Roles y responsabilidades

6.6.1 In the above narrative of what occurred in the December 2008 to January 2009 period, I have referred to a number of occasions when documents were provided to or requests were made by the SPBC. The process that Ms Wiley-Smith and Ms Brunoro undertook was one initiated by the SPBC. I say something briefly here about the processes by which that occurred.

6.6.2 The first Cabinet consideration of the HIP in its early form was by the SPBC of Cabinet. Its members were Mr Rudd, the Deputy Prime Minister (Ms Gillard) and Ministers Swan and Tanner (the four most senior Ministers). The purpose of the SPBC as described by Mr Rudd was to consider and determine the strategic policy direction of the Government,

144 AGS.002.010.0918, 2.

145 Statement of Wiley-Smith at [57], STA.001.001.0271, 15 March 2014. 146 Statement of Wiley-Smith at [27], STA.001.001.0271, 15 March 2014. 147 Statement of Brunoro at [42], STA.001.002.0001, 17 March 2014. 148 Statement of Brunoro at [6], STA.001.002.0001, 17 March 2014. 149 Statement of Brunoro at [45], STA.001.002.0001, 17 March 2014. 150 Transcript (20 March 2014) 337 (R Carter).

151 Statement of Rudd at [20], STA.001.080.0001, 15 May 2014. 152 Statement of Rudd at [21], STA.001.080.0001, 15 May 2014.

to implement the Government’s pre-election policies and to develop the Government’s overall budget strategy. Decisions of this Committee were ‘usually’ referred to the full Cabinet.153

6.6.3 It was the SPBC that had been briefed by Treasury about the GFC in mid-October 2008 as to the nature and scale of those circumstances. Treasury advised that critical decisions would need to be made and on an urgent basis if a recession was to be avoided.154

6.6.4 On 19 January 2009, the ‘Nation Building Measures—Stimulus’ came before the SPBC. The relevant proposal was at that stage called ‘Energy Efficiency and Green Jobs’. It comprised four elements, the first being ‘A new Climate-Proofing Our Homes’ program at $3.7 billion over two years, but not including service delivery and other costs and the Low Emission Assistance Plan for Renters (LEAPR), modified to target low income households in rented accommodation.

6.6.5 The climate-proofing element was to be delivered in partnership with the States and Territories, and to involve in-home energy audits to up to 900,000 households and rebates of up to $1,000 to low and middle income households for capital energy efficiency improvements, including insulation and solar or heat pump hot water systems.155 _{A comment on that proposal which was before the SPBC was that}

the proposal was ‘complex, insufficiently developed and subject to significant cost uncertainties and implementation risks’.156 _{It was recommended to be further considered}

ahead of the March COAG meeting through a more fully developed submission that addressed the implementation arrangements and risks in greater detail and that further cooperation with the States and Territories could be explored with a view to spreading the implementation and costs burden.

6.6.6 Further discussion of this item took place in the SPBC on 21 January 2009. For that meeting, it was recommended that the SPBC agree to the Climate-Proofing Our Homes program as outlined in an attached New Policy Proposal.157 _{It was recommended that}

it be delivered through COAG as part of the National Strategy for Energy Efficiency. One focus for that proposal was to be insulation.158 _{It was to be targeted at low and}

middle income households. That proposal suggested that the average cost of ceiling insulation was about $1,200 per house, that the insulation industry could expand to meet the additional demand created by the program, and that there be an ‘auditor training component’ focussed on training 1,360 home energy sustainability assessors.159

Faster delivery options were noted, including by removing the upfront audit component. Having such audits, it was said, ‘would have implication for the speed with which the program could be delivered and rebates provided’. This offer was then extended:

Were Ministers inclined to seek earlier delivery of rebates, an alternative model would be considered that did not require audits to qualify for rebates for the installation of insulation and efficient hot water heaters. Customers would submit bills for installation of these two products which would be rebated by the government up to $1000. DEWHA estimate that they could commence delivery of such a program within three months, provided they were allocated additional resources to fast track the establishment of appropriate IT systems and guidelines.

153 Statement of Rudd at [22], [21], STA.001.080.0001, 15 May 2014. 154 Statement of Rudd at [11], [12], STA.001.080.0001, 15 May 2014. 155 AGS.001.131.0001, 2.

156 AGS.001.131.0001, 4. 157 AGS.002.131.0008. 158 AGS.002.131.0009, 4. 159 AGS.002.131.0008, 5.

6.6.7 There were two drawbacks with the alternative, faster model. First, it was said, it would compromise the environmental and climate change benefits of the program, because it was thought that behaviour needed to change and that in-home audits were the means to achieve that change. Secondly, such a model could not be delivered through COAG. 6.6.8 On Friday, 23 January 2009, the SPBC met again. It would appear (from later SPBC

papers) that at this meeting, the SPBC requested officials to develop an Energy Efficiency Homes program for consideration, which would run for two years and provide free ceiling insulation and installation for Australian owner-occupiers.160

6.6.9 That program came before the SPBC for its 27 January 2009 meeting. At that meeting, SPBC discussed ‘Energy Efficiency’. It was recommended that the SPBC agree to the Energy Efficient Homes program as outlined in associated papers, ‘with the final design to be settled between the Prime Minister, the Treasurer, the Minister for Finance and Deregulation and the Minister for the Environment, Heritage and the Arts prior to announcement’. The program as presented was that insulation would be installed at no cost, that there would be a call centre through which householders would register their interest and a request be sent to the ‘delivery entity’, that there be up to 15 ‘implementation regions’, that a ‘lead delivery entity’ be selected through a tender process to ‘ensure that the assistance can be delivered consistently across the region’ and that bulk procurement and sourcing could occur at the regional level. It was said that a compliance program would be implemented to prevent fraud (no mention was made of safety or of ensuring the proper installation of insulation). It was then recommended that program design be finalised only after further consultation with industry to ensure delivery targets could be met.161

6.6.10 Under the heading ‘Risks’, reference was made to the significant increase in installations to be expected. It was said that one option for mitigating this risk was to implement the program over five years instead of two. This, it was said, ‘would provide more time for the industry to adjust and to make longer term business decisions’. It was then said:

A rapid expansion of the industry to meet a two year program creates risks if the industry subsequently needs to shed the substantial workforce required to deliver the two years option when demand is subsequently reduced. A medium-term path for the industry may need to be considered prior to the termination of the program.

6.6.11 Such a risk, it will be seen in Chapter 13, materialised when the HIP was brought to an end early, after just one year of operation.

6.6.12 Other risks were identified, but they related not to safety, but to costs increasing, and the possibility of a need for draught-proofing so as not to limit the effectiveness of insulation.162 _{‘Implementation risks’ were said to include cost, delivery integration and}

the following:

Delivery Technical –Medium

There are significant risks associated with tight timeframes for the

implementation of major programs. Tight procurement oversight and regular reporting will be required to meet the delivery schedule outlined in the package—namely aiming for a 1 July 2009 commencement date.163

160 AGS.002.131.0018, 3. 161 AGS.002.131.0018, 2-3. 162 AGS.002.131.0018, 5. 163 AGS.002.131.0018, 9.

6.6.13 The SPBC papers recorded that the Insulation Council of Australia and New Zealand (ICANZ) and Fletcher Insulation had indicated that domestic production of insulation materials could be increased by perhaps 40%, that increasing plant size would take 18 months to two years and that ‘meeting the proposed volumes [is] potentially feasible, but only through imports as the capacity of domestic industry would be quickly exhausted’. ICANZ is recorded as having said that training would take one day and that no specialist skills are required.164

6.6.14 One outcome of this meeting, it would seem, is that the SPBC requested officials develop an option for the Energy Efficient Homes program which would run for 5 years.165

6.6.15 Mr Tune, on about 27 January 2009, requested that the cap be at $1,600.166 _{He could}

not recall why that figure was chosen.

6.6.16 On 28 January 2009, the SPBC considered submissions regarding the EEHP including the HIP. It was resolved that there ought be an ‘interim arrangement’ providing rebates up to a maximum of $1600 from the day on which the HIP was announced to 1 July 2009, with the details of that program to be settled between PM&C and DEWHA. The final design was to be settled between the Treasurer, Finance Minister Mr Tanner, Mr Garrett and Mr Rudd before announcement. It is not clear that this ever occurred. The papers for that meeting include two alternatives for the program: one for a two-year duration, and the other for one of a five-year duration. The cap proposed was $1,600. The five-year option was said to allow ‘greater use of domestically manufactured insulation and provide longer-term benefits to the industry’.167

6.6.17 There is a minute of the SPBC decision of 28 January 2009168 _{which reads as follows:}

6.6.17.1 The Committee noted the papers prepared by PM&C titled:

6.6.17.1.1 Energy Efficient Homes Package of 27 January 2009; and 6.6.17.1.2 Energy Efficient Homes Package of 28 January 2009

(‘the paper’)

6.6.17.2 The Committee agreed to the Energy Efficient Homes program (EEHP): 6.6.17.2.1 as outlined in Attachment A to the Paper …

6.6.17.3 The Committee also agreed that officials meet with Australian insulation manufacturers prior to finalisation of the EEHP design to explore their capacity to expand supply and ensure delivery targets can be met.

6.6.17.4 The Committee further agreed that the final design of the EEHP be settled between Mr Rudd, the Treasurer, the Minister for Finance and Deregulation and the Minister for the Environment, Heritage and the Arts (‘the Minister’) prior to announcement…

6.6.18 On 3 February 2009, the full Cabinet received an oral briefing from Mr Rudd on the Nation Building and Jobs Plan and agreed to the Energy Efficient Homes Plan, for which $3.9 billion had been allocated.169 _{As will be seen below, this was the same day that the}

HIP was announced.

164 AGS.002.131.0018, 12 165 AGS.002.131.0208, 3.

166 Statement of Tune at [4], STA.001.092.0003, 15 May 2014; AGS.002.078.0600, 1. 167 AGS.002.131.0208, 4.

168 AGS.002.131.0208, 17-18. 169 AGS.002.131.0074, 1.