Diccionario de la EDT

2.3.1 An important theme of this Report is that the HIP’s formulation and implementation was unduly rushed. That occurred largely because of a belief—which I am satisfied was genuinely held, by officers of the Department of the Environment, Water, Heritage and the Arts (DEWHA) and of the federal Office of the Coordinator-General (OCG–at that time located within the Department of the Prime Minister and Cabinet (PM&C))—that the 1 July commencement date was unchangeable. If, as Mr Rudd contends, there was flexibility in the date if safety considerations were raised, there appears to have been either a miscommunication of that flexibility to DEWHA and OCG officers or an unwillingness by those officers to ask.

2.3.2 When the HIP was announced by the Prime Minister on 3 February 2009, it was clearly stated that the program would commence in substance on 1 July 2009. Exactly how that date was arrived at is not entirely clear. Mr Rudd gave evidence that the date had its origins in earlier work carried out in 2008 as part of the National Energy Efficiency Strategy.19 _{Mr Rudd expressed the view that the commencement date for the program}

‘lay properly within the province of our public service advisers.’ At paragraph 55(c) of his statement, Mr Rudd said that the 1 July commencement date for the full program was part of the original recommendation from the public service. In a submission to the Commission, Counsel for Mr Rudd said that the 1 July commencement date came from previous proposals by officials including the Insulating Australian Homes Plan proposed on 1 December 2008 and the Climate Proofing our Homes proposal made on 19 January 2009.20 _{In short, Mr Rudd said that the date was chosen by the public}

service, which advised that it was achievable.21

2.3.3 However, that was not the evidence of the public servants who appeared before the Commission. There was unanimity in their evidence that the date of 1 July was one that was imposed upon them, and that they then had to do their best to achieve a rollout of Phase 2 of the HIP by that date. The timeline was variously described as “challenging”, “ambitious”, “very tight”, “a hard barrier”, “immutable” and a “religious thing”.22

2.3.4 When Ms Wiley-Smith and Ms Brunoro of DEWHA were asked to carry out costings for the program over the Australia Day long weekend in January 2009, they were asked by Mr Johnston of PM&C, to “presume” a 1 July start date.23

2.3.5 Given that the EEHP was first and foremost a stimulus measure, I accept that there was a perceived need for expedition in its rollout. However, I find that neither the SPBC nor the Prime Minister was given any advice by those working specifically on the EEHP, particularly officers of DEWHA, that the specific program could be designed and ready for full implementation on 1 July 2009. Any reference to an ability to deliver a program by 1 July 2009 related to the smaller Sustainable Homes Assistance Package program that was to be developed and implemented in conjunction with the States and Territories. I do not consider it fair to simply assume that such a date would or could be carried forward into a different program being implemented solely by the Australian Government. 2.3.6 The greater mischief, in my view, was not so much setting the commencement date of

1 July 2009, but rather in either engendering the view, or in failing to dissuade the view, that the date could not be changed.

19 Transcript (15 May 2014) 4808-4809 (K Rudd).

20 SUB.004.009.0086, 3; SUB.004.009.0086, 6; SUB.004.009.0021, 27. 21 Statement of Rudd at [44], STA.001.080.0001, 15 May 2014.

22 Description given by Ms Avril Kent: Transcript (9 April 2014) 2428 (A Kent). 23 STA.001.002.0043, 1.

2.3.7 Mr Rudd was of the view—and there is no evidence to contradict him—that if Cabinet or the SPBC had been asked for a delay in the commencement date because of genuinely held concerns that issues of safety could not be dealt with adequately by 1 July, such an extension would have been granted. Counsel for Mr Rudd told the Commission:

The officials had five months to consult and develop the Home Insulation Program and if the date was not achievable or the programme carried unreasonable risk to safety, they had the opportunity to advice the Cabinet Committee that the timetable was not achievable and should be extended…“.24

2.3.8 When asked whether commencement date was moveable, Mr Rudd said:

My response to that is very simple: had any public servant, any Minister advised the Cabinet that there was a safety risk to either workers or to households, then I’m confident in saying the reaction of Ministers would have been to say, “This has to be dealt with.” And if that involved a delay, then that would have been the response.”25

2.3.9 In contrast, there is a body of evidence that reflects a belief by the officers of DEWHA and the OCG that the matter of an extension was not so straightforward:

2.3.9.1 In a memorandum concerning a meeting on 31 March 2009, at which the delivery model was discussed, which Senator Arbib attended, Mr Hoffman has recorded: “The Program must be in place for the announced 1 July 2009 launch day”; 26

2.3.9.2 Mr Hoffman gave evidence that “there was a very high priority being placed by the Government on achieving that date”;27

2.3.9.3 Mr Garrett said that he did not know the significance of the 1 July date but was of the view that “it was our job to do it the best that we could to make sure that it happened”;28

2.3.9.4 Mr Garrett also said that it was understood that timing was always a critical element in the roll out of the program;29

2.3.9.5 Mr Arbib, the then Parliamentary Secretary responsible for the HIP, said that it was never explained to him why the start date was chosen; 30

2.3.9.6 Ms Kruk, the then Secretary of DEWHA from 2 March 2009, said that in her view the 1 July date was immoveable;31

2.3.9.7 Mr Forbes, the then Deputy Secretary of DEWHA, said that he recalled discussions with Mr Mrdak and with Minister Garrett early on about the 1 July rollout date and the challenge that was going to be. He said “they were both very focused on the 1 July so I knew that it was an immutable date”.32

Mr Forbes said the two men said it was up to him and the department to make sure we got there (i.e. by 1 July). He said the date was fixed “because

24 SUB.004.009.0021, 27.

25 Transcript (15 May 2014) 4811 (K Rudd). 26 AGS.002.008.0641, 1.

27 Transcript (25 March 2014) 881 (P Hoffman). 28 Transcript (13 May 2014) 4555 (P Garrett). 29 Transcript (13 May 2014) 4557-4558 (P Garrett). 30 Transcript (12 May 2014) 4412-4415 (M Arbib). 31 Transcript (28 March 2014) 1232 (R Kruk). 32 Transcript (3 April 2014) 1808-1809 (M Forbes).

that was what the Prime Minister wanted”.33 _{Mr Forbes said that the rigidity}

of the timeframe led to issues being prioritised. He said it was “a very compressed timeline”;34

2.3.9.8 Mr Carter, the then First Assistant Secretary of the Division of DEWHA responsible for the HIP, said that at the meeting on 31 March 2009, it was made clear to him that matters were being decided at a “very senior level” and he didn’t feel it was his place to disagree with the time line.35 _{The change}

in business model discussed at that meeting was designed to accelerate the implementation of the program;

2.3.9.9 Mr Hughes said that the timing of the program was problematic, and that the pressure of time was the biggest problem confronted by those tasked with implementing the HIP;36

2.3.9.10 Mr Kimber said that although he didn’t recall why 1 July was chosen, he did recall a sense of urgency from the Government and from the Department of the Prime Minister and Cabinet around “implementing the program quickly so that we met the economic stimulus objectives”. Mr Kimber said that DEWHA were not allowed the opportunity to conduct as much consultation as they wanted to, to develop any in-house expertise or take the time to develop pilot projects for the program;37

2.3.9.11 Mr Hoitink said the date was ‘pretty much fixed’ and was a ‘hard barrier’.38

2.3.10 There is a conflict between the evidence of Mr Mrdak and that of Mr Arbib, as to whether an extension to the commencement date was possible, that I discuss at greater length in Chapter 6. Mr Arbib gave evidence that no one told him that the HIP couldn’t be up and running by 1 July. He did concede that was a challenging date.39 _{Mr Mrdak gave evidence}

that on four occasions he discussed with Mr Arbib concerns he had about the program commencing on 1 July.40 _{These concerns were not about safety, but about the robustness}

of the payment and compliance systems. Nevertheless, the response from Mr Arbib was that the date couldn’t be changed. Mr Mrdak did explain that to change the time frame for the HIP would have involved changing an element of a suite of fiscal stimulus measures, which were all timed carefully by government to deal with how they anticipated the global financial crisis would roll out, and its employment impacts in Australia.41

2.3.11 There certainly seems to be a disconnect between the evidence of Mr Rudd, which reflects the view of his Cabinet colleagues, and that of the public servants. Whether the public servants should have done more to clarify whether an extension to the commencement date was permissible is discussed in subsequent chapters. No public servant put in writing any concern about the 1 July deadline. No public servant (other than Mr Mrdak) gave evidence that an extension was asked for and refused. However, what I think is abundantly clear is that, for whatever reason, the public service were working towards a deadline that they perceived was inflexible, and that constraint of time led to many of the unfortunate compromises that were made to the integrity of the HIP and, ultimately, to the safety of those working under it.

33 Transcript (3 April 2014) 1885 (M Forbes). 34 Transcript (3 April 2014)1805 (M Forbes). 35 Transcript (20 March 2014) 375 (R Carter). 36 Transcript (9 May 2014) 4177-4178 (A Hughes). 37 Transcript (10 April 2014) 2580 (W Kimber). 38 Transcript (14 April 2014) 2854 (D Hoitink). 39 Transcript (12 May 2014) 4412 (M Arbib).

40 These conversations took place on 3 and 31 March, 19 May and 2 June 2009. 41 Transcript (27 March 2014) 1054 (M Mrdak).

2.3.12 What is noteworthy is that no one, including Mr Rudd, Mr Arbib and Mr Garrett, gave evidence that there was any economic imperative for a 1 July commencement date. That is, no one was prepared to say that the economic stimulus to be provided by the HIP mandated its commencement by 1 July and, if other considerations—such as safety, audit or compliance— could not be accommodated within that timeframe, that compromises would have to be made. But that is exactly what occurred. The short answer to the question of why it occurred is, on the evidence put before me, perhaps as simple as a lack of proper communication.

2.3.13 The perceived need to rush the design and implementation of the HIP brought about a failure to properly consult with industry and the public service about the risks of the changed delivery model and, for related reasons, a failure to heed more than one warning about the risks of installing insulation, and especially Reflective Foil Laminate sheeting (known as RFL).

2.3.14 Later parts of this report will consider how the perceived need to rush the design and implementation of the HIP affected the Australian Government’s decision-making in material respects, and the unfortunate consequences that resulted.