Green Loans scheme to be scrapped in favour of new Green Start program after rorts

The Federal Government will shut down its failed Green Loans program and introduce a replacement Green Start program over the next few months, climate change minister Penny Wong announced yesterday.

The announcement comes after three separate reports into the failed Green Loans scheme released yesterday found the program experienced serious compliance breaches and budget blowouts, leading to its ultimate demise.

The reports, the Faulkner Inquiry, Resolution Consulting Services report and the Protiviti Consulting report, were all released on the website of the Department of Climate Change yesterday. Each reported a number of different problems.

The Faulkner Report found a “widespread lack of compliance with the principles, guidelines and regulations relating to procurement in the rollout of the Program”.

It also found prima facie evidence of contract splitting, whereby the work from the same supplier has been split into different components in order to avoid authorisation from senior management. Breaches of the Financial Management Act were identified, along with poor documentation, poor contract planning and “weak budget control”.

“For example, the costs of three contracts for IT project management, the contract service centre and logistics escalated by a factor of four, nine and 19 on the original contract terms, respectively.”

The Resolution Consulting report found the program did not identify the number of assessors required to undertake the assessments, and so control over those numbers was given to the Association of Building Sustainability Assessors – “a clear conflict of interest”.

“Overall, management controls were insufficient for a program that was unnecessarily complex and over engineered. Assessors and financial partners have effectively become the drivers of the program outcome and there are significant reputational risks in closing off assessments and access to the Green Loans.”

“There is no clear exit strategy for the Green Loans program.”

The Green Loans scheme worked through an assessment program. Home owners could book an assessment with a registered assessor, and then receive a report on a number of different improvements that could be made to their property to make it more environmentally friendly. They could also access interest-free loans to fulfil these recommendations.

However, there were several problems. The scheduled number of assessments was overblown, while several companies offering assessments weren’t even able to contact the Government to book their assignments. The take-up of the actual loans was extremely low, with a number of home owners never actually receiving their reports.

The Government made changes earlier this year that restricted the amount of assessments that could be made each week, but many individual assessors have left the industry due to those financial constraints.

These reports have prompted the introduction of the new Green Start program, which is set to be funded in two rounds, Wong announced.

“In the first round, the Commonwealth will fund the delivery of energy assessments for households. Grants will be awarded to accredited assessors and organisations who can deliver high quality assessments through a competitive process.”

“In the second round, the Government will seek proposals from community and welfare sector NGOs and other organisations to provide practical help to low-income and disadvantaged Australians to improve their energy efficiency.”

However, few other details were provided.

Green Loans sustainability assessments will continue, Wong said, “to ensure a smooth transition to the new program”.

But Tom Buckley, managing director of Green Home Loans Australia, says he is only cautiously optimistic about the new program.

“We’d certainly be interested, but the lack of detail about the coming project can’t really provide much certainly for us. It’s quite disappointing because we have a large infrastructure here, and it’s hard for us to make decisions when there are no details.”

Buckley says his company has suffered due to the restrictions placed on how many assessments can be undertaken each week.

“Those changes basically annihilated the industry. A lot of people moved out because it wasn’t viable to earn a living. All the problems weren’t really solved at all.”

“What the government is trying to do is scale back operations instead of saying the program is finished, which would be a disaster. We participate in a strong way in this industry, but certainly not in the way we could before. We’ll have to wait and see about the new program.”