Mark Dreyfus MP

Member for Isaacs
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Home Insulation Safety Plan - update

18 October 2010

On Friday the Auditor General released his report into the Home Insulation Program (HIP) that was produced
in response to a request by the then Minister Assisting the Minister for Climate Change, Greg Combet, on 3
March this year.

THE HON GREG COMBET AM MP
MINISTER FOR CLIMATE CHANGE AND ENERGY EFFICIENCY

THE HON MARK DREYFUS QC MP
PARLIAMENTARY SECRETARY FOR CLIMATE CHANGE AND ENERGY EFFICIENCY

JOINT MEDIA RELEASE

Home Insulation Safety Plan - update

On Friday the Auditor General released his report into the Home Insulation Program (HIP) that was produced
in response to a request by the then Minister Assisting the Minister for Climate Change, Greg Combet, on 3
March this year.

The release of the Auditor General’s report provides an opportunity for the Government to report on progress
in winding down the program and remediating legacy issues.

As outlined by Minister Combet earlier this year the key elements of the Government’s remediation program
are:

  • The Home Insulation Safety Program (HISP)
  • The Foil Insulation Safety Program (FISP)
  • Industry Assistance and Payments
  • Strong Fraud and Compliance Measures

Over the last seven months, the Government has made significant progress against these objectives.
However, much work remains to be done.

The Parliamentary Secretary for Climate Change and Energy Efficiency, Mr Mark Dreyfus, has assumed
responsibility for the winding down of the program and is working closely with Mr Combet on these issues.

Home Insulation Safety Program (HISP)
Under the HISP, safety inspections of at least 150,000 homes that had non-foil insulation installed under the
now terminated Home Insulation Program are being carried out.

These inspections are targeted at those homes that are most likely to have safety issues. If an ongoing risk
assessment indicates that more houses should be inspected, they will be.

In addition to these inspections, any household that has safety concerns with installations under the HIP can
request an inspection through the safety hotline – 131 792. These inspections are being performed in
addition to the minimum of 150,000 homes.

The HISP is being managed by PricewaterhouseCoopers (PwC). PwC has engaged subcontractors to assist
with the inspection program including CSR-Bradford and UGL Services for inspections and safety
remediation work.

UGL Services is engaging a number of reputable small to medium sized businesses, including insulation
installers, to assist with this work.

The Government has now completed or arranged at a time convenient to households around 55,000
inspections of non-foil installations.

Foil Insulation Safety Program (FISP)
Under the FISP over 50,000 householders who had foil insulation installed are being offered a choice, based
on the advice of a qualified electrician, to have their foil insulation removed or safety switches installed.

The FISP is also being managed by Pricewaterhousewcoopers who have engaged UGL services to
oversight the inspection process.

The Government has now completed or arranged at a time convenient to households around 40,000
inspections of foil installations.

As at 15 October, 46 per cent of householders had foil removed, and a further 40 per cent of householders
have had safety switches installed. 14 per cent have had inspections only.

The Department estimates that at current projections, foil inspections will largely be completed by Christmas
this year.

Release of Inspection Results
The Government understands the need for the inspection programs to be transparent and accountable to the
community.

The Government is already producing a monthly public report on the Department’s website that details:

  • The progress of the both the HISP and FISP including the number of inspections undertaken ;
    The number, location (by State) and type of fire incidents that have been associated with the Home
    Insulation Program;
  • The progress of outstanding payments that are to be made to individuals and businesses; and
  • Information about the industry assistance packages.

The Government and the public need to have ongoing confidence that the inspection programs are achieving
their goals.

Therefore, the Government has commissioned CSIRO to assist by conducting a statistical analysis of the
inspection data to inform future inspections.

In addition, the Government has asked the Department to commission a leading independent internationally
recognised consultancy firm to carry out an analysis of the safety inspection programs in order to provide a
further assessment of the inspection program.

Together, the inspections results data, the work conducted by the CSIRO, and the report of the consultancy
firm will support the Government’s future decisions on the safety inspection programs.

When all of this work has been considered by the Government it will be released publicly. A considered
release of this information will provide the public with confidence in the inspection programs.

The Government has taken the decision to not release data concerning non-foil safety inspection results at
this stage of the inspection process.

The reasons that the Government has taken this decision include:

  • The fact that the non-foil inspections have not been a random sample and therefore are not
    representative of potential issues across the HIP;
  • The non-foil inspections are being targeted according to a risk assessment, for example businesses that
    have been associated with non-compliance or fires are being targeted, rather than installations of
    businesses that have no compliance issues;
  • The release of the results of the targeted, risk assessed inspections would be misleading concerning the
    incidence and type of safety concerns and potentially therefore cause unnecessary apprehension and be
    open to misrepresentation:
  • For these reasons the results could also generate further disruption in the insulation industry; and
  • The Government’s advice is that stability in the insulation industry and the conduct of the inspection
    programs is of primary concern for the successful mitigation of safety issues.

The inspection data is being used to inform future inspections and is also being shared with state and
territory regulatory bodies and law enforcement agencies.

Industry Assistance
The Government announced on 6 May the Insulation Industry Assistance Package to support reputable
home ceiling insulation businesses with the costs of holding insulation stock.

Applications closed on 4 June for phase one of the package and 30 July 2010 for additional eligible product
applications.

The Government has received 941 applications for support and has so far approved 631 applications worth
$21.7 million.

Further to these measures, the Commissioner of Taxation is making available a deferral until October 2010
of all payment on activity statements for March to June 2010, including GST, for eligible insulation companies.

Fraud and Non-Compliance
The Home Insulation Program was damaged by the poor conduct and fraudulent behaviour of a number of
companies.

The Department engaged forensic auditors from KPMG in April to undertake an assessment of fraud and non
-compliance under the HIP.

Identified fraud and non-compliance is being investigated and where appropriate, referrals are being made to
the police or other authorities for action.

The Australian Federal Police (AFP) has provided an out posted agent to Department of Climate Change and
Energy Efficiency. This role will provide assistance with a review of Home Insulation Program cases that are
suspected of being fraudulent. Any matters subsequently referred to the AFP for investigation by the
Department under the Home Insulation Program will be assessed individually under the guidelines set within
the AFP Case Categorisation and Prioritisation Model.

Fraud staff have also been investigating a number of matters with a view to recovering debts to the
Commonwealth and undertaking further actions in liaison with other Government authorities.
The Government will continue to exercise discretion in its public commentary on fraud investigations to
ensure future potential prosecutions are not prejudiced.

Scrutiny of the Home Insulation Program
The Government has always been determined to learn lessons from the administration of this program the
administrative and risk management processes applied by the Department of Climate Change and Energy
Efficiency have been significantly improved.

In the interests of transparency and accountability, the Government has supported a number of inquiries into
the Home Insulation Program since its closure on 19 February.

These include the recently completed Auditor General report into the Home Insulation Program and the
review of the Administration of the Home Insulation Program which was conducted by Dr Allan Hawke. Both
of these reviews are publicly available.

In addition to this the Government fully supported the Senate Inquiry into the Home Insulation Program,
making available departmental officers and hundreds of pages of documents for the Committee to make its
deliberations.

The Government notes that the coronial inquiries are still ongoing into the tragic loss of four people that were
associated with the Home Insulation Program. The Government has agreed to provide funding for legal
representation of the families associated with the coronial hearings.

MONDAY, 18 OCTOBER 2010