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6.1.2 There existed for some years before the Home Insulation Program (HIP) was announced, various proposals and discussions within the Australian Government for improving the energy efficiency of Australian homes. When the Rudd Government was elected in 2007 it brought a large number of election promises that soon occupied the Department of the Environment, Water, Heritage and the Arts (DEWHA). Some witnesses said that before being allocated the HIP, the Department was already working at close to, or even exceeding, full capacity.1 _{Many of the policies being developed during 2008 were related}

to the proposed introduction of a Carbon Pollution Reduction Scheme (CPRS). 6.1.3 Development of a strategy to ensure the economy-wide uptake of energy efficiency

measures was also stated to be a high priority for the Department of the Prime Minister and Cabinet (PM&C) in 2008–09.2 _{The Strategic Review of Australian Government}

Climate Change Programs by Mr Roger Wilkins AO was released on 31 July 2008 and considered the efficacy of various climate change programs and their relationship to a possible CPRS.3 _{During 2008 a whole-of-Government taskforce was established within}

PM&C to oversee the development of such policies. Chaired by Dr de Brouwer, this taskforce reported to the Government in September 2008.

6.1.4 A Council of Australian Governments (COAG) Working Group on climate change and water was also established. That working group had an Energy Efficiency Sub-Group (EESG). A discussion paper was presented in March 2008.4 _{The Chair of the Working}

Group, Senator Wong, sought ideas on early opportunities for deeper or accelerated energy efficiency. Home insulation was not addressed in any detail at that time. 6.1.5 An interim report of the Working Group was produced in May 2008.5 _{It did not address}

insulation as a stand-alone policy.

6.1.6 The Green Paper for the CPRS was released on 16 July 2008. It did not address insulation as a stand-alone policy.

6.1.7 The final report of the EESG was submitted on 12 August 2008.6 _{Members of the}

sub-group included Ross Carter, Chris Johnston and Sasha Kaminski, whose names appear later in connection with the HIP. This report conveyed the options that the EESG recommended to accelerate or expand the uptake of energy efficiency measures in Australia. There is nothing in it concerning insulation of residential premises in any substantive form.

1 Statement of Carter at [13], STA.001.001.0340, 17 March 2014; Transcript (20 March 2014) 339 (R Carter); Statement of Keeffe at [31], STA.001.015.0001, 28 March 2014; Transcript (26 March 2014) 925 (M Hoffman). 2 Department of the Prime Minister and Cabinet, Annual Report 2008–09, Output 1.1—Economic and Industry

Policy (Commonwealth, 2009), 40.

3 Statement of Brunoro at [8] and [9], STA.001.002.0001, 17 March 2014. 4 AGS.002.008.0062, 1-53.

5 AGS.002.008.0007, 1-55. 6 AGS.002.008.0121, 1-94.

6.1.8 Mr Rudd, then Prime Minister, wrote to the State Premiers and Territory Chief Ministers in August 2008 advising them of the work being undertaken by the Government in advance of a COAG meeting scheduled for October 2008. The letter referred to the Government’s development of a streamlined package of energy efficiency measures designed to complement the CPRS.

6.1.9 On 15 September 2008, PM&C prepared (for the Cabinet) the National Energy Efficiency Strategy.7 _{That document made reference to a possible CPRS, but recorded that the}

Government had not yet made a decision about the final design features of it. The strategy, it was said, must aim to complement the CPRS. It was to include, among other things, a ‘Households and Communities Energy Efficiency Initiative’.8 _{It was}

recommended that a Sustainable Homes Assistance Package be implemented, involving measures for home energy audits and financial incentives for households to improve the energy efficiency of their properties.9

6.1.10 The Garnaut Climate Change Review Final Report was released on 30 September 2008.10

That review had been commissioned by Federal, State and Territory governments in 2007, as a study of the impacts of climate change on the Australian economy.

6.1.11 At the COAG meeting on 2 October 2008, agreement was reached for the development of a National Strategy for Energy Efficiency (NSEE). COAG was to consider a detailed proposal of this kind in December 2008, including what was to be the allocation of jurisdictional role and responsibilities.11 _{A meeting of State and Territory energy}

coordinators was held on 6 November 2008. Documents were produced in 2008 by or for the EESG of the COAG Working Group on Climate Change and Water.12 _{They gave}

some consideration to energy treatments for residential buildings, but at a very general level rather than with any specificity and were cast in terms of policy objectives not specific proposals. In the last of these, the Final Report, there was no recommendation that homes be insulated.

6.1.12 Mr Ross Carter chaired the EESG which sat underneath the COAG Working Group on Climate Change and Water.13 _{He had involvement in the preparation of some or all of}

these documents.

6.1.13 On 14 October 2008, Mr Rudd announced the Economic Security Strategy, as a response to what he described as ‘the worst financial crisis in our lifetime’ and ‘the economic equivalent of a national security crisis.’14

6.1.14 In 2008, a taskforce in PM&C was considering measures which might support the introduction of a CPRS. Two DEWHA officers (Ms Beth Brunoro was one of them) were seconded to PM&C to assist.15

7 AGS.002.131.0227. 8 AGS.002.131.0227, 2. 9 AGS.002.131.0227, 8.

10 Ross Garnaut, The Garnaut Review: Australia in the Global Response to Climate Change (Commonwealth, 2011). 11 AGS.002.131.0116, 1.

12 Examples are AGS.002.008.0007, 55; and AGS.002.007.0007, 17-18 (Interim Report); AGS.002.008.0121, 32-39 (Final Report).

13 Transcript (20 March 2014) 327 (R Carter).

14 The Hon Kevin Rudd MP, Address to the Nation: Canberra (14 October 2008) Parliament of Australia, <http:// parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22media%2Fpressrel%2FGXTR6%22>. 15 In 2009, Ms Brunoro was known as Ms Riordan. I have used her current name throughout this Report for

consistency. Statement of Wiley-Smith at [6], STA.001.001.0271, 15 March 2014; Statement of Brunoro at [13], STA.001.002.0001, 17 March 2014.

6.1.15 The focus of the work at this time was not home insulation. It was just one of a number of possibilities that were being considered. The elements considered to be important at this stage were assistance to low income and disadvantaged households and loans for energy efficiency items or improvements.16 _{Ms Brunoro had, however, by this time,}

undertaken research, for example, on various energy efficiency packages that had been implemented in some Australian States and overseas. Some ‘roundtables’ with stakeholders for these proposals were conducted in 2008.17 _{This information was later}

drawn upon when it came to formulating the proposal that became the HIP in its early form. Ms Juliana Marconi assisted with that research (much of it web-based), but at a more routine or administrative level. Ms Marconi was a junior officer within DEWHA. 6.1.16 On 3 November 2008 Ross Carter sent an email to Dr Rhondda Dickson (Branch Head,

Industry Infrastructure and Environment Division, PM&C) and Chris Johnston with an attachment ‘NEES Roles and Responsibilities of Commonwealth.’18 _{That document was}

headed ‘Roles and Responsibilities of Commonwealth, States and Territories under the National Energy Efficiency Strategy’. The document stated, in part:

A cooperative approach to the delivery of the NEES between the three tiers of government is critical as each has distinct, often constitutionally defined, roles which in turn create different opportunities to exercise influence over energy demands. A lack of coordination risks duplication and, at worst, confusion and disengagement by the business and community sectors targeted by energy efficiency policy. It is therefore critical to agree the key issues of cooperation, differentiation of roles and responsibilities, funding and accountability to be jointly addressed by the three levels of government.

6.1.17 These prescient remarks by Mr Carter were not heeded in the design and implementation of the HIP.

6.1.18 On 10 November 2008 the Climate Institute released ‘Australia’s National Strategy for Energy Efficiency’, a policy paper.19 _{In its introduction the document states:}

‘The Council of Australian Governments has committed to developing a National Strategy for Energy Efficiency, to be implemented from June 2009.’20 The paper calls for discussion of a national energy efficiency program, at the lowest cost to households, businesses and the economy.

6.1.19 The Government’s fiscal response to the GFC in October 2008 was unlikely to be its final stimulus package. Discussions continued about the integration of energy efficiency measures into the future economic stimulus measures.

16 Statement of Wiley-Smith at [7], STA.001.001.0271, 15 March 2014.

17 Statement of Wiley-Smith at [9], STA.001.001.0271, 15 March 2014. Meetings also occurred in November 2008 with the President of ACOSS and Mr Garrett (AGS.002.005.0823) about residential energy efficiency for low income earners, but there is no suggestion that Ms Brunoro or Ms Wiley-Smith were present at them. On 29 August 2008, there was an NGO Workshop on Disadvantaged Households and Residential Affordability in Melbourne attended by Mr Ross Carter of DEWHA (AGS.002.030.0811, 1-18). A ‘Senior Officials Group on Energy Efficiency’ (SOGEE) meeting took place on 18 December 2008 (AGS.002.033.7516, 1-3). These are examples only of the meetings and consultations which took place about possible energy efficiency programs in the second half of 2008. In addition to these there were numerous National Energy Efficiency roundtable meetings held in August and September 2008 in all the state capitals and in Canberra. 171 stakeholders are said to have attended (AGS.002.101.2857, 1).

18 AGS.002.033.0002, 1-7.

19 The Climate Institute, Australia’s National Strategy for Energy Efficiency (2008). 20 The Climate Institute, Australia’s National Strategy for Energy Efficiency (2008), 3.

6.1.20 On 7 November 2008 Ross Carter sent an email to his colleagues:

I gather some of this is likely to be the subject of discussion in the next few days. As alluded to the other day I think there is a phasing opportunity for consideration, announcement and delivery of various elements of the NEES- SHAP/NSEE Agenda that may be attractive in the context of a tight fiscal environment and consideration of direct assistance in the CPRS White Paper as well as in providing a negotiating frame for the NSEE. A paper was prepared on the phased approach to the sustainable homes assistance package. This also looked at assistance from the States and Territories 21

6.1.21 The attachment to the email was titled ‘Phased approach to the sustainable homes assistance package’. It stated:

Our intention would be to develop a coordinated package with the States and Territories—to be signalled upfront and incorporated as part of Phase 2’. ‘This phasing option would provide time to rationalise programs with the States…

6.1.22 On 28 November 2008 officers in PM&C (including Chris Johnston) put together a ‘Taskings’ document.22 _{The document read in part:}

Taskings DEWHA:

1. Provide options for a program to install insulation in under-insulated Australian homes—including the following information:

• cost to fully rebate for all homes / other cost options • import intensity of programs (i.e. where are the necessary

components made?) • skills requirements:

• does installation require skilled or unskilled labour?

• is there currently the skills capacity required to implement the program quickly?

• if not how long would it take to establish the required skills capacity?

• how many jobs would the program create (provided as a figure per amount spent (eg jobs per $10M spent) and

• an estimation of carbon benefit per dollar cost of program (ie avoided greenhouse gas emissions)

2. Provide options for a program to install solar hot water systems in Australian homes—including information as per item 1, above.

6.1.23 This was perhaps the genesis of the work that ultimately fed into the development of the HIP, although no documents were produced to the Commission that show that PM&C responded specifically to the tasks assigned to DEWHA.

21 AGS.002.033.1532, 1. 22 AGS.002.033.3559, 1.

6.1.24 There was a COAG meeting on 29 November 2008 that dealt with climate change issues. It referred to a document of shared understanding. Under the heading ‘Energy Efficiency’ it stated:

A range of activities on energy efficiency are being pursued by the

Commonwealth and States. A COAG working group on climate change and water, through its energy efficiency sub-group has been tasked with preparing options to accelerate or expand the uptake of energy efficiency measures, including the need for a comprehensive and integrated approach. The Commonwealth has proposed the national energy efficiency strategy will be the single overarching framework for accelerating energy efficiency reforms with streamlined roles and responsibilities to be agreed by December 2008. An alternative finalisation date of early 2009 is now proposed in light of the scope of this task.23

6.1.25 On 1 December 2008 Ms Wiley-Smith sent to Andrew Parson, Ross Carter and Stephen Oxley a number of ‘one page’ summaries of various programs.24 _{These dealt}

with a variety of energy efficiency measures. One referred to insulation. It was entitled ‘Insulating Australian Homes Plans’. It contained the following:

Objective: To accelerate the uptake of insulation by Australian households and stimulate the development of the energy efficiency industry through the provision of a subsidy package for households choosing to insulate their houses.

Cost Options: The total cost for this option is estimated to be approximately $5.61B over five years (2009 to 2014). It consists of installing insulation costing up to $1500 per household or the total cost of insulation averaging $1200. Impact on jobs: Positive. The majority of insulation materials used in Australia are manufactured locally… Australia’s insulation industry incorporates products for residential, commercial and industrial markets encompassing two broad product categories—bulk insulation and reflective insulation. These are available as a number of different insulation materials [footnoting the submission by the Insulation Council of Australia and New Zealand (ICANZ) to the Victoria Energy Efficiency Target Scheme]. The measure would create a demand for additional installers and create job opportunities if [sic] the supply chain. The scale of this measure may also stimulate job creation in the insulation manufacturing sector. Capacity constraints/ability to deliver: The current insulation installation network has additional capacity at the moment, however would have to expand and create new jobs if the government aimed to have all uninsulated houses insulated. This is a relatively straightforward matter as installers do not require extensive training and can be brought on line quickly [again referencing the ICANZ submission].

Overall assessment: Installing ceiling insulation provides long-term emissions and energy savings relative to other household investments.25

23 AGS.002.033.2478, 2. 24 AGS.002.033.3731, 1. 25 AGS.002.033.3751, 1-2.

6.1.26 There was also a document on the Energy Savings Trust and Technology Neutral

Household Assistance.26 _{The technology neutral household assistance measure proposed}

to provide subsidy assistance of up to $1,500 to all Australian households to purchase, retro-fit and/or install household energy efficiency options, including insulation.

6.1.27 On 2 December 2008 Andrew Parsons sent Chris Johnston a document headed ‘New Green Deal—Revised Version’.27 _{This document is set out in a quadrant using carbon}

impact and jobs impact as the axes. It refers to a number of possible options. In the right upper quadrant styled ‘High Carbon Impact/High Jobs Impact’ appears: ‘1. Insulating Australian Homes (RECOMMENDED).’ The ‘New Green Deal’ or ‘Green Jobs’ is how PM&C described the package that sought to combine energy efficiency measures with jobs stimulus initiatives.

6.1.28 Attachment A to this document is a ‘Summary of Proposal and Recommendations’. It is said that the Insulating Australian Homes Plan would have a fiscal cost $5.6 billion over five years (and that a lower cost option focussed solely on ceiling insulation might be possible). The PM&C view was recommended for further consideration: it was said to have the lowest abatement cost of all proposals … ‘with a substantive impact on jobs and economic activity (the majority of materials are manufactured in Australia, installers require little training and can be brought on-line quickly).’ Part of Attachment B to this document was the ‘Insulating Australian Homes Plan’ prepared by Mary Wylie-Smith, referred to above.

6.1.29 At the same time the States and Territories were doing their own work on energy efficiency measures.28

6.1.30 On 4 December 2008 there was a meeting of the Senior Officials Group of the NSEE.29

This meeting charted what was proposed over the following months.30 _{It is evident that}

this group did not envisage the stimulus announcement in February 2009, or their work forming part of it. It also envisaged the continuing involvement of the States and Territories in the development and implementation of policy. I am satisfied that by the first week of December 2008, although more general work had been done that incorporated some work on energy efficiency, what became the HIP was not then in serious contemplation. What was proposed was a package aimed at low income households, including a variety of measures of which insulation was but one option. It was also envisaged that the States and Territories would be involved in any program delivery.

6.1.31 In December 2008, the Australian Government released a CPRS White Paper.31

It identified a need for cash assistance targeted at low-income households, and referred to a proposal by the Brotherhood of St Laurence (in conjunction with KPMG and Ecos Corporation) that recommended the implementation of a national energy efficiency program. The paper also refers to an Australian Council of Social Service (ACOSS) proposal to retrofit houses so as to minimise energy consumption. The paper suggested that an uninsulated roof cavity could lose 35 per cent of a home’s heat, and that insulation was capable of lowering each home’s greenhouse gas emissions by more than 2.5 tonnes per year.32 _{Mr Chris Johnston, an Acting Assistant Secretary in PM&C,}

26 AGS.002.033.3754, 1. 27 AGS.002.033.3992, 2-3.

28 See, for example, AGS.002.033.3926, 1-2 (South Australia). 29 AGS.002.033.5549, 1.

30 AGS.002.033.5983, 1-2.

31 Department of Climate Change, Carbon Pollution Reduction Scheme: Australia’s Low Pollution Future (Commonwealth, 2008); PUB.002.001.0436, 1-385.

has stated that ultimately it was decided that energy efficiency measures would not be included in the White Paper and would progress separately.33