insulation product and the installation, and occupational health and safety plans. Finally, a strengthened compliance regime will be developed in concert with state and territory occupational health and safety and fair trading authorities.

In designing this program, as I have already indicated, the government’s key priority is safety for households and workers. The government will be taking advice from industry and experts on the design of the scheme. The panel of experts advising on the inspection program comprising Messrs Silberberg, Tighe and Arnel has also been commissioned to advise on the proposed implementation arrangements for the scheme. They will provide an interim report to government later this month. The design of the scheme will also be informed by the findings of the Hawke Review into the Home Insulation Program which, as I announced, will consider issues around design, delivery and administration.

It is my intention to engage very closely with industry, unions and regulators to ensure that risks are managed in the best possible way. Advice will also be sought so that the audit and compliance systems attached to the new scheme are significantly strengthened.

Full details of the scheme, including registration requirements for installers, will be released in due course. It is important to stress that in designing the scheme the government will focus carefully of course on the safety of households and installers, and appropriate risk mitigation. The rebuilding of consumer and industry confidence will be essential to the success of the new scheme, and this can only be achieved through the close cooperation of the government and the longstanding, reputable manufacturers and installers that are prepared to stand behind their product.

In conclusion I would like to restate the principal decisions that the government has taken to date to address the issues associated with the wind-up of the Home Insulation Program. Firstly, the 50,000 households that have had foil insulation installed horizontally in the ceiling space under the program will continue to be the subject of electrical safety inspections.

Secondly, this program of inspections will be replaced as soon as possible with a program for the removal of the foil or alternatively for the installation of safety switches for all 50,000 households. Individual households will be able to make the choice of foil insulation removal or, alternatively, the installation of safety switches, on the advice of a licensed electrician. Details of this plan will be announced as soon as possible.

Thirdly, a minimum of 150,000 households that have had non-foil insulation installed will also be the subject of a large-scale safety inspection program. Inspections will be targeted according to an assessment of risk. In combination with the foil insulation inspections, this means that a minimum of 200,000 homes will be inspected. If a risk assessment identifies that additional homes should be inspected, further inspections will be undertaken.

Fourthly, until the new inspection program is in place, the current arrangements enable householders who have safety concerns to ring and request a safety inspection, which will be carried out as soon as possible. In relation to callers with other concerns, names and details are taken and they will be contacted once the new inspection program is finalised.

Fifthly, a panel comprising Dr Ron Silberberg, Mr Peter Tighe and Mr Tony Arnel will advise the government in relation to the foil and non-foil inspection and remediation programs, as well as the design of the Renewable Energy Bonus Scheme.

Sixthly, workers in the insulation manufacturing and installation industry who have been displaced will have jobs services packages available to them. Assistance is being provided to businesses to retain and retrain workers.

Seventhly, Dr Allan Hawke has been appointed to conduct a review of the design and administration of the program and will report to the government before the end of March.

Eighthly, the Auditor-General has agreed to conduct an audit of the program.

Ninthly, the Department of Climate Change and Energy Efficiency has consulted the Australian Federal Police concerning potential fraudulent conduct. The department will appoint a firm to conduct a forensic audit of the program as a basis for identifying cases of fraud.

Tenthly, the government has committed to work with police and other relevant authorities in all jurisdictions to deal with cases of noncompliance and fraud.

Finally, the government has also committed of course to cooperate in any appropriate way with the coronial inquiries into the deaths of Matthew Fuller, Rueben Barnes, Marcus Wilson and Mitchell Sweeney. Their deaths are a tragedy, and I once again extend my sincere sympathies to the families and friends of these young men.

I ask leave of the House to move a motion to enable the member for Flinders to speak for 37 minutes.

Leave granted.

I move:

That so much of the standing orders be suspended as would prevent the member for Flinders speaking for a period not exceeding 37 minutes.

Question agreed to.

Greg Hunt (Flinders, Liberal Party, Shadow Minister for Climate Action, Environment and Heritage) Share this | Link to this | Hansard source

The Home Insulation Program was an example of systemic policy failure with the deepest human consequences. The ministerial statement today continues the practice of systemic failure. In that which has been presented there are three systemic failures and one grand human omission.

The systemic failures are very simple and I want to start with those. Firstly, we know that there are 240,000 houses which have either unsafe or dodgy insulation. There is no plan to find and fix the 240,000 houses out of the potential million. Without a plan to examine all of the one million houses there is no solution to this problem, because almost one-quarter of them have either dangerous or dodgy insulation as a result of a program which was monumentally ill conceived and ill executed and which caused enormous human damage.

The second of the systemic failures is that there is no plan for small business in its moment of need right now. Small business is calling for assistance either in the form of a buyback or of financial assistance. There is a minor component in the existing program, but the small business program, which was promised almost two weeks ago, is now almost two weeks overdue and today’s statement has come and gone without assistance for those firms which are laying off workers on a daily basis. Almost 1,500 workers have lost their jobs, and there is no plan for small businesses which are currently going into liquidation.

The third systemic failure in the statement today is that there is absolutely no transparency in, honesty about or accountability for the extraordinary policy failings which represent perhaps the most systemic policy failure of the last 20 years in terms of its human consequences—not one word about the costs of repairing the government’s program. The National Electrical Contractors Association has referred to potentially $450 million as the cost of repairing a program which was already on track to being $1 billion over budget—potentially $450 million of costs, and not one word of transparency in a ministerial statement about a grand program failure in costs, not one word in real terms about the causes within the government both in terms of design and in terms of monitoring and responding to the 21 warnings which were given to the minister, and not one word as to why only three cases of criminal fraud have been reported, when we know that 0.5 per cent of 16,000 audited cases, approximately 80 cases, have already been identified as likely cases of criminal fraud. There is a disparity between the 80 in the government’s own figures and the three which have been reported to the Federal Court. Those are the systemic failures.

So the pattern of denial and systemic failure, and a program which has been catastrophic in human terms, continue. But in showing the House’s sense of responsibility to the people whom it affects, there is one grand human omission. The minister, and I give him credit for this, made reference to the four young boys—Matthew Fuller, Reuben Barnes, Marcus Wilson and Mitchell Sweeney—whose lives have been lost through association with this program. The government has previously called upon the parliament to make apologies for the wrongs of previous governments. There is no doubt that this government had a duty of care, that it breached that duty of care and that there has been damage on a systemic and a human scale. The minister, his predecessor Mr Garrett and the Prime Minister have all failed to apologise to the families of those four young men and have all failed to apologise to the now 105 homeowners whose homes have been damaged or lost through fire as a result of this program. I call upon the Prime Minister to say sorry, and to use the word ‘sorry’, to the families of those young men who were lost and to the homeowners of the 105 homes which, it has now been admitted, have been damaged or destroyed through fire during the course of this program. That is the least, in terms of human responsibility, which the Prime Minister, the new minister and the previous minister, Mr Garrett, can do.

Against that background, I want to examine briefly three things: the scope of the tragedy, the systemic causes of this grand program failure with its profound human consequences and then the lack of solutions as to what must be done as we go forward. In terms of the scope of the tragedy, let us be absolutely clear that it begins with what we now know to be 105 associated house fires. What we had thought was a figure of 1,000 potentially deadly electrified roofs as a result of the foil insulation program is, we know as of today, closer to 1,500. We also know that there are 240,000 either unsafe or improperly installed and inadequate cases of insulation. We also know that there is a $1 billion blow-out in the program. We also know that there is a potential $450 million bill which future generations will have to pick up for the failures of this program, and above all else we know that there have been four human tragedies associated with this program.

Against that background, it is inconceivable in a Westminster democracy that a minister who received not just one, two, three or four but 21 warnings of grand systemic failure should retain his job as a minister of the Crown. He is a cabinet minister of Australia, the highest position in the Westminster system which can be occupied in Australia short of being Prime Minister. Mr Garrett remains in that position. He has lesser responsibilities but he has the same pay, the same status and the same entitlements. He was tickled with a feather and it is as if this grand systemic failure has been brushed off by the Prime Minister.

So we have no apology. The word ‘sorry’ has not appeared. There has been regret that the government might be held in lower esteem as a result of this—which is a contempt on all of those people who have suffered as a consequence of a design that did not care about the human consequences of a ministerial process which could not be bothered to intervene to take steps when there were public warnings, public debates, adequate notice and every chance and every responsibility for action.

So that is the scope of the tragedy. But let us look at the causes. How could it be that we come to this statement today, which recognises 105 house fires, a potential 1,500 deadly electrified roofs, 240,000 either dangerous or dodgy installations, a $1 billion blow-out and a potential $450 million worth of fix-up costs to fix the roofs—not to mention, above all else, the human tragedy? The causes date back to the stimulus package which was announced by the Prime Minister in February last year. Right from the outset, the opposition warned that the package in its totality was not appropriate for Australia. We had reservations. But we now know that there were warnings all the way through. What was proposed here was to place an industry on steroids and to multiply its size. This industry was multiplied more than twentyfold and in so doing it was evident from the outset that it would attract shonks, shysters, frauds, dodgy installers, those with criminal intent and those who did not care about the human impact. There was a duty of care from the government to make sure that it did not create an unsafe environment for homeowners and young installers. That duty of care was obvious. It should be imbued into every program, and that duty of care was not exercised.

We know this, because the government received warnings to its project control group from the Department of the Environment, Water, Heritage and the Arts. The environment department set out a design structure which would have ensured that existing operators tendered in order to win the right to carry out the program, and the project control group, we are told—but there is total silence on this in the minister’s statement—overrode those instructions and that design. They removed the safeguards and in so doing they created an industry which said, ‘Let it rip.’

They love to talk about ‘let-it-rip capitalism’ on that side. They created the greatest example of ‘let-it-rip rorting’ in Australian policy history. They did so because the Prime Minister’s department, carrying out the desire of the Prime Minister and Ministers Arbib and Garrett, drove forth a set of outcomes which removed the safeguards. So from the outset the program was rotten and it was evident that there would be risk. That is not something which the opposition has come upon; it is something that the department of the environment warned about from the outset.

We also know that from that point on there were 21 specific warnings to the government from external bodies. As the program began to unfold, the warning signs were not just ignored; they were buried, and the result was catastrophic. Often in this place people will overstate, but it is not possible to overstate the human impact and the systemic problems caused by this program. It beggars belief to imagine that the minister responsible for that program remains in his position as a cabinet minister under the Crown in the second-highest role available in the Westminster system in Australia.

Firstly, the design was obviously rotten. Secondly, there were 21 warnings. These warnings came from the electrical authorities within the industry, from the union movement, from the states and territories, and from the opposition. Let me go through what I believe were the four most critical and damning of warnings. On 9 March 2009, Mr James Tinslay, the CEO of the National Electrical Contractors Association Queensland chapter, personally wrote to Minister Garrett directly. He warned of the risk of fire and the risk of systemic failure and that it was evident that increasing the size of an industry twentyfold without safeguards would create a structural flaw which would bring human consequences.

The second thing that occurred was that on 29 April the state and territory authorities, in a phone hook-up of fair trading authorities with the Commonwealth, warned not just of problems but also of fires and fatalities. The words were very clear. They said that this program could not be regulated. They said that, because of its size and scope, the program—its fundamental essence, nature and design; everything which the Prime Minister craved—was unsafe and unsustainable, and paper changes would not solve the issue. At that point, before the program had commenced, the government was warned that it had a ticking time bomb and it was lighting the fuse. It was warned by the states and territories. At that point—because we know that the Western Australian government have made this statement public—they were expecting a failure rate of 10 per cent. A failure rate of 10 per cent out of 2.7 million installations is 270,000 failures. The government authorised a program which it knew would have 270,000 failures.

It turned out that they underestimated the failure rate; the failure rate is closer to 24 per cent. How could they proceed in good faith when there were warnings from the state and territory authorities of fires and fatalities, of a system which could not be regulated and of a system which would have a 10 per cent failure rate, or 270,000 homes? They proceeded nevertheless, and the reason for that is that, at the top of the tree, the Prime Minister was determined that this program would bring political kudos. They would roll out the money and roll out the benefits, and if 270,000 homeowners had a small problem then that was a price which they were willing to pay. That is not a price which any government should be willing to pay. This program was not worth one house fire, let alone one life. It is extraordinary that these warnings were in place.

The third of the critical warnings came on 16 October when Master Electricians Australia wrote to Minister Garrett, as well as releasing a press release. In that letter the CEO of Master Electricians Australia, Malcolm Richards, said to Minister Garrett that unless there was an immediate suspension of the foil program they could not rule out further fatalities. I know those words because I have read them and rolled them around in my mind. I find it extraordinary. They warned that if the program for foil insulation was not suspended then there would be further fatalities. Sadly, that was prescient. It was correct. This was a warning from the experts, a warning made directly to the minister and a warning made both in public and in private. That warning was correct, it was profound and it was ignored. The consequences are real, important, human and can never be undone.

The fourth warning—and I left this until last because it is perhaps the most significant—is that the entire Minter Ellison risk report and risk register which were delivered to the government on 9 April 2009 contained a systemic dismantling of the program which was proposed. I have read that report, which we had to extract from the government through the Senate estimates program. I have read the risk register, which was buried when the minister made a statement one Friday afternoon which was never acknowledged. The risk register had to be drawn out of the Senate estimates process. The risk register set out the risk and the consequences of fire under the program as being five out of five—the risk was five out of five and the consequences were five out of five. It set out the risk of systemic fraud and the risk of departmental programmatic failure and the inability of the department to manage the program. In a high-calibre report it set out all of these risks in a way that was prescient. Most importantly it said the program’s commencement should be deferred by three months because it would simply not be possible to commence the program in a way which would deal adequately with these risks.

That report of itself should have been enough for the minister who formerly had responsibility for the program, who remains the minister for the environment, to lose his job—to do the honourable thing and withdraw. But that was the 21st of the warnings which we learned of. It is clear that there was a systemic failure in design, a complete ignorance of the risks and the warnings and a willingness to turn a blind eye.

What we then move to when we see this is not just that there were 21 warnings from official authorities but that the opposition called for an Auditor-General’s inquiry for the first time on 26 August. I wrote for the first time on 27 August. We called on seven occasions before the first of the fatalities for an Auditor-General’s inquiry into rorting and, in particular, into dangerous work practices. We then called on multiple occasions for an Auditor-General’s inquiry. I wrote for a second time on 18 November 2009 and for a third time last week, on 1 March, calling for an Auditor-General’s inquiry. I am pleased that the minister responded two days later to that letter and that finally the government acknowledged that the program was so rotten and corrupted in its design, its execution and its ignorance of the warnings that they could no longer resist an Auditor-General’s inquiry.

Having said that, we see that we called publicly for an inquiry and that the industry, the unions and the states and territories all warned the government. But we know that right at the heart of this was the Prime Minister’s project control group, which said at the outset, ‘Keep going.’ So we want to know what the project control group said, how they overrode the advice of the Department of the Environment, Heritage and the Arts, on whose instruction they overrode the advice and on whose instruction they continued to drive forward.

What we also know is this: with the systemic design flaws, which had real human consequences, and with the continued pattern of ignoring the 21 warnings, we have brought ourselves to this situation where the program has been terminated because it was simply unsustainable. But the program was only terminated, and the minister was only reassigned in his duties, once the political heat, the opprobrium and the public criticism became too great for the Prime Minister. Only the day before he removed the minister, he was defending the minister in this House. He was defending the program, and he started to tally up the human losses to indicate that they were an acceptable statistic, as if they were acceptable collateral damage. It was not until the Leader of the Opposition asked whether the Prime Minister was really saying that these human beings and the loss of people’s homes were an acceptable price for the program that the penny seemed to drop that there are real human beings that have been the victims of this program.

What I want to say beyond that is: as we look forward, what do we see is fundamentally flawed and fundamentally missing? In terms of the future actions, there are five areas for future activity. The first, in terms of safety, is finding and fixing the 1,500 deadly roofs and the 240,000 dodgy installation jobs. In relation to the 1,500 potentially deadly electrified foil roofs, I accept the proposals put forward by the minister today. They are appropriate, they are in line with what we believe should happen and we believe that that is a step forward today. However, there is no time frame as to how long homeowners will have to wait. The minister’s own department was advising a week or two ago that it would take up to five years to find and fix some of these roofs. So we want a time frame. In relation to the 240,000 dangerous and dodgy roofs out of the 1 million, there is no plan to ensure that all of those million are inspected. There is no plan to find, fix and replace the 240,000 dangerous and dodgy roofs, let alone a time frame.

The second of the major areas, after safety, is cost. There is no statement from the government as to what the cost of finding and fixing the consequences of this debacle is. The National Electrical Contractors Association told a Sunday paper just over a week and a half ago that it could be $450 million to carry out the job properly. We expect a full statement of costs when parliament resumes tomorrow. We want a full statement as to the likely costs.

The third area of future activity is small business, and this is not about restarting the program. I express my and the opposition’s deep reservations about restarting the program. We will keep an open mind, but we express our deep reservations about restarting a program which would simply inflame the problem of putting an industry on steroids and about which there are no adequate safeguards. But we will reserve our position. But right now there are numerous small businesses who have contacted the coalition. All of their messages have been passed on to the government, but those small businesses have no answer to the contracts they have struck in terms of stock held and insulation in bondage. We know about contracts for foam and transportation vehicles and all sorts of fixed costs from which they have no escape. So there is no plan for small business, and we expect an interim statement by the end of this week in relation to small business.

Fourth, there is no statement in relation to the training for those people who will be finding and fixing the 1,500 foil roofs. We have already heard stories of unscrupulous businesspeople trawling for business, going through records and trying to pay for records of houses where foil was installed.

Fifth, there is a very interesting question here: who, in the new Department of Climate Change and Energy Efficiency, has the experience to carry this out? That is not a department with a history of interface with the public. It is the department that put together the renewable energy target, not to mention the emissions trading scheme. The renewable energy target is being redone as we speak, and we will work with the government to fix that up, but honestly! Does this mean that there will be a large number of people who will simply be transferred from the Department of the Environment, Heritage and the Arts to redo the same job under a different hat? How many people will be moved from the one department to the other and simply have their departmental masters changed?

I now turn to the inadequacies in the ministerial statement with regard to the past. There are four elements here. First, we have no statement in relation to warnings. When did the Prime Minister’s office receive the Minter Ellison report and risk register? We have asked that of the Prime Minister. We have no answer. We expect that to be part of the second statement. There must be a second statement brought before this House—and we would like it tomorrow—as to when the Prime Minister received the Minter Ellison risk report and register. When did his office receive that report?

The second of the areas in relation to the past is ministerial interference in the safeguards presented to the cabinet and to the project control group by the Department of the Environment, Water, Heritage and the Arts. We know from public reports that the department of the environment put forward a program which would have allowed for tenders by existing installers that would have made a massive difference in terms of safety and quality. Who overrode that decision and why? Was it the Prime Minister? Was it his office? Was it Minister Arbib? We want a full statement as to why the project control group overturned the safeguards proposed by the department of the environment.

The third of the issues in relation to the past is criminality. On the basis of the figures given by the minister, we know that the opposition have sent forward from our office alone at least 17 reports of potential criminal fraud. Three have been reported to the AFP, but we know that with a 0.5 per cent criminal fraud rate out of the 16,000 audits done to date that that should equate to about 80 potential frauds. Why have there only been three reports to the AFP, when that figure was in place before Christmas? There have been effectively no new referrals to the AFP.

Lastly, in relation to the past, there should be an apology. The Prime Minister and Minister Garrett should simply say the words ‘I am sorry’ to those who have been affected—the 105 homeowners; the people who live in uncertainty with regard to the potential 1,500 deadly electrified roofs; the 240,000 homeowners out of the one million who have dangerous or dodgy insulation; and, above all else, the families of those young men who are no longer with us.

This program has been a debacle from the start. This ministerial statement continues the failures. It does one thing, which is to provide a repair process for the foil insulation, and that is welcome, but it fails on every other front. There is no plan to find and fix the 240,000 dangerous or dodgy roofs. There is no plan to assist the small businesses which are under daily threat of liquidation. There is no transparency about the cost, about the issue of criminality, about the causes, which go right to the heart of this government—and there is no apology. The word ‘sorry’ has not been used, to the best of my knowledge, by any senior member of the government to express their concern.

This ministerial statement fails in its duty. The government has failed. Minister Garrett must go. The Prime Minister should make the next statement and he should cover the fundamental flaws which remain with the program and the fundamental failure to acknowledge the causes, the consequences, the cost and the human issues that this program has brought upon Australia.