Member for Isaacs

Home Insulation Joint Press Conference Parliament House 2 March 2011

02 March 2011


Minister for Climate Change and Energy Efficiency

Cabinet Secretary
Parliamentary Secretary for Climate Change and Energy Efficiency

3 March 2011


GREG COMBET: Thanks very much for coming. I’m joined by Parliamentary Secretary and
Cabinet Secretary Mark Dreyfus who has responsibility with me for the wind up of the home
insulation program. We put a release out earlier today in relation to some operations that
have been taking place in relation to the home insulation program. But firstly I just want to
refer back to the statement that I made to Parliament on 10 March last year when I indicated
that one of the key objectives that I had as the minister responsible for winding down the
home insulation program was to identify and put in place processes that dealt with issues of
non-compliance under the program and of alleged fraud.

I also said at that time that the Government would put in place measures to rigorously pursue
those individuals and companies that had engaged in potentially fraudulent behaviour. That
is why the Government then went on to request the Auditor-General to conduct an
investigation into the home insulation program and that is why I, as minister, also spoke to my
department about the engagement of a forensic auditor to investigate how fraud may have
been perpetrated under the home insulation program.

I can confirm, of course, that yesterday a number of activities were undertaken aimed at
targeting those who are alleged to have committed serious fraud under the Government’s
home insulation program.

This activity involved a joint operation between the Australian Federal Police, the Department
of Climate Change and Energy Efficiency in which 35 search warrants were executed across
three states. And as the Federal Police have confirmed, 22 of those search warrants were
executed in New South Wales, three in Queensland and 10 in Victoria.

The activities were focused on Brisbane, Sydney and Melbourne in those States. There were a
large contingent of AFP and Department of Climate officers involved as well as some state
police. During the execution of the search warrants a large amount of data was seized in the
form of documents but also computers.

What will happen from here is that forensic analysis will take place in relation to all of the
data that has been seized and we expect and anticipate that that is going to take some
months. There is a lot of material yet to be worked through.

Over the last twenty-four hours some interviews with those associated with the properties
where the search warrants were executed have also been interviewed. To date, at this time,
no persons have been charged with any offences relating to the investigations. Responsibility
for continuing the investigations and evaluating other data, as I said, is anticipated to take
some time.

Now, concurrently, the Department of Climate Change has launched a comprehensive debt
recovery program aimed at recovering all debt owed from fraudulent and non-compliant
activities. Around two-thousand letters have now been sent to affected insulation installers
putting them on notice that they have thirty days to repay their debts.

Yesterday’s activities were the direct result of a lot of painstaking and difficult work
undertaken by the Department of Climate Change and the forensic auditors who were
engaged and provided by KPMG. All of that work over the last twelve months has enabled the
AFP and the Department to conduct the operations that are now well and truly under way
and I’m advised, of course, that as all of those investigations are continuing it’s not
appropriate to be making further comment on specific details at this stage. But, of course, it
is our intention that once the investigations are completed the Government will release the
relevant information. So there will be some limitations I will have in answering your
questions but that is the information that we can provide at this stage.

REPORTER: So Minister, just to clarify, did the investigation start in March shortly after your
parliamentary speech?

GREG COMBET: What happened after my speech to Parliament on 10 March last year is that
the Government requested the Auditor-General to undertake an audit of the home insulation
program and, of course, the Auditor-General reported on that some months ago. In addition,
the Department of Climate Change engaged KPMG to conduct a forensic audit of the program
internally to identify instances of non-compliance and potential fraud.

That information, of course, has been thoroughly assessed by the AFP in partnership with
officers of the Department of Climate Change and that has led to the operations that were
conducted yesterday.

REPORTER: Minister, the two thousand letters that have been sent out, how much money do
those two-thousand letters relate to?

GREG COMBET: That’s not something that it would be appropriate for us to comment on at
this stage because it is a material matter under the investigation. But, as I said, once the
investigations are completed at an appropriate point in time we will release information of
that nature.

REPORTER: Is it possible to put a monetary figure on the non-compliance and the potential
fraud and what’s your expectation of how much of that money will you be able to recover for
the Commonwealth?

GREG COMBET: I think I can’t say much more than my previous answer but you would have to
appreciate too that with the data that has been gathered as a result of the execution of the
search warrants there will be, you know, an evaluation of the extent to which non-compliance
and fraud has been undertaken.

REPORTER: Minister, I think the other side of that coin - Minister, you talk about the
legitimate insulators - I’ve been speaking to the industry this afternoon and these people are
really hurting. They’re struggling to get - they cannot get money out of the Department.
From what I’ve heard, a lot of these people are facing bankruptcy now. What’s your view of
that situation?

GREG COMBET: I think there are something in the order of around twenty thousand claims
out of a total of pretty much 1.2-million claims that were made under the home insulation
program. Now, it’s a while since I re-looked at those figures but around twenty-thousand I
think is the number - and Mr Dreyfus will correct me if I’m wrong - the Department is
withholding payment for and we’re withholding those payments for good reasons.

REPORTER: Minister, when do you think we can expect to see any charges or arrests made?

GREG COMBET: Well, I can’t speculate about that and, of course, we’re not directly involved
in the investigation.

REPORTER: Minister, do you think there’ll be further searches in other states as well or…

GREG COMBET: Well, of course, we’re not only not in a position to assess that, at this point in
time, but it wouldn’t be appropriate for me to speculate about it.

REPORTER: Minister, is the investigation looking at the involvement or alleged involvement of
organised crime in the home insulation sector? Is some of this fraud potentially the result of
organised crime?

GREG COMBET: Again, I apologise, but I’m not in a position to speculate about who or what
or may be involved in these matters because what is very important is that we allow the
investigations to continue to a point where if charges can be contemplated then, that they
are, and we do not want to do or say anything in any way that may prejudice the process that
has to be followed.

REPORTER: Minister, in the release it referred to unscrupulous operators. Now, by that, do
you mean insulation installers, insulation suppliers or are there potentially householders who
have signed off on forms who might be party to some of these frauds that you’re

GREG COMBET: Well, we’re referring to unscrupulous operators but, by that reference,
principally we are referring to installers who may have been registered under the home
insulation program.

REPORTER: Do you expect that there will be any further search warrants carried out?

GREG COMBET: Well, I can’t speculate about that I’m sorry.

REPORTER: As a former trade union leader, how do you feel about all the job losses in this
industry with those companies that did go under? And a lot of those people, I’m told, still
don’t have jobs; didn’t get jobs back.

GREG COMBET: I don’t think you need to be a former trade union leader to have concern
about that but you will also recall that we put in place a number of assistance programs as
part of the wind down of the home insulation program to try and deal with the fallout from it
and to support people in a process of transition.

REPORTER: How long do you think it will be before this is all done and dusted? Are we
looking at a timeframe of up to several years?

GREG COMBET: Well, again, I can’t speculate about that. There’s a lot of data that now has to
be evaluated principally by officers of the Department of Climate Change but along with the
AFP and I can’t speculate about how long that may take.

REPORTER: On another issue, if I could, to do with the carbon pricing strategy, you’ve
referred to the need to potentially phase in certain sectors into the scheme. On
compensation, is it possible you’re likely to stagger the phase out of compensation to
particular sectors as well?

GREG COMBET: You’ll forgive me if I repeat an answer I’ve given to a number of questions of
that nature and that is that having announced the framework for the design of a carbon price
mechanism, the detailed work is ahead of us and there’s a lot of discussion to be had with all
of the interested parties and stakeholders and that will answer those questions when we’ve
completed that process. Thank you very much.