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Feb 24, 2010

Risk and Incompetence in an Insulated Media

Garrett should resign over his bungled scheme that ignored warnings from Minter Ellison and which ultimately caused the deaths of four people and has increased rapidly the c

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Garrett should resign over his bungled scheme that ignored warnings from Minter Ellison and which ultimately caused the deaths of four people and has increased rapidly the chances of tens of thousands of homes burning down.

That, in a nutshell, is the line the mainstream media in this country has pursued for nearly a week – with The Australian taking the lead role and the rest of the MSM herd dutifully following them down into what we now know is a cul-de-sac of complete and utter incompetence. There is simply no other way to put what has gone on here.

Let us be clear – the insulation scheme was only shut down after the Minter Ellison document became a pivotal issue, suggesting that Garrett not only failed to read a document back in April 2009 that seemingly highlighted every problem – both real and imagined (but more on that later) – that has come to pass in the scheme, but that if he had read the Minter Ellison document and acted upon it, if he had followed the advice of Minter Ellison, homes would not have burned, people would not have died, the scheme would not have failed. It was definitive proof, so the media narrative went,  that Garrett was a poster boy for ministerial incompetence writ large.

It was this Minter Ellison document and the plague like, hysterical misreporting of its contents, that forced public opinion to run so strongly against Garrett (with his approval rating of 28%) and the government that they were forced to shut it down – just as all governments shut down medium sized programs when public opinion gets beyond rational; witness the politicians superannuation scheme in 2004 and the Howard fuel excise indexation in 2001.

If the Minter Ellison document was reported accurately, the program would still be operational.

This scheme was shut down and the jobs of at least 5000 people and the immediate living standards of another 12-15 thousand family members got sent down the toilet because journalists were incompetent. On their heads rests the economic consequences of these ostensibly low income, lowest skilled people getting sacked.

This Minter Ellison Risk Register was a report that, according to The Australian, “warned of an “extreme risk” of house fires, fraud and poor quality installations”. On top of these frightening risks, The Australian stated that, “ Peter Garrett was kept in the dark by his department about warnings it received that the home insulation scheme should be delayed for three months because of “extreme risks”.

The only problem here is that this – and I mean all of this – is complete and utter bullshit.

But before we get to what the risk assessment actually says – because, let’s be frank, you won’t see that written anywhere in The Australian – what is worth mentioning first is the nature of the report for some context.

Garrett’s department commissioned one-stop consulting shop Minter Ellison for a risk assessment on the insulation program, a report it delivered to the department in April 2009. This report only cost the department $28,985. About now, some of you will be thinking “29K!! Outrageous!!” – but far from this being an expensive report, it’s actually very cheap in the broader scheme of government consulting work.

That cheap price reflects the very nature of the report’s contents (and goes to the heart of why top level public servants leave the PS for consulting work!). It wasn’t a comprehensive “The Final Word” style report – it was basically an appraisal of the risks that might pop up when it comes to rolling out the insulation program, a rough estimate on the costs that may be involved from those risks should they eventuate, and a short evaluation of the risk mitigation programs that the government had in place for each area as of April 2009.

In Question Time on Tuesday, it was revealed that the report took less than six days to produce – highlighting the serious but not definitive nature of the document. If Minter Ellison spent more than 50 hours on this report, I will eat my laptop. So the report isn’t comprehensive – nor is it meant to be – it’s simply a professional brainstorm done up into a nice report with some smart people in charge of the whiteboard and the pens.

That is what $29K buys in the world of the modern consultant.

What the MSM has been suggesting is that not only does the continuation of a multi-billion dollar program – the insulation rollout – pivot on the contents of a $29K report of programmatic risk, but that Peter Garret’s very tenure as Minister pivots on whether or not he actually read the thing.

That is pretty much one of the more ludicrous ideas you’ll ever come across – a multi billion dollar program and a Ministers tenure being determined by a report smaller than your average miscellaneous expenses budget – but none-the-less, this is The Australian and the herd of the mainstream media we’re talking about here. Who really gets surprised these days when you find that your already low expectations are still a little on the high side with this lot?

As the Senate committee into this demonstrated clearly (transcript available here soon),when this program was being developed by the Dept, they went out and collected a substantial array of information and policy advice to assist not only the Minister in the rollout of the program, but also to assist with the department’s own preparedness for implementing the policy. The department undertook internal research, they consulted widely with industry and other relevant government organisations like the ACCC and departments like DEEWR. They also engaged with third party specialists – one of which was Minter Ellison.

The department then collated and condensed this wide array of information from a wider array of sources into a set of advice briefs for the Minister. You see, that’s actually what government departments do. From the idiot commentary in the press you’d think that Departments should be abolished since the Minister apparently does everything – although as Bernard Keane regularly points out in Crikey, journalists failing Public Service Operations 101 is neither new nor irregular.

The Minter Ellison report was but one, small piece of info that went into this mix that made up the advice the Department provided to Garrett.

That gets us on to the actual Risk Register document itself. You can download it here, and use the explanatory cover email available here as a key to some of the abbreviations in the register. Remember, this document isn’t the be all and end all, it is but one piece of information the Department was using to identify areas of risk that needed to be managed. Also remember that the role of this report is to identify as many risks as possible.

When Minter Ellison talks about risk, they mean a professional definition of risk, not a literal definition of risk that you might find in a dictionary. That is something that’s important to keep in your though orbit as you go through the document.

The first thing to notice is that nowhere in this document does Minter Ellison warn of the dangers of workplace deaths or worker safety. The reason is obvious – existing generic workplace regulations were adequate enough to prevent deaths as long as employers abided by existing law. In the Risk Register, Minter Ellison did not identify any additional systemic risk of workplace deaths and safety becoming an issue.

Next up, you’ll notice that there are 19 specific and separate issues where risk factors are identified, the inherent nature of that risk is described, the risk mitigation strategies in the program as of April 2009 are rated on their strength and a rating is given on whether the risk is tolerable or not for each specific area.

As of April 2009, there were only 3 areas where the risk was not considered to be tolerable – as in, further strategies had to be developed in order to expect a successful outcome for that particular area of the program. These specific areas were:

Area 2. Procurement/Licensing. This specific area was about how licenses were going to be provided and as of April it had yet to be fully determined by the department . Similarly, business model planning was at the time being undertaken by KPMG over procurement issues.

Minter Ellison recommended for this specific area that delaying the program to September or starting a partial rollout with Sydney/Melbourne metro areas first was an option. The consequences of getting this wrong was that there would be delays when it came to getting insulation into ceilings – to the point where it may not occur at all. This option of delaying the program was based on what had occurred up to April 2009. Between April and July, the Department obviously developed procurement/licensing policy appropriately, since – and the pudding is in the eating – insulation was rolled out into ceilings with no major delays.

Area 3. Time. This was specifically about the internal mechanisms of the administration of the policy and how the time lines being so tight, there was a concern that the management and the actual policy administrators would be too green to deliver the policy out the door.

Between April and July of 2009, we know the Department mitigated these risks successfully as, again, the proof of the pudding is in the eating. The program pushed insulation out the door on the deadline date of July.

Area 7.Political. This was specifically about the government’s public relations and risks to their political standing and had absolutely nothing to do with the actual program of getting insulation into ceilings. It was all about government communications management with the press and other people that might want to have a whinge about something.

Every other area, including installation quality and compliance, fraud, legal, regulation, industry capacity, outcomes (actual), delivery, take-up, training mechanisms and product quality were all given a tolerable risk rating by Minter Ellison.

They were all given a risk approval by Minter Ellison.

Let me say that again, every one of those areas just mentioned were all given a risk tick.

What you have been reading from the press is ill-informed, pig-ignorant bullshit. Let’s go to a few examples.

Dennis Shanahan

Garrett led a department charged by cabinet with implementing a scheme for which it was not equipped, and which was warned there would be fraud, fires, waste and accidents if it did not delay the start of the scheme by at least three months.

No – that is a totally and utterly incorrect. Minter Ellison did not say that fraud, fire and waste would occur if the program was not delayed, they stated clearly (although obviously not clear enough for some!) that delaying the program was an option to guarantee procurement/licensing issues were fully developed and for internal administration to be effectively put in place. However, those issues were fully developed between April and July, such that we saw the program rollout on time.

Minter Ellison said the risk of fraud, fire and waste was acceptable, and didn’t mention “accidents” in the risk register at all! 5 arse-hats, go stand in the corner Dennis .

Courier Mail Editorial

This document, which is more than 10 months old, was drawn up by a major Australian law firm, Minter Ellison, and was comprehensive enough to foretell just about every disaster that has befallen Mr Garrett’s housing insulation program

That was its job – to predict every foreseeable risk. It also stated the risks were acceptable in 16 of 19 areas, and in those 3 that were not acceptable at the time, the department successfully met its deadline for rollout, demonstrating that the risk was mitigated.

Andrew Bolt

Garrett’s own department commissioned a report from Minter Ellison Consulting last year on whether its free-insulation scheme would work, and in April last year the report was sent to both Garrett and Rudd’s office, warning the scheme was in fact dangerous and could waste hundreds of millions of dollars.

Minter Ellison never anywhere in the report stated that the scheme was dangerous. We’d get you to wear the dunce cap but there’s only so many a single person can have on their head at a given time.

ABC Online:

Mr Garrett is under pressure to reveal when he was first briefed about the Minter Ellison safety risk assessment, which warned of shonky installation and house fires

The report did not warn of shonky installation and house fires, both of those areas got the risk assessment tick.

The Oz

The advice from top-tier law firm Minter Ellison outlined strategies to tackle serious risks in the program. It warned that the government’s timeline was too tight for the program to be delivered in a “properly controlled way” and said the Environment Department was ill-equipped to roll out such a massive program.

What it actually said – specifically on the issue of time, was:  “time available to develop and deliver the program in a properly controlled way may be inadequate

Compare that to the dross above: “It warned that the government’s timeline was too tight for the program to be delivered in a “properly controlled way

Anyway, that’s enough of these fools – let’s now move on to looking at some actual numbers suggesting that far from the insulation program being the cause of a dramatic increase in hell, fire and brimstone breaking out in the nations ceilings, it actually reduced the rate of installation caused fires. Yes, you read that right. Follow me to the next post.

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59 comments

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59 thoughts on “Risk and Incompetence in an Insulated Media

  1. revolution909

    Now we see the rorting become an issue in the media….For those of you who have read my previous posts you may have deducted that I have some association with the program. I’ll be taking your questions all week.

  2. Voices of Reason – Pure Poison

    […] Possum on the insulation scheme: As the Senate committee into this demonstrated clearly (transcript available here soon),when this program was being developed by the Dept, they went out and collected a substantial array of information and policy advice to assist not only the Minister in the rollout of the program, but also to assist with the department’s own preparedness for implementing the policy. The department undertook internal research, they consulted widely with industry and other relevant government organisations like the ACCC and departments like DEEWR. They also engaged with third party specialists – one of which was Minter Ellison. […]

  3. revolution909

    I wouldn’t get too hung up on interpretations (or mis-interpretations for that matter) of the ME report. Whatever analysis the department did immediately prior to the shut down of the program indicated (when extrapolated) possible issues surrounding at least 10% of installations. As a side note, the number of de-registered installers is actually 100s of times larger than the list published on the department web site – obviously not a good look….

  4. jenauthor

    @ Poss ‘Kruk and Mrdak pretty much destroyed all of the lines that have currently been run about the Minters report.’

    The problem, as has been the theme of most of these media discussions, is that the truth of that isn’t being reported.

  5. WTF Government. - Perth Street Bikes

    […] deaths – poor OH&S practices caused that. Unfortunately, work-place deaths occur every year. Poor journalism is as much to answer as anything else here! Did the insulation program actually reduce fire risk? […]

  6. moo

    Possum, whilst this is a very good read and highlights a lot of crap being uttered about the program, one of my major problem with it was how Peter Garrett said he’d fix it. What was reported was that PG’s department would make the installers carry out checks of their own work in the homes that may have unsafe insulation.

    This would be similar to a teacher letting his/her students mark their own test papers when there were cheats in the class. What reasons do the insulation installers have to actually search for and remedy their mistakes and how confident can homeowners be that the same installers that installed dodgy insulation have the skills to fix their mistakes? In my mind very little.

    It seems rediculous to think that PG would not have brought about an independent team to check up on the possibly badly installed insulation, as opposed to the installers which in part caused this mess.

  7. revolution909

    You are correct – the audit process really only began to ramp up in late Oct, mainly in response to consumer complaints and negative press. The l targeting and methodology of the general auditing procedures remains a mystery. I would hazard that audits were more concerned with determining that jobs had been done at all (ie. not fabricated and claimed on line) as opposed to assessing workmanship/value for money.

  8. Tri$tan

    BOOM! Nail on the head revolution909.

    The oversight by the government laid the ground work allowing installations to be dodgy.

    Yep, the installers themselves did the work – but it could likely have been anticipated and prevented.

    The argument is if they attempted to do this – without the benefit of hindsight – what they did would have seemed appropriate.

    However, seeing a company on the 7:30 report who never had one of their installations audited… there seems to be a lack of ovesight over the program and (perhaps) a general feeling that ‘that’s not our problem’.

  9. revolution909

    …continued

    I would suggest reading the Installer Advices published on DEWHA’s website to track the re-active nature of the department’s responses to various issues.
    One interesting example is the short period in October when the rebate for rental properties was brought in line with that for owner occupied properties – an increase from $1200 to $1600 – only for the rebate to be dropped back to $1200 for all properties a few weeks later.
    It is however the rorting, I would suggest that finally brought about the demise of the program – in almost all cases installers claimed the maximum rebate for properties – irrespective of of the area insulated, the product or the difficulty of the work. This was made particularly easy because claims were made on-line. I doubt these figures will be released, but they would certainly make for interesting statistical analysis – and probably wouldn’t indicate effective or efficient spending of public funds.

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