Involvement of Mr Simon Co

7.12.14 Mr Simon Cox was seconded from the Department of Finance and Deregulation to the OCG on about 23 February 2009. His understanding of the role was to assist with developing a project plan for the OCG’s oversight of the Nation Building and Jobs Plan.319

He had some input in to the reporting that took place up, ultimately, to the Prime Minister, via Mr Mrdak. The same reports are likely to have been sent to Mr Arbib.320

7.12.15 One of Mr Cox’s first tasks was to ascertain if the National Code of Practice for the Construction Industry (‘the Code’) applied to the HIP. He learned it did not, something he described in an email as ‘good news’321 _{because had it done so, it would have halted}

the HIP.322

7.12.16 Mr Cox thought that the Code was concerned with Unions and so forth . He was wrong, but, as Mr Mrdak explained, that Code would have imposed occupational health and safety management requirements. He accepted that had it been applicable it would have required a lot of investment by firms to get accreditation. Mr Mrdak was particularly conscious of the time involved, noting in his evidence that new regulation involves a period of time to get in place, as well as the intent of the coverage and how application of the Code would affect the entry into the industry.323

7.12.17 Mr Cox recalls there being three concerns with the brokerage model: timing (getting it ready for the 1 July start date which the government had committed to); concerns within the OCG that smaller companies have access and not just the bigger ones; giving the consumer the choice who came into their house and what product they were able to get.324 _{He had some recollection also of ‘legal concerns’ about a contract between the}

Commonwealth and the provider.325

7.12.18 Mr Cox then prepared a different delivery model. He said that the business model was in a state of flux at the time, that there was a DEWHA preferred model and multiple hybrid models, but does not recall being instructed to do so. The model he prepared was sent to Andrew Wilson and Martin Hoffman under cover of an email stating:

Over the past few days I have turned my mind to what a market-driven approach may look like for the Energy Efficient Homes Package. (particularly focussing on the Homeowner Insulation Program)

319 Statement of Cox at [5],[6], STA.001.007.0001, 21March 2014; Transcript (25 March 2014) 747 (S Cox). 320 Transcript (25 March 2014) 748 (S Cox).

321 Statement of Cox at [Annexure C], STA.001.007.0001, 21 March 2014. 322 Transcript (25 March 2014) 755 (S Cox); Transcript (25 March 2014) 746 (S Cox). 323 Transcript (27 March 2014) 1067 (M Mrdak).

324 Transcript (25 March 2014) 777 (S Cox). 325 Transcript (25 March 2014) 778 (S Cox).

The attached paper contains my thoughts on the matter. It is obviously not complete, but I think it contains a shell of an idea that would be worthy of consideration. For discussion.326

7.12.19 The paper itself was entitled ‘Potential Business Model for Rollout of the Full Program- Working Paper’.327 _{The ‘methodology’ was stated as being:}

This scheme is designed to allow market forces to work and to deliver the most efficiency/effectiveness without providing a centralised solution.

7.12.20 It suggested, on the topic of ‘authorised installers’, that a list of those authorised to install products under the scheme be compiled. Cox stated:

Prior to the commencement of the full rollout DEWHA in conjunction with States and Territories (where applicable) and the contracted processing centre (if available) will compile a list of installers who are authorised to install insulation under this scheme.

This will reduce the number of dodgy installers, particularly unqualified new entrants.

7.12.21 Thus, even Mr Cox still envisaged a role for the States and Territories and a contracted processing centre. Importantly, Mr Cox saw the need for training as an important requirement if there was going to be a market-driven model. He said:

Training for New Entrants”

“Minimum standards should apply to any installers wishing to be included on the authorised list. DEWHA to work with DWEEWR to implement a training regime that new entrants (and potentially existing suppliers) must meet before they can be included on the list.

7.12.22 This important safeguard was subsequently removed, as discussed in Chapter 8 of this report.

7.12.23 On 29 March, Martin Hoffman wrote to Mr Mrdak and Mr Andrew Wilson:

I was planning to call the KPMG consultant Monday morning to ensure they are on track. Will also call this Minters person as well for the same reason. Simon Cox has done a good paper on Friday pm re how we see it best working. Will try and get traction with that on Monday. What do you need for Tuesday meeting?328

7.12.24 Mr Mrdak responded:

Thanks Martin—let’s run through our best fit option and get a note ready for sending to Arbib with key issues/questions for him to consider for the meeting with DEWHA.329

7.12.25 A PowerPoint presentation was prepared for the meeting with DEWHA officers and Mr Arbib. It sets out the ’PM&C proposed delivery model‘330 _{It was revised by Mr Hoffman}

before presentation. 326 AGS.002.030.1116, 1. 327 AGS.002.030.1117, 1-3. 328 AGS.002.008.1239, 1. 329 AGS.002.008.3375, 1. 330 AGS.002.008.0646, 1-5.

7.12.26 In the meantime a meeting took place between Mr Garrett and Secretary Kruk about a wide range of matters but including the implementation of the energy efficiency programs. The meeting took place on 30 March. Malcolm Thompson made a note of the meeting that relevantly provides:

Energy Efficiency: Secretary spoke to recent risk assessment and business model work undertaken for and by REED on the insulation programs; Minister agreed the need for a full time project manager; also noted the need for a hybrid delivery model to help manage risk and provide a contingency if one approach was not working; Secretary noted that some States have good roll-out models and that we should use these where they exist.331

7.12.27 Exactly why the Minister’s exhortation was never pressed was not explained in evidence.