Transcript of Proceedings - 20 March 2014

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TRANSCRIPT OF PROCEEDINGS

O/N H-358908 5 MR I. HANGER AM QC, Commissioner

ROYAL COMMISSION INTO THE HOME INSULATION PROGRAM 10 BRISBANE

9.30 AM, THURSDAY, 20 MARCH 2014

15 Continued from 19.3.14

MR K.N. WILSON QC appears with MR J.R. HORTON as counsel assisting 20 MR T. HOWE QC appears with MR D. O’DONOVAN for the Commonwealth of Australia MR R.A. PERRY QC appears for family of Matthew Fuller and Rueben Barnes MR M. WINDSOR QC appears with MR M. HEATH for Peter Stewart and 72 others MR T. BRADLEY QC appears with MS A.J. COULTHARD for the State of 25 Queensland MR I. HARVEY appears for Mike Mrdak MR D. BARROW appears for Jessica Wilson MR M.J. WILLIAMS appears for Murray Barnes MR P. BRIDGMAN appears for Kevin Keefe 30 MR S. KEIM QC appears for family of Mitchell Sweeney MS N. JOHNSON appears for Robyn Kruk MR S.A. McLEOD appears for Ross Carter

Copyright in Transcript is owned by the Commonwealth of Australia. Apart from any use permitted under the 35 Copyright Act 1968 you are not permitted to reproduce, adapt, re-transmit or distribute the Transcript material in any form or by any means without seeking prior written approval.

20.3.14 P-325 ©Commonwealth of Australia COMMISSIONER: Yes, Mr Wilson. Let’s proceed.

MR WILSON: Commissioner, the next witness is Ross Malcolm Carter.

5MR S.A. McLEOD: And, Commissioner, my name is McLeod, initials S.A. I appear on behalf of Mr Carter.

COMMISSIONER: Thank you, Mr McLeod.

10MR McLEOD: And as a matter of courtesy, there will be a point during the course of the day that I will need to leave, but Mr Hickey will be looking after Mr Carter’s interests.

20 MR WILSON: Your name is Ross Malcolm Carter?

THE WITNESS: Yes.

25MR WILSON: You are a public servant currently employed in which department?

THE WITNESS: I’m a public servant currently employed in the Clean Energy Regulator.

30MR WILSON: And for the purpose of this inquiry, you signed a statement on 17 March 2014?

THE WITNESS: I did.

35MR WILSON: Do you have a copy of that statement with you?

THE WITNESS: I don’t.

MR WILSON: We will get a copy for you. Just satisfy yourself that the document 40at the front of that folder is the statement signed by you on 17 March.

THE WITNESS: It is.

MR WILSON: Thank you. In paragraph 5 of your statement, you say that you were 45the first assistant secretary responsible for the Renewables and Energy Efficient Division, referred to by the acronym REED.

20.3.14 P-326 R.M. CARTER XN ©Commonwealth of Australia MR WILSON THE WITNESS: Yes.

MR WILSON: Who did you report to?

5THE WITNESS: I reported to a number of deputy secretaries at various times in the department.

MR WILSON: In relation to what became known as the Home Insulation Program, which deputy secretary did you report to? 10 THE WITNESS: It was the acting deputy secretary, Malcolm Forbes.

MR WILSON: There’s no need to lean forward, Mr Carter. That will pick up your voice. Now, prior to 2009, you had been involved in some work for the energy 15efficiency subgroup of the COAG working group on climate change and water?

THE WITNESS: Yes.

MR WILSON: And you were a chair of one of the subgroups; is that right? 20 THE WITNESS: I can’t recall that exactly. I think so.

MR WILSON: Right. And that subgroup put together a number of papers through the course of 2008? 25 THE WITNESS: Yes.

MR WILSON: And did that subgroup do work on home insulation?

30THE WITNESS: Yes.

MR WILSON: To what extent?

THE WITNESS: We were examining a range of energy efficiency measures that 35might be considered by government, and – and of energy efficiency particularly in – in homes insulation is one of the important parts of that.

MR WILSON: As part of that work, did you investigate at all the types of insulation products that were available on the market? 40 THE WITNESS: Not that I recall.

MR WILSON: Or their technical specifications?

45THE WITNESS: Not – not that I recall.

20.3.14 P-327 R.M. CARTER XN ©Commonwealth of Australia MR WILSON MR WILSON: What investigations, then, were you carrying out into the home insulation programs?

THE WITNESS: It was really from – from my perspective, just looking at what 5were sound energy efficiency measures. I wasn’t involved in the technical aspects of those – of those measures.

MR WILSON: So one of the technical measures that was available was home insulation? 10 THE WITNESS: Yes.

MR WILSON: And you didn’t drill down any further than that?

15THE WITNESS: Not – no.

MR WILSON: Did you look at whether or not any program could be introduced for home insulation throughout Australia as part of your work?

20THE WITNESS: We looked at – at a mix of programs and measures. I think the – the Energy Efficiency Task Force and – and, later, the national strategy on energy efficiency looked at a whole suite of measures, and we were, I think, in 2008 looking at – at various treatments for homes, including insulation.

25MR WILSON: What was the Energy Efficiency Task Force?

THE WITNESS: It was a task force that was formed in the Department of Prime Minister and Cabinet to look at – at measures for energy efficiency in the context of both the – of a, I think – a COAG process at that time as well as for the government 30to consider in the context of its own policy deliberations.

MR WILSON: And what involvement, if any, did the Department of Environment have in that task force?

35THE WITNESS: We had quite a lot of involvement. From recollection, we had seconded some officers to that task force, and we were asked to provide various bits of information and analysis into that task group.

MR WILSON: Do you recall the officers who were seconded to that task force? 40 THE WITNESS: No. I don’t recall those.

MR WILSON: Do you recall how many officers were seconded?

45THE WITNESS: No. I don’t recall that.

20.3.14 P-328 R.M. CARTER XN ©Commonwealth of Australia MR WILSON MR WILSON: And throughout the course of 2008, as I said, discussion papers and reports were released by the energy efficiency subgroup?

THE WITNESS: Yes. 5 MR WILSON: And could I just put up on the screen AGS.002.008.0062. Can I show you this document. We might have to do this the old-fashioned way. It’s only a few questions about these things. Is yours tabbed?

10THE WITNESS: Yes. It is.

MR WILSON: Tab 2. And, Commissioner, we’ve been told that we can refer to these documents, so we can put them into the data room in due course.

15COMMISSIONER: Thank you.

MR WILSON: I’m just looking at it in a very superficial way at this stage. That is a discussion paper by the energy efficiency subgroup of March 2008?

20THE WITNESS: Yes.

MR WILSON: And were you involved in the preparation of that document?

THE WITNESS: I don’t recall. 25 MR WILSON: And if we go to page 27 of that document, we can see the treatment that the subgroup gave to energy efficiency treatments for residential buildings.

THE WITNESS: Yes. 30 MR WILSON: And that’s quite a high level, if you like, or policy-focused treatment, as opposed to specific types of programs.

THE WITNESS: Yes. 35 COMMISSIONER: That’s up on the screen now.

MR WILSON: Thank you. And you will see from the index, so that others can follow, the types of things that you were looking at in that discussion paper in early 402008.

THE WITNESS: Yes.

MR WILSON: Can I get you, then, to turn to tab 3 and, for the record, 45AGS.002.008.0007. Is that a copy of the interim report of the energy efficiency subgroup that was prepared and released in May 2008?

MR WILSON: And, again, did you take any role in the preparation of all or part of that report? 5 THE WITNESS: I recall this document going through the energy efficiency subgroup.

MR WILSON: In the Department of Prime Minister and Cabinet or - - - 10 THE WITNESS: No. The energy efficiency subgroup, I think, was a subgroup that I chaired underneath other working groups under COAG. I don’t think it was part of the Energy Efficiency Task Force.

15MR WILSON: So the Energy Efficiency Task Force was situated in Department of Prime Minister and Cabinet.

THE WITNESS: Yes.

20MR WILSON: Beneath that were a number of subgroups.

THE WITNESS: No. That’s not my recollection. My recollection is that the COAG committee structure was separate to the Energy Efficiency Task Force that was located in Prime Minister and Cabinet. It was - - - 25 MR WILSON: And where did the energy efficiency subgroup fit into the scheme of things?

THE WITNESS: It sat underneath the COAG working group on climate change and 30water.

MR WILSON: Thank you. And you will see there that the contents page is up on the screen, and the treatment of measures for residential buildings is dealt with in a couple of pages of the report, at pages 17 and 18. And, again, they’re not specific 35treatments, for example, of household insulation, but rather more policy objectives, things such as the disclosure of - - -

THE WITNESS: In the contents, yes.

40MR WILSON: - - - household energy ratings and things like that. And then, just to round that off, we can bring up AGS.002.008.0121, tab 4 in the folder you have. The final report of that subgroup was presented in August 2008.

THE WITNESS: Yes. 45 MR WILSON: And in section 6 of that report, as appears in the contents page, was the treatment of the residential sector, starting at page 32 of the report - - -

MR WILSON: - - - and finishing on page 39 of the report, with some recommendations. 5 THE WITNESS: Yes.

MR WILSON: Now, correct me if I’m wrong, but I don’t see in there anything that recommends that all households in Australia be insulated. 10 THE WITNESS: No.

MR WILSON: And once that final report was presented, did that end your involvement in that subgroup? 15 THE WITNESS: No. I think that subgroup continued for some time, but I can’t recall.

MR WILSON: Doing what? 20 THE WITNESS: Continuing on the national strategy on energy efficiency.

MR WILSON: And did that involve developing any policy to do with home insulation? 25 THE WITNESS: Not that I recall, within that work.

MR WILSON: Now, then, if I could then take you back to your role within the department. You were the first assistant secretary in charge of the REED. 30 THE WITNESS: Yes.

MR WILSON: Can you explain to the commission the reporting mechanisms, that is, you reported up through an acting deputy secretary, Mr Forbes, to - - - 35 THE WITNESS: Yes.

MR WILSON: - - - the secretary of the department.

40THE WITNESS: Yes. That’s - - -

MR WILSON: Did you have any direct liaison with the Minister without the intervention of either the deputy secretary or secretary?

45THE WITNESS: I met, on occasions through 2008, with the – with the Minister, often in presence of the deputy secretary or secretary.

20.3.14 P-331 R.M. CARTER XN ©Commonwealth of Australia MR WILSON MR WILSON: That was my question. Did you ever meet the Minister – and perhaps we can deal with chunks of time, if you like – up to the end of 2008, not in the presence of the deputy secretary or the secretary?

5THE WITNESS: I can’t recall. I may have been in meetings with the Minister.

MR WILSON: Can you recall the circumstances in which you would have a direct conversation with the Minister which didn’t involve either of those other two office bearers? 10 THE WITNESS: If there was a particular policy issue that the Minister wished to be briefed on, we would occasionally be called up to undertake that briefing.

MR WILSON: And would that also be accompanied by a writing briefing? 15 THE WITNESS: Most often, yes.

MR WILSON: And then we move forward from the beginning of 2009 to, say, 30 June, mid-2009. Do you recall any circumstances in which you would have had 20direct contact with the Minister, absent the deputy secretary or secretary?

THE WITNESS: I can’t recall meeting the Minister in that time.

MR WILSON: Be pretty unusual – it would be pretty unusual for that to occur. 25 THE WITNESS: For me to meet independently with the Minister.

MR WILSON: Yes.

30THE WITNESS: In my experience, it has varied with different Ministers.

MR WILSON: Well, just focus on Minister Garrett.

THE WITNESS: It – my recollection is that in the early part of the government – 35that I met more frequently with the Minister, but that that decreased over time.

MR WILSON: The government was elected in 2007.

THE WITNESS: Yes. 40 MR WILSON: And had it decreased by the end of 2008, that you would have direct contact with the Minister?

THE WITNESS: Yes, it had. 45 MR WILSON: So any meetings that you attended after then would most likely be in the company of either the deputy secretary or the secretary.

20.3.14 P-332 R.M. CARTER XN ©Commonwealth of Australia MR WILSON THE WITNESS: Most likely.

MR WILSON: And was that so continuing on, then, into the second half of 2009 and into 2010? 5 THE WITNESS: Yes. I can’t recall meeting with the Minister in 2009.

MR WILSON: Can we then look the other way, that is, the people that you were in charge of and reporting to you. How did that occur? 10 THE WITNESS: In a range of ways, either informally or through meetings.

MR WILSON: Well, let’s look at the specific case of the home insulation program.

15THE WITNESS: Yes.

MR WILSON: Mr Keefe was a branch head.

THE WITNESS: Yes. 20 MR WILSON: He reported to you.

THE WITNESS: Yes.

25MR WILSON: How did that take place?

THE WITNESS: Mr Keefe and I would meet on a regular basis to discuss issues that were emerging in his – in his space.

30MR WILSON: When you say “meet regularly”, do you mean daily, weekly, monthly?

THE WITNESS: On an as needs basis, but also with regular weekly meetings, and I would also meet with all of my branch heads collectively, I think, on a weekly basis. 35 MR WILSON: So that was a standing arrangement that each of the branch heads and you would meet weekly.

THE WITNESS: I think it was weekly, yes. 40 MR WILSON: And then, apart from that, if an issue arose Mr Keefe would meet with you on an as needs basis.

THE WITNESS: Yes. 45 MR WILSON: What about, then, those officers that were reporting to him, people like Ms Brunoro, Mr Kimber and others?

20.3.14 P-333 R.M. CARTER XN ©Commonwealth of Australia MR WILSON THE WITNESS: I would not meet with them on a regular basis at all.

MR WILSON: Did you ever meet with them directly, in the absence of Mr Keefe?

5THE WITNESS: Not that I can recall.

MR WILSON: Do you recall any circumstances or any occasions on which an officer below the level of Mr Keefe came to you, directly, and reported to you?

10THE WITNESS: Yes. I generally had an open door policy to my staff, so if they wanted to see me they could.

MR WILSON: And then, in terms of documentary material, what reporting to you was there? That is, were individual documents sent to you? Were you sent a 15summary of what had happened during the day or the week or the month? How was that done?

THE WITNESS: I can’t recall.

20MR WILSON: You can’t recall how reports were made to you?

THE WITNESS: Well, no. The – the – I mean on specific work items, sometimes an email or a note would occur or a file minute; sometimes just a conversation.

25MR WILSON: That is, you wouldn’t expect, would you ..... that every email that went to somebody below the level of Mr Keefe would be copied to you?

THE WITNESS: I wouldn’t expect that, no.

30MR WILSON: That would be inundating you. That’s information you didn’t need to know.

THE WITNESS: That’s correct.

35MR WILSON: What about ..... particular pieces of information? And I’m focussing here on the Home Insulation Program. I know you’ve had other responsibilities as well. If a particularly significant piece of information came into the Department, would you expect to be copied into that?

40THE WITNESS: Well, it depends on how the significance was judged. Offices would raise issues up the line if they felt they were very significant, yes.

MR WILSON: Your involvement with the Home Insulation Program began when?

45THE WITNESS: I think on 27 January.

MR WILSON: And how did you become aware of it?

20.3.14 P-334 R.M. CARTER XN ©Commonwealth of Australia MR WILSON THE WITNESS: Ms Wiley-Smith briefed me on – on the work that had been undertaken by her and Ms Brunoro over the proceeding days.

MR WILSON: Had any requests been made to you to permit them to do that work 5for Prime Minister and Cabinet?

THE WITNESS: No. I had been on leave during that period.

MR WILSON: Was it unusual for officers of the Department of Environment to be 10seconded to do that sort of work for another agency?

THE WITNESS: It was not unusual for the Department and Prime Minister and Cabinet to ask for information from – from ..... of departments, no.

15MR WILSON: And how did you become aware on 27 January?

THE WITNESS: I think I caught up with Ms Wiley-Smith when I returned to work and had a conversation with her.

20MR WILSON: And what did she tell you?

THE WITNESS: She told me that they had had an urgent request to provide information on a home insulation initiative and that they had spent a lot of time over the – over the preceding days trying to put that together. 25 MR WILSON: Were you aware at that stage that the program was going to be or envisaged to be given to the Department to manage – the Department of Environment, I should say?

30THE WITNESS: I can’t recall but I would have assumed that.

MR WILSON: So what did you then do to find out what was going on?

THE WITNESS: I can’t recall. 35 MR WILSON: Anything.

THE WITNESS: I – no. I’m afraid I can’t recall what happened in those days.

40MR WILSON: Subsequently, the Home Energy Program – the Home Insulation Program was given to the Department of Environment.

THE WITNESS: Yes, it was.

45MR WILSON: It was a huge task.

THE WITNESS: It was.

20.3.14 P-335 R.M. CARTER XN ©Commonwealth of Australia MR WILSON MR WILSON: You can’t remember at all any inquiries you made to find out what was going to be involved in that work?

THE WITNESS: Well, I had spoken to Ms Wiley-Smith about the submission that 5had been made. I don’t recall seeing any further detail other than what she appraised me of until – until the Prime Minister’s announcement.

MR WILSON: Would she give you copies of the documents that had been prepared? 10 THE WITNESS: I think she emailed those to me, yes.

MR WILSON: Did you liaise with either the deputy secretary or the then acting secretary about the matter? 15 THE WITNESS: I think we had some conversations about the matter at that point.

MR WILSON: ..... conversations or emails?

20THE WITNESS: I can’t recall. Possibly both.

MR WILSON: What would have been the subject of those conversations?

THE WITNESS: I can’t recall. 25 MR WILSON: Would it have been along the lines of “What is this all about? What are we going to be expected to do? How are we going to organise staff to do it?” – those sort of mundane issues?

30THE WITNESS: Yes. I would think so.

MR WILSON: When you say you don’t recall, is this something you’ve shut out of your mind?

35THE WITNESS: It – it was a long time ago and a very stressful period, so – yes, it’s something I have reflected on deeply but trying not to reflect on, if I can.

MR WILSON: Now, in terms of paragraph 6 of your statement – if you put that folder to one side. Pick up your statement. 40 THE WITNESS: Yes.

MR WILSON: I’m just wanting to understand the extent of your involvement between February 2009 and, say, the end of April 2009. What did you actually do in 45terms of the implementation or the design of the Home Insulation Program?

20.3.14 P-336 R.M. CARTER XN ©Commonwealth of Australia MR WILSON THE WITNESS: I certainly undertook a number of discussions with – with Mr Keefe and Ms Wiley-Smith about the nature of the program that was – that had been announced and how we might go about organising it. We – I think at that time – put in place a technical team that Ms Brunoro was to head up to do the initial discovery 5and design work.

MR WILSON: Did you know anything more than what had been announced by the Prime Minister on 3 February 2009?

10THE WITNESS: No. My recollection was that there was not a great deal of detail available to us at that point.

MR WILSON: That is, a program had been announced that every home in Australia before a certain date had the opportunity of being insulated. Is that the extent? 15 THE WITNESS: The material that we were working on – the assumption at that point that the material that Ms Wiley-Smith had provided was the basis of that – of that proposal.

20MR WILSON: Were you aware, for example, that what had been costed was a model whereby the Commonwealth was going to contract with a regional entity who would then organise and farm out the work?

THE WITNESS: Yes, I was. 25 MR WILSON: Is that a model with which the Department had had any experience? That is, contracting with entities who would then effectively do the hard work.

THE WITNESS: Yes, it was. We had a number of programs that were 30administering that had used variations of that model and I think the solar – Solar Cities Program was an example of that that Ms Wiley-Smith was very familiar with.

MR WILSON: And you had, perhaps, precedents in place for the contracts with the lead delivery agencies? 35 THE WITNESS: I think they were a different nature of consortia but a similar conceptual model. Yes.

MR WILSON: And that model continued to be the one that was being worked on 40until the end of March 2009?

THE WITNESS: Yes, it was.

MR WILSON: Now, again, I come back to what – what was your role in that? Was 45Ms Wiley – Ms Brunoro providing you with reports or only when problems arose or just discussed in the weekly meetings? Just give us an idea of what your role was.

20.3.14 P-337 R.M. CARTER XN ©Commonwealth of Australia MR WILSON THE WITNESS: My role was providing a – if you like – a strategic oversight of what was occurring. So Mr Keefe and I would discuss those issues. I’m not sure – I think during that period that we established a steering committee to – to manage the issues so I would be reported to in that kind of format on where we were up to. 5 MR WILSON: For example, were you aware at the time that there was to be an industry meeting on 18 February?

THE WITNESS: I can’t recall – I would assume I was aware of that. I’m very 10aware that that meeting took place.

MR WILSON: That is, somebody in the Department told you we’re liaising with industry, seeking their views and having a meeting with them on this date.

15THE WITNESS: Yes.

MR WILSON: Did you go to the – any of the industry meetings?

THE WITNESS: I went to some but not all of them. 20 MR WILSON: Do you recall going to the one on 18 February?

THE WITNESS: I’m not sure if I went to that one.

25MR WILSON: Do you recall why the Department was liaising with industry?

THE WITNESS: Yes, in terms of – of putting or designing a program of this nature, it was important to talk to the industry representatives that would have expertise in – in insulation. 30 MR WILSON: Did you have any part in selecting who would attend those meetings, or was your input sought about those sort of matters?

THE WITNESS: No, not that I can recall. 35 MR WILSON: It was more that you were advised that this was happening rather than being involved in the decision making process?

THE WITNESS: That’s correct. 40 MR WILSON: And to put it in context, you’ve set out in paragraph 9 of your statement that this was a very busy time for your division.

THE WITNESS: It was. 45 MR WILSON: In the beginning of 2009.

20.3.14 P-338 R.M. CARTER XN ©Commonwealth of Australia MR WILSON THE WITNESS: My division had been extremely busy throughout 2007 through to 2009.

MR WILSON: From the election of the Rudd government? 5 THE WITNESS: And prior to - - -

MR WILSON: And prior to that?

10THE WITNESS: - - - to that. Yes.

MR WILSON: I know it’s always difficult to put figures on things but as end of 2008 approached and 2009 began, in terms of capacity, what capacity were you working at? 50 per cent? 60 per cent? 15 THE WITNESS: I think I put in my statement that we were at a 110 per cent or something of that nature. Obviously, it’s a numerical measure but we had been very busy but a – but a very productive and delivering division.

20MR WILSON: So if one is working at a 110 per cent capacity, even if that’s not an exact figure, you’re working to your limit?

THE WITNESS: I would say we were working to our limit, yes.

25MR WILSON: You were then made aware that you were going to be assigned a program which is going to be responsible for insulating two million houses: an enormous job.

THE WITNESS: Yes. 30 MR WILSON: What did you do?

THE WITNESS: Well, the model that had been proposed in contracting with consortia was not conceptually different to models that we had put in place, so we 35felt at that point that we would be able to – to provide additional resources to manage that sort of model.

COMMISSIONER: The two-year or the five-year one?

40THE WITNESS: I think the – the – either model, Commissioner.

MR WILSON: Because most of the work, most of the heavy lifting, is done by the regional broker.

45THE WITNESS: That’s correct.

20.3.14 P-339 R.M. CARTER XN ©Commonwealth of Australia MR WILSON MR WILSON: I know this is jumping ahead a bit, but when the model changed, how did that impact on the ability of the department with its resources to cope with it?

5THE WITNESS: I think it was quite a dramatic change in the approach to – to delivery. Part of the change involved another organisation, Medicare, being involved, and – and they had significant capability and capacity themselves, but it was quite a change from, if you like, a relationship between the Commonwealth and a few to the Commonwealth and many. 10 MR WILSON: And 10,000.

THE WITNESS: Yes.

15MR WILSON: Did that stretch the resources of the department?

THE WITNESS: Yes. I think it - - -

MR WILSON: In particular, your division? 20 THE WITNESS: Yes.

MR WILSON: Could I take you, then, to paragraph 12 of your statement. When you say, “In the lead-up to roll-out of the HIP,” are you speaking there about 253 February or 1 July?

THE WITNESS: 1 July.

MR WILSON: And what resources was the department given? 30 THE WITNESS: The department was given significant financial resources. I can’t recall the exact magnitude of those, but my recollection was that dollars were not the limiting factor in – in obtaining resources.

35MR WILSON: That is, you were given as many staff as you thought you needed?

THE WITNESS: No. We were given the financial resources, but in terms of getting the – the right staff and skill sets on board, that was – was a more difficult task. If you like, on-boarding staff takes – takes time and logistics. 40 MR WILSON: Can you just explain that a bit further?

THE WITNESS: So in terms of – of recruiting new staff into the – the public sector, that can take some time to – to do. And in terms of advertising for positions, that can 45take some time to do. We also found that getting existing staff reallocated from within the department took some time.

20.3.14 P-340 R.M. CARTER XN ©Commonwealth of Australia MR WILSON MR WILSON: And can I just then juxtapose that against – you were told that the program was required to roll out on 1 July?

THE WITNESS: Yes. 5 MR WILSON: Were you told whether that was a fixed or a tentative date?

THE WITNESS: It was the announced date by government.

10MR WILSON: Well, were you told whether there was any flexibility in the date?

THE WITNESS: We hadn’t been – been told if there was any flexibility.

MR WILSON: Well, did you work on any assumption as to whether it was fixed or 15flexible?

THE WITNESS: We – we were initially working on the assumption that that was the date the government wanted the program to commence.

20MR WILSON: Did you at any stage say, “Sorry, we know that’s the date you would like to start, but we’ve got to get new staff in, got to get the right skill set. That all takes time. Can we put it back?”

THE WITNESS: At the – the 31 March meeting that I’ve mentioned in my 25statement, the – the intent from Kevin and I in attending that meeting was to discuss the timeframe and delivery risk for 1 July of rolling out the – the model that we proposed across Australia and that that had been identified in our initial risk assessment as being an extreme risk. I think that was, though, driven more by the timeframe for procurement rather than a – than a resourcing or building constraint in 30terms of the teams.

MR WILSON: When you say the timeframe for procurement, do you mean contracting of these regional entities?

35THE WITNESS: Yes. In terms of constructing an appropriate procurement or tender document, putting that into the marketplace for the required amount of time and then working through the bids that would come in on that and putting in place contracts for those to commence.

40MR WILSON: And to your knowledge, was considerable effort being put into working out that regional delivery model up to 31 March 2009?

THE WITNESS: Yes. It was – the focus of our work was on developing that model, and – and I think during that period we also had a number of – of industry 45participants who had – had begun to develop proposals or relationships along those lines.

20.3.14 P-341 R.M. CARTER XN ©Commonwealth of Australia MR WILSON MR WILSON: Do you know whether the regional delivery model was something that was embraced by people in the insulation industry, or did they not speak with one voice?

5THE WITNESS: I can’t recall specific comments, but I had the sense that there were concerns about – about market competition with such a model.

MR WILSON: Was it ever brought to your attention that certain participants in the industry may be lobbying either your Minister or the Prime Minister to not proceed 10with the regional roll-out model?

THE WITNESS: I was not aware of that.

MR WILSON: When you talk about the right skill sets, what do you mean by that? 15 THE WITNESS: In terms of – of – of skill sets, we had teams that were – that were delivering similar programs as well as quite different programs, as well as policy teams, but in terms of – of beginning a fairly large program of this nature, being able to – to get additional people with those skills when – when, as a division that was 20working at a – at a very high capacity, a lot of the – if you like, our best people were already deployed, working on those other programs.

MR WILSON: And how did you seek to address that?

25THE WITNESS: We – we used a wide range of approaches to that. Where – where possible, we tried to outsource skill sets. So we would go to agencies that – employment agencies that would have skill sets available on them. We – we went through networks to other agencies where staff might be available. We sought to identify staff internally that might be available. 30 MR WILSON: I’m trying to understand what skills you were looking for. Was it project management skills or accounting skills or skills with people who had done insulation work? What were you looking for?

35THE WITNESS: It was more, I think, around the former sort of skills.

MR WILSON: Project management?

THE WITNESS: Project management, program management, contracting and 40procurement process, those types of skill sets.

MR WILSON: Did the department have within it any of those types of skills, that is, was there a project management section or something like that?

45THE WITNESS: I think there was a – a project management office or – or area. I’m not sure if that was a centralised area, but my recollection was it was a fairly new or immature capability at that point. I think there were other areas, and I’m thinking

20.3.14 P-342 R.M. CARTER XN ©Commonwealth of Australia MR WILSON of specifically three divisions that were called the water group that I think had – had a reasonable project management function as part of their work.

MR WILSON: Did you try and access that expertise? 5 THE WITNESS: Yes. We did.

MR WILSON: And how did you do that?

10THE WITNESS: We would identify some individuals and then seek to have them reallocated to the division.

MR WILSON: Who were they?

15THE WITNESS: Well, one name springs to mind, and that was Ms Avril Kent. I think she was in that – in that area, and we - - -

MR WILSON: And she was subsequently brought into the branch that Mr Keefe was in charge of? 20 THE WITNESS: Yes. She – she was. There may have been – have been others.

MR WILSON: Now, in paragraph 13 of your statement – and this is really, I suppose, spanning a much larger period than the first part of 2009 – you speak of the 25effect that this program had on the staff that were working on it. You say that the staff were working long hours and weekends. Was that an occasional thing, or was this just a relentless workload for the staff that you were in charge of?

THE WITNESS: It – it was – well, I – there were teams that were pretty intensely 30occupied throughout the year. I don’t think all teams were operating at that level all year.

MR WILSON: And what are we talking about there? When you say “long hours”, what does that mean? 35 THE WITNESS: Look, it would – it would vary. But some staff would be there for – you know, doing late nights at times, till, you know, maybe, 9 or 10 o’clock on occasions and working on weekends, as well.

40MR WILSON: Did anyone from human resources, or whatever it’s now called, say, “Look, this has to go stop or be moderated. These people can’t keep working like this”?

THE WITNESS: Not that I can recall at that point. It was of concern to me. 45 MR WILSON: Did you have any concerns?

20.3.14 P-343 R.M. CARTER XN ©Commonwealth of Australia MR WILSON THE WITNESS: Yes. I did have concerns.

MR WILSON: What did you do about it?

5THE WITNESS: Generally, when people had been working in an intense area and were needing to do – you know, change duties or do something else – we would try to facilitate a move to allow them to do that.

MR WILSON: How do you reconcile that, or deal with that, as opposed to keeping 10the knowledge within the section, so that pieces of information aren’t lost as people transfer out?

THE WITNESS: It’s always a challenge to do that. Yes.

15MR WILSON: Well, in respect – I’m asking you to focus on the Home Insulation Program. Was there some system put in place whereby, if anyone came in, there was a ready repository of information that they could access to see what had gone on before they arrived?

20THE WITNESS: I – we had filing systems in place and, generally, people worked in teams. So there was a level of knowledge transfer within teams.

MR WILSON: For example, as well as email, were there hard copy documents kept in folders? 25 THE WITNESS: I think there was the formal filing mechanism, as well as the electronic filing mechanism.

MR WILSON: And how did the electronic filing mechanism work? That is, for 30example, I’m thinking about a particular document, but assume someone from outside of the department provided some information to the department that was thought to be important, about safety. Is there a subfolder created called Safety, or how is that managed?

35THE WITNESS: I’m not familiar with the layers of folders that different teams of areas would develop. But my understanding was that there was a – if you like, a methodology in place for creating drives, and then directories within those drives, for storing documents and information.

40MR WILSON: And also hard copy folders, so if I wanted to know about what information has been given to the department, before I arrived, on the issue of safety, can I go and pick up a folder that’s marked Safety or is it not as simple as that?

THE WITNESS: It may not be as simple as that. The – I’m not a records expert. 45But the – you know, most departments use a records management system that has a thesaurus for how – for how different files are names and how different documents go into those files. So they may not all go onto a topic like safety.

20.3.14 P-344 R.M. CARTER XN ©Commonwealth of Australia MR WILSON MR WILSON: When you say there’s a thesaurus used, how would you expect – if you, as the head of the division, wanted to know all the documents that we had at a particular date about safety issues, how would you go about doing that?

5THE WITNESS: I would generally ask one of my staff to assemble those documents.

MR WILSON: That’s an easy way out, isn’t it?

10THE WITNESS: Well, at – you know, operating at a – at the level that I did – I wasn’t day-to-day managing documents and their storage offline, no.

MR WILSON: But were you sufficiently confident that if you asked a staff member to find all of the information the department had available, at its disposal, as at a 15certain date, about safety, that search could be easily done?

THE WITNESS: I’m not sure that I would say easily done. I think that in all government agencies that I’ve worked in, the volume of material and the storage and electronic retrieval of them has been – has been challenging. 20 MR WILSON: Well, for example, you’ve no doubt seen, through the reviews of this process, that there was a letter sent by an organisation called MICA to Minister Garrett in February 2009.

25THE WITNESS: Yes.

MR WILSON: It warned about certain risks with insulation products being too near downlights.

30THE WITNESS: Yes.

MR WILSON: Now, if I’m coming into the department in March 2009 and I’m involved in helping to draft the guidelines for this project, how do I put my hands on that document? Do I even know that it’s there? 35 THE WITNESS: Ministerial documentation is, I think – is recorded in a system called Slipstream, which was searchable. Whether those documents were easily connected to work areas, I’m not sure.

40MR WILSON: Could I bring up on the screen, please, AGS.002.017.1602. Now, this document is not addressed to you. It’s addressed to Ms Riordan. But it contains some pretty important information. If I’m coming into the department and I’m looking at what products should be used in this program, how they should be used, what risks there are in using them, how would I find this document? 45 THE WITNESS: I’m not sure if that document had been stored on one of the drives or folders that related to that team’s work or not.

20.3.14 P-345 R.M. CARTER XN ©Commonwealth of Australia MR WILSON MR WILSON: But wasn’t there any guidelines or policy that documents like this ought to be stored?

THE WITNESS: There’s certainly recordkeeping requirements within departments. 5Yes.

MR WILSON: Do you recall having seen that document before today?

THE WITNESS: I don’t recall having seen that. 10 MR WILSON: Would you expect that that sort of information would be brought to your attention, as the person in charge of the division?

THE WITNESS: No. 15 MR WILSON: Why not?

THE WITNESS: Because there was a huge amount of interaction with a wide range of stakeholders, and on a technical nature, which wasn’t brought to my attention. 20 MR WILSON: But you were aware that there was a degree of agitation or controversy about which products should be permitted to be used in the scheme.

THE WITNESS: Yes. 25 MR WILSON: And there was a debate about R-values. We needn’t go into the specifics of that, but whether products met - - -

THE WITNESS: I was aware of that debate. Yes. 30 MR WILSON: And whether certain products performed the insulation function that this whole program was looking at, that is, providing a certain level of thermal comfort to households.

35THE WITNESS: Yes.

MR WILSON: If there’s a danger in using one of those products in a particular way, wouldn’t you expect that to be brought to your attention?

40THE WITNESS: Yes, I would.

MR WILSON: But I’m understanding from your evidence that it wasn’t.

THE WITNESS: No. I don’t – I don’t recall an issue of whether a product should 45or should not be included – safety being any part of that discussion.

20.3.14 P-346 R.M. CARTER XN ©Commonwealth of Australia MR WILSON MR WILSON: Let me approach it in a slightly different way. Were you aware, as of mid-February 2009, 18 or 19 February 2009, that there had been three electrocutions in New Zealand arising out of people using metal foil in a certain way? 5 THE WITNESS: I have tried to recall, because I can recall hearing about the New Zealand program, but I can’t recall when I heard about that program.

MR WILSON: I can tell you that it was raised at an industry meeting on 1018 February 2009 by a gentleman named Ruz.

THE WITNESS: Yes.

MR WILSON: He referred to it in quite general terms, that is, there had been a 15problem in New Zealand and three men had been electrocuted. The following day he’s sending this email to Ms Riordan. Just searching your memory, do you recall that issue being raised with contemporaneously? That is, it’s not something you’ve read months down the track. In February, you’re being told there’s this issues that have happened in New Zealand. 20 THE WITNESS: I can recall a discussion about the New Zealand program, but I can’t recall when it was or the nature of the conversation.

MR WILSON: Do you recall who the discussion was with? 25 THE WITNESS: No. I can’t recall that.

MR WILSON: Is it most likely to have occurred with Mr Keefe, or may it have been with Ms Riordan herself? 30 THE WITNESS: It could have been with either.

MR WILSON: If you have had such a discussion, which you cannot now recall, would you expect to have done something about it, either yourself or directed 35someone to find out what had happened in New Zealand?

THE WITNESS: I would have expected that the – that the technical teams looking at that information would have researched further into it.

40MR WILSON: Is that an assumption you would make, or would you direct them to do that?

THE WITNESS: It would be an assumption I would make.

45MR WILSON: Do you think it is slightly more important than that, that you should have directed them to carry out that research and made sure it was done?

20.3.14 P-347 R.M. CARTER XN ©Commonwealth of Australia MR WILSON THE WITNESS: At that point the teams were conducting quite a range of research and consultation, and my experience of Ms Brunoro and, indeed, others in the division, was that they were very diligent in undertaking that work.

5MR WILSON: You say that you recall being told about something that had happened in New Zealand. Do you recall ever following that up?

THE WITNESS: No, I don’t recall following that up.

10MR WILSON: Could we just bring that document back up on the screen. If I was somebody coming into the department, would you expect that I would be able to find that very easily, if I was looking at what the risks were or the safety aspects of this program?

15THE WITNESS: I would expect that the information that came in from industry consultation would have been stored and compiled somewhere accessible, yes.

MR WILSON: But this is a little bit more than information coming in from industry. This is a specific warning or a specific alerting of the department to a 20particular risk, with a particular type of product, used in a particular way. Would you expect that would be stored, perhaps, more accurately than simply comments from industry?

THE WITNESS: Well, I would assume that it would be stored in an appropriate 25way. But, as I’ve already mentioned, I don’t have the detail of how various teams were storing and managing their information.

MR WILSON: When is - - -

30COMMISSIONER: Mr Wilson, can I just ..... I don’t think this document was before the coroner’s inquest, was it?

MR WILSON: No.

35COMMISSIONER: No. I mean, do we actually know where it was kept?

MR WILSON: No.

COMMISSIONER: We haven’t found out in the course of - - - 40 MR WILSON: No.

COMMISSIONER: - - - preparing for this inquiry. It has just been produced by the - - - 45 MR WILSON: Yes.

20.3.14 P-348 R.M. CARTER XN ©Commonwealth of Australia MR WILSON COMMISSIONER: I see.

MR WILSON: Documents are produced electronically.

5COMMISSIONER: Yes. So you don’t know what file it’s from.

MR WILSON: No.

COMMISSIONER: Okay. 10 MR WILSON: I think we’re in the process of doing that. But in terms of when Mr Fuller died in October 2009, in a particular way, that is, stapling metal foil connecting a live wire, did you then go back and say, “Were we ever told about this risk? Were we ever warned about this risk?” 15 THE WITNESS: I didn’t, at that point, no.

MR WILSON: Later - - -

20THE WITNESS: No. My involvement with the program had decreased significantly from mid-year on.

MR WILSON: So you were looking at other matters.

25THE WITNESS: Yes. The – Mr Keefe was more working closely with Mr Forbes, because the amount of work on the other side of – or on the breadth of the division – was occupying me extensively.

MR WILSON: Who stepped into your role, then? 30 THE WITNESS: No one – Mr Keefe, on these matters, was working very closely with Mr Forbes.

MR WILSON: So you were, effectively, left out of the loop. It was Keefe reporting 35to Forbes.

THE WITNESS: Yes. I didn’t have as much of a role through that period.

MR WILSON: Thank you. 40 MR HOWE: Could I just take the opportunity to indicate that we have provided the records electronically, but we’ve done so on a Ringtail database which, when interrogated, would enable my learned friend’s instructors to identify the type of the hard copy file that every document on Ringtail comes from. So we can have that 45conversation, and then – I think we’ve gone a step further. I think we’ve actually now got the file.

20.3.14 P-349 R.M. CARTER XN ©Commonwealth of Australia MR WILSON MR WILSON: Yes.

COMMISSIONER: Okay. It looks like trouble might be solved, then. Yes. Thank you, anyway. 5 MR HOWE: More generally, there is a system in place for identification of where every document on Ringtail comes from.

COMMISSIONER: Where it comes from – thank you for that. 10 MR WILSON: We’ve got the file, and people are looking at it at the moment.

COMMISSIONER: Thank you.

15MR WILSON: When did that drop-off in your involvement in the HIP occur? Was it about mid-June?

THE WITNESS: It – it was - - -

20MR WILSON: You say in mid-2009.

THE WITNESS: Yes. It was increasingly through, really, May/June. We had a number of programs that were – that were in a very intense state. The one that – that I think was – was most controversial at that time was the solar homes and 25communities plan, the photovoltaic rebate program, where the rebate level was extremely generous, and – and that – that demand had – had taken off phenomenally. So managing that and the closure of other programs etcetera was occupying a lot of my and the other parts of the division’s time.

30MR WILSON: Are you aware that there were also meetings of secretaries on – when I talk about secretaries, I don’t mean typists but high office-bearers in the department on a regular basis?

THE WITNESS: Yes. 35 MR WILSON: And did you attend those?

THE WITNESS: No.

40MR WILSON: Were you made aware that there was a secretaries meeting that had taken place on 16 February 2009?

THE WITNESS: I can’t recall that, no.

45MR WILSON: What was the purpose of those meetings?

20.3.14 P-350 R.M. CARTER XN ©Commonwealth of Australia MR WILSON THE WITNESS: Generally – well, I’m not sure entirely. I think the – the – that secretaries would meet on a regular basis to discuss the priorities and direction of the public sector and of the government.

5MR WILSON: And were briefs or minutes or reports given to them for the purpose of those meetings?

THE WITNESS: Certainly if they asked for material, it would have been provided, yes. 10 MR WILSON: Do you recall at the secretaries meeting – sorry. I will withdraw that. For the purpose of a secretaries meeting early in the life of the Home Insulation Program, do you recall being asked to prepare some material on reporting guidelines, that is, how reporting was made to the Minister for Environment, the Office of 15Coordinator-General, Department of Prime Minister and Cabinet?

THE WITNESS: I don’t recall that request, no.

MR WILSON: Do you recall, as matters developed through the first half of 2009, 20becoming aware of those reporting lines?

THE WITNESS: We were certainly involved in – in providing reports to the – the Office of the Coordinator-General on a regular basis.

25MR WILSON: I’m sorry. I will just stop you there. Those reports were provided on a weekly basis?

THE WITNESS: I – I recall that was the case, yes.

30MR WILSON: And were those reports copied to the office of the Minister for Environment?

THE WITNESS: I don’t recall.

35MR WILSON: Do you recall what information was provided to the office of the Minister for Environment? That is, on the one hand we have formal briefs, which we’ve seen.

THE WITNESS: Yes. 40 MR WILSON: Was there any additional information flowed to the Minister’s office?

THE WITNESS: I would generally have a catch-up with the Minister’s adviser, 45Mr Levey, on a fairly regular basis, and it would be myself and relevant branch heads for – for whatever topical issues were occurring at the time.

20.3.14 P-351 R.M. CARTER XN ©Commonwealth of Australia MR WILSON MR WILSON: So you and, what, Mr Keefe?

THE WITNESS: And – and other branch heads given the spectrum of work, yes.

5MR WILSON: Focusing on the Home Insulation Program, would it have been you and Mr Keefe?

THE WITNESS: Myself and Mr Keefe, yes, though Mr Keefe would have also had direct discussions with the ministerial adviser. 10 MR WILSON: And the person in the Minister’s office who you liaised with about the Home Insulation Program was Mr Levey?

THE WITNESS: Yes. That’s correct. 15 MR WILSON: And what sort of matters would you be discussing with Mr Levey, because he’s at a political level, isn’t he?

THE WITNESS: Yes. He’s an adviser to the Minister. We – we had a – a full and 20frank discussion of progress across various issues. Quite often he would be raising issues of concern with various programs or – or matters that we were dealing with.

MR WILSON: So would it be a fair proposition to say that the Minister was kept fully advised as to what was going on? 25 THE WITNESS: It – it would be – would be fair to say that – that the Minister would have had access to advice from his adviser, yes.

MR WILSON: I should have put that slightly differently: that Mr Levey was being 30kept fully advised as to what was going on.

THE WITNESS: He was certainly, yes, being kept well advised of what was happening in the division.

35MR WILSON: And then, of course, it’s a matter between him and the Minister as to what information he passes on.

THE WITNESS: Indeed.

40MR WILSON: What about the other channel, that is, to the OCG? That was done by way of weekly reports?

THE WITNESS: Yes. There was a weekly meeting with the Office of Coordinator-General that in the early part of 2009 Kevin and I went to. It generally 45dealt with the spectrum of stimulus measures that were in place, and – and each – each department would report on where they were up to with those measures.

20.3.14 P-352 R.M. CARTER XN ©Commonwealth of Australia MR WILSON MR WILSON: What did you understand was the role of the Coordinator-General in the Home Insulation Program?

THE WITNESS: The – the – well, my understanding of the – the role of the 5Coordinator-General was that that role had been put in place to oversee and drive the – the stimulus package for the government and to, if you like, problem-solve or – or remove any blockages or red tape that might – that might be slowing down the delivery of those measures.

10MR WILSON: So you saw their role not only as an oversight role but also a driver?

THE WITNESS: Yes.

MR WILSON: In terms of being proactive in requiring steps to be taken by the 15department that you were part of?

THE WITNESS: Yes.

MR WILSON: And before 31 March 2009 – we will come to that meeting in due 20course – had there been any examples that you can now recall where the Office of Coordinator-General had driven any particular aspect of the Home Insulation Program?

THE WITNESS: I – I can’t recall prior to that. 25 MR WILSON: Was the first example of that the meeting which took place on 31 March?

THE WITNESS: That was the one that – that sticks most in my mind, yes. 30 MR WILSON: In paragraph 21 of your statement, in the last part, you say:

The process of implementing the HIP was unusual –

35etcetera:

...and, as such, the processes the department was used to were not followed.

What were the processes the department was used to which weren’t followed in this 40case?

THE WITNESS: What I was referring to there was my experience of developing cabinet proposals and then implementing the decisions of government.

45MR WILSON: And how wasn’t that done in this case?

20.3.14 P-353 R.M. CARTER XN ©Commonwealth of Australia MR WILSON THE WITNESS: Is it useful for me to describe what was the more usual process to contrast that?

MR WILSON: As long as you don’t tell us – and Mr Howe will jump up if you do – 5what’s decided in the cabinet room.

THE WITNESS: Yes. My – my general understanding of the process followed then, the one that we had been – been used to was that – is that an agency that had the policy responsibility for a particular area – and we had that for energy efficiency 10– would prepare – you know, if requested by government, would prepare the policy proposal in the form of an exposure draft cabinet submission that included an attached new policy proposal that went through some detail on costings, staffing, delivery issues etcetera. That exposure draft was built up. The Department of Prime Minister and Cabinet manages the business of cabinet and – and the templates and 15processes and timeframes for delivering that, but the policy agency develops those materials. An exposure draft is then circulated amongst agencies for – for their comments. And quite often during the development of that exposure draft and its refinement, inter-departmental committee meetings are held across agencies to flush out and discuss issues from – from various portfolios. That then results in a more 20formal Cabinet submission which is at the – I think, called the coordination stage of a Cabinet submission which is then sent to agencies for a more formal response, and those more formal responses – if they weren’t then accommodated in the refinement of the draft, were included in the advice to government of the final Cabinet submission. 25 MR WILSON: And then the decision was ultimately made ..... back to the same department.

THE WITNESS: Yes. Then a – a Cabinet decision minute would be – would be 30provided to the Department that addressed the recommendations of the submission.

MR WILSON: Now, what happened here was completely different to what you’ve just described.

35THE WITNESS: Yes.

COMMISSIONER: So the normal process goes through a proposal which is looked at by various departments – it sounds like an informal basis; comes back with constructive criticism from relevant parties; constructive criticism is taken on board, 40and the proposal is refined and then that goes up to Cabinet.

THE WITNESS: Yes. That’s correct - - -

COMMISSIONER: That’s the normal process. 45

20.3.14 P-354 R.M. CARTER XN ©Commonwealth of Australia MR WILSON THE WITNESS: - - - Commissioner. And there is that formal step that gives departments the opportunity to raise residual issues that haven’t been addressed through that.

5COMMISSIONER: Yes. They say – they say, “They haven’t looked at these things. These are our problems still. Over to you, Cabinet - - -

THE WITNESS: Yes.

10COMMISSIONER: - - - for you to determine.”

THE WITNESS: Yes, Commissioner.

COMMISSIONER: Yes. 15 MR WILSON: Whereas here you had the proposal was originating in the Department of Prime Minister and Cabinet, officers of the Department being seconded to that purpose to do some costings, and then you were given the project to manage without having done all that lead up work. 20 THE WITNESS: That’s correct but the officers were seconded, they were requested to provide the analysis and input, yes.

MR WILSON: ..... formal than even a secondment. 25 THE WITNESS: Well, in the – in the timeframe, they weren’t moved into the Department of Prime Minister and Cabinet to undertake the work, no.

MR WILSON: Yes. Now, at paragraph 23 of your statement, you say that an initial 30plan was developed for implementing the HIP. You then speak about resources within the Department. But what about the actual program itself? That is, our understanding is that it commenced in what has been called phase 1 as and from the day it was announced.

35THE WITNESS: Yes. Phase 1 – my understanding of that was that the industry had expressed concerns that – and I think those concerns had been expressed to the Department of Prime Minister and Cabinet. I’m not sure if they had been expressed to the Department but – that if the government announced a major initiative that was commencing from 1 July that activity would stall in the industry until such time as 40that money became available, that those who were undertaking work currently would wait until a rebate or subsidy was available.

MR WILSON: So what plan was developed for implementing the HIP that you’re aware of, in that initial period? 45 THE WITNESS: So the phase 1 period was a very tight timeframe to develop between the date of announcement – I think on 3 February. I’m not sure if we

20.3.14 P-355 R.M. CARTER XN ©Commonwealth of Australia MR WILSON commenced prior to that but certainly between that period – and I think the guidelines were put in place on 26 February for that phase 1 approach. The reason or the way in which we implemented that was that it was very similar to some existing rebate programs that we were operating and we were able to use the same basic 5business process to – to deliver that phase 1.

MR WILSON: Did you also, then, develop some guidelines?

THE WITNESS: Yes. I think there were some guidelines that were published on 26 10February.

MR WILSON: And if I could bring up AGS.002.008.3386 please. If I can just scroll down a little bit to the email from Mr Carter. Back up. This is an email from you to Mr Mrdak, copied in to Mr Keefe. Yes? 15 THE WITNESS: Yes.

MR WILSON: Mr Mrdak was the Coordinator-General?

20THE WITNESS: Yes.

MR WILSON: And is this an example of you reporting to the Office of the Coordinator-General developments in the implementation and perhaps even the design of the Home Insulation Program? 25 THE WITNESS: It is an example. It doesn’t – I think there was also a more template kind of reporting.

MR WILSON: Yes. A weekly – a weekly reporting – things that were being 30undertaken and when they were expected to be completed.

THE WITNESS: I think – I think that was the case, yes.

MR WILSON: But here you’re providing what are described by you as extremely 35preliminary guidelines for the program as at 16 February.

THE WITNESS: Yes.

MR WILSON: And what was the nature of the relationship at that stage between 40the Department and the Office of the Coordinator-General? Was it harmonious?

THE WITNESS: Yes. The – yes.

MR WILSON: Constructive? 45 THE WITNESS: Yes.

20.3.14 P-356 R.M. CARTER XN ©Commonwealth of Australia MR WILSON MR WILSON: Each giving opinions that were valued by the others?

THE WITNESS: Yes.

5MR WILSON: You’re a little uncertain about that one.

THE WITNESS: Well, it’s really the nature of authority in the – in the Commonwealth public sector where - - -

10MR WILSON: What does that mean?

THE WITNESS: - - - the Department of Prime Minister and Cabinet is the primary agency in the public sector so it carries the authority of Prime Minister and Cabinet.

15MR WILSON: So – and I know this is a generalization – but if there were two views and one is held by the Department of Prime Minister and Cabinet, that would tend to prevail?

THE WITNESS: That’s correct. 20 MR WILSON: Now, as you were developing not only the early guidelines for the program, were you developing also what was to be rolled out from 1 July?

THE WITNESS: Yes. We commenced work on that. 25 MR WILSON: So that was being done concurrently?

THE WITNESS: That – that was my recollection, yes.

30MR WILSON: And in terms of what was to be rolled out from 1 July, can you just explain the process that was undergone – being undertaken there?

THE WITNESS: We had been undertaking consultation with – with industry on – to harvest their expertise and views on the – on the program but also developing the 35business model and then procurement approach for delivering that model.

MR WILSON: As part of your work or what was being reported to you, had you become aware by mid-February 2009 that the insulation industry was, (a), largely unregulated except in South Australia? 40 THE WITNESS: It had been – or my understanding was that – that the government had chosen the insulation industry for this program because it was a relatively easy industry to enter, yes.

45MR WILSON: And, (b), that the components of the industry have internal conflicts as well. That is, they didn’t all speak the one voice.

20.3.14 P-357 R.M. CARTER XN ©Commonwealth of Australia MR WILSON THE WITNESS: I don’t recall that as strongly. There were quite a number of different associations representing different products is my recollection.

MR WILSON: Now, you’ve spoken about this being an easy industry to get into. I 5don’t in any way intend this flippantly, but if you’re going to insulate two million homes across Australia, did you expect that there would be casualties?

THE WITNESS: No. That – that never crossed my mind and wasn’t raised with me. 10 MR WILSON: Did you do any research to see what the incidence of electrocutions were, for example, in Australia and New Zealand before this program was put in place?

15THE WITNESS: Not that I recall.

MR WILSON: That is, statistically, one in X people doing this type of work might get electrocuted as a statistical average.

20THE WITNESS: Not that I recall, no.

MR WILSON: Do you recall paying any particular attention to putting in place steps to ensure that, as best you could, as best the Commonwealth could, that didn’t happen? 25 THE WITNESS: The – the department did undertake risk assessment and had a risk assessment process in place where consultation and information fed into that, but there was a general assumption that it was an established industry that was operating at a reasonable scale across Australia and that – and that we weren’t aware of there 30being – being major safety issues emerging in that industry.

MR WILSON: That’s the established industry, but I think you just said that part of the aim was to make it very easy for other people to enter that industry.

35THE WITNESS: The – well, the initial business model that we were working on involved using consortia that – that would put together existing players in the industry but would also provide for new entrants.

MR WILSON: And you say that the department got some risk analysis work done. 40Were you aware that an external consultant was engaged for that purpose?

THE WITNESS: Yes. I was aware of that.

MR WILSON: How were you made aware of that? 45

20.3.14 P-358 R.M. CARTER XN ©Commonwealth of Australia MR WILSON THE WITNESS: I – I can’t recall how I was made aware of that, but it was one of the early issues that Mr Keefe wanted to make sure we had in place – was a – was a risk assessment, and I think Minter Ellison was contracted to assist with that.

5MR WILSON: Did you have any interaction with Mrs Coaldrake from Minter Ellison, who undertook that work, or was that done at a level below that?

THE WITNESS: I had some interaction with Ms Coaldrake, yes.

10MR WILSON: What was that?

THE WITNESS: She was involved in – in the project control group meetings. I can’t recall meeting Ms Coaldrake prior to those, but I may have.

15MR WILSON: Those project control group meetings started in early to mid-April 2009?

THE WITNESS: Yes.

20MR WILSON: Were you aware that Ms Coaldrake was providing at least some preliminary or draft work for about a month before that?

THE WITNESS: Yes. I was aware that we had preliminary work.

25MR WILSON: How were you made aware of that?

THE WITNESS: The – the first instance that – that – that sticks in my mind was the preliminary risk assessment that was provided to the Office of Coordinator-General, I think, in the – in the last week of March. 30 MR WILSON: And did you attend any of the workshops that were conducted whereby risks were identified that might arise through the program?

THE WITNESS: I – I can’t recall attending any. I may have. 35 MR WILSON: Now, in terms of, then, up till the end of March, the delivery model was regional brokers. They would be responsible for, what, training?

THE WITNESS: They would be responsible for the end-to-end delivery of the – of 40the program. My recollection of that – of that concept was that it would need to be providing for some way in which households wishing to be – to participate and have their homes insulated could contact the organisation and that – that – that it would then manage the provision of an installer and the installation work and that – and that they would be responsible for delivery of that end-to-end service and that we would 45then meet those costs through contract arrangement with that provider.

20.3.14 P-359 R.M. CARTER XN ©Commonwealth of Australia MR WILSON MR WILSON: Thank you. Then, as matters progressed through March 2009, did the Office of Coordinator-General take a closer interest in the business model?

THE WITNESS: Certainly the – the meeting that occurred on the – I think 531 March provided a preliminary risk assessment, and my recollection of that risk assessment was that it highlighted the – the difficulty in achieving broad roll-out of the – of the proposal from 1 July. And – and we were attending that meeting on 31 March to discuss that issue. I can expand further on - - -

10MR WILSON: Don’t worry. We’re going to go there, but I’m just dealing with documents leading up to that. Could I have brought up on the screen, please, annexure C to your statement. It will be in the folder that you have, but also it’s AGS.002.008.3206. Now, this is an email from Mr Keefe into which you’re copied on 26 March. 15 THE WITNESS: Yes.

MR WILSON: And we will go to the attachments in a minute, but you will see Mr Keefe there says: 20 I have adapted the business model to reflect discussion we held this afternoon.

Were you aware that Mr Keefe was having discussions with the Office of Coordinator-General about the business model on or about 26 March 2009? 25 THE WITNESS: I wasn’t aware of the specific conversation, but I was aware that we were regularly in contact with the Office of Coordinator-General.

MR WILSON: Were you aware that the view was being expressed by the Office of 30Coordinator-General that the business model needed to place an emphasis on protecting smaller operators?

THE WITNESS: Yes. We had had a number of discussions, and I can’t recall if I had those with the Office of Coordinator-General as well, but certainly Kevin and I 35had discussed the concern about – about smaller operators potentially being excluded from – from the – the business model and the need to try and ensure that – that the business model catered for them so they weren’t effectively squeezed out of the market by – by the program. We had also had a number of discussions about – about approaches to regional and rural areas where – where the incentive for – for 40commercial providers to travel long distances, potentially, to insulate small numbers of individual homes was – was a concern, and how that might be accommodated within – within some of – I think the reference to hybrid approaches – and additionally for – for indigenous communities – whether there was an approach that might be taken for indigenous communities as well that – that would enable a 45business model that would work in those areas.

MR WILSON: And the second paragraph, last sentence:

20.3.14 P-360 R.M. CARTER XN ©Commonwealth of Australia MR WILSON Some models may require ministerial decisions to change the agreed and announced policy settings.

What did you understand that to refer to? 5 THE WITNESS: I understood that to – to mean the – the timing of and nature of the roll-out of the program.

MR WILSON: And you had already – I’m sorry. I should ask, did you know that 10KPMG had already been engaged to do some work on business models?

THE WITNESS: Yes. I think I was aware at that time and had, as part of the discussions with Mr Keefe – had – had some of the – the work that KPMG had done – that we discussed that, yes. 15 MR WILSON: If I could then get you to turn to annexure D to you statement, which is - - -

COMMISSIONER: Before you leave that document, that sentence that Mr Wilson 20referred you to: is that a suggestion that the new business model that’s proposed, whereby you have thousands of contractors, may take a longer period of time?

THE WITNESS: No, Commissioner. It was more that – that the announcement was for broad roll-out on 1 July, and we felt that – that it was more likely that we would 25be able to have roll-out in the more densely populated metropolitan areas, that the attractiveness and logistics of consortia putting those arrangements in place would – would lead to that occurring first and that some of the – some of the more regional and remote areas and less populated areas may take longer to actually get operating.

30COMMISSIONER: I see. We’ve heard about the business model up until March being, you know, probably 15 contractors. What sort of contractors were you thinking of there? I mean, was it big companies, building companies, Bunnings?

THE WITNESS: Yes, Commissioner. We – I – I think it was commercial in 35confidence at the time, but I do recall one that I think was put forward by – Spotlight, I think, was the entity, and it often involved – or the sorts of discussions we had had involved both an insulation manufacturer and its existing relationship with installing companies, as well as a company that might provide services – dispersed services that involved call centres and resources able to - - - 40 COMMISSIONER: So, basically, you contract out the whole task to a number of – around 15 companies.

THE WITNESS: Yes, Commissioner, to a number of – we anticipated that there 45would be some different arrangements between commercial partners. And, hence, I think, the concern about the procurement process, that we would be assessing some quite different and complex proposals from industry.

20.3.14 P-361 R.M. CARTER XN ©Commonwealth of Australia MR WILSON COMMISSIONER: So if you were to proceed on the pre-March model, what would you have had to do between March and July?

THE WITNESS: Between March and July, the sorts of steps, Commissioner, would 5be to have developed tender documentation, so to outline in quite some detail the services that were being sought by the Commonwealth, to then – and that would also have been informed by industry consultation on the sorts of things that they had in mind, so that - - -

10COMMISSIONER: That they might be able to provide.

THE WITNESS: Yes, indeed, and then to provide that tender information through the Commonwealth procurement process, which involves advertising.

15COMMISSIONER: I presume that’s fairly standardised.

THE WITNESS: It is a fairly standardised process, and has built-in timeframes to allow submission of proposals, and then an assessment process, which is also quite a tightly governed process around how tender proposals are assessed. And, generally, 20there’s document developed around how will – how that assessment will take place, what sorts of factors in the request – in the tender request – would get what kind of weighting in that assessment.

COMMISSIONER: That’s all processes in which the Commonwealth has great 25residual expertise.

THE WITNESS: Yes, Commissioner, and that – my division had done a number of very similar exercises.

30COMMISSIONER: Yes. That’s already happening between then and July. I mean, I’m not saying it’s a lot of – not a lot of work. You knew where you were going between March and July.

THE WITNESS: Yes, Commissioner, but the timeframe was - - - 35 COMMISSIONER: Tight - - -

THE WITNESS: - - - very tight for those processes, and particularly because of the potential complexity that some of the responses to the tender might take, the 40assessment of that, a decision to negotiate with a – with a preferred party – and then the timeframe to get that in place.

COMMISSIONER: So with this change of program in March, whereby instead of having 15 contractors you might have, as Mr Wilson mentioned before, 10,000, even 45with the help of the expertise of Medicare, that would have been a massively more complex task, wouldn’t it?

20.3.14 P-362 R.M. CARTER XN ©Commonwealth of Australia MR WILSON THE WITNESS: In terms of the relationship of the Commonwealth to many, as opposed to the relationship between the Commonwealth and a few, yes, Commissioner.

5COMMISSIONER: And the many including people who had never been in business before and were just starting up.

THE WITNESS: Yes, Commissioner.

10COMMISSIONER: So did it make sense to change from the first model to the second?

THE WITNESS: In my opinion, the end-to-end consortia model was a better model, Commissioner. 15 COMMISSIONER: That’s the pre-March model.

THE WITNESS: The pre-March model – yes.

20COMMISSIONER: Did you protest or – that’s the wrong word. Did you raise that at a higher level than yourself?

THE WITNESS: Certainly, we did. We raised it in the – in the meeting on 31 March. But as we were essentially in a – in a meeting with Parliamentary 25Secretary, representing Prime Minister and Cabinet as well as the Coordinator-General – their view of what the government’s direction was was that this was a preferred business model to meet the objectives that had been set.

COMMISSIONER: Mr Carter, I’ve not worked in the public service, and my 30knowledge of it comes only from Yes Minister. Is it not the role of senior people like yourself and those above you to, if I can say, push back and say, “Gentlemen, this won’t work,” or, “This is a very silly idea,” or, “It’s not the best idea”?

THE WITNESS: It certainly is our role to provide advice, Commissioner, on - - - 35 COMMISSIONER: Objective advice – that’s what you’re there for.

THE WITNESS: Yes. It’s also, though, to implement the policies of the government of the day. And we – certainly, Kevin and I were not happy with the 4031 March meeting. We had gone to that with a different intent, which was to gain acceptance of a progressive rollout of the preferred model, and left, essentially, with a clear view that the government wanted a broad-scale rollout and that we would be potentially – I think, at that time, it was still not determined as to the precise model, but that it would involve partnering with Centrelink or Medicare to deliver that. 45 COMMISSIONER: And in the end, of course, you do what you’re told.

20.3.14 P-363 R.M. CARTER XN ©Commonwealth of Australia MR WILSON THE WITNESS: Ultimately, yes.

COMMISSIONER: Yes. You give the advice. Then, having given the advice, you say, “Well, it’s my job, then, to implement the government’s decision.” 5 THE WITNESS: Yes, Commissioner. Yes.

COMMISSIONER: All right. Is that a convenient time?

10MR WILSON: Yes, Commissioner.

COMMISSIONER: We will adjourn now.

15ADJOURNED [11.01 am]

RESUMED [11.23 pm]

20 COMMISSIONER: Mr Wilson.

MR WILSON: Could we bring up annexure D to Mr Carter’s statement. This is a document that was annexed to that email that I took you to just before the break 25which is described by Mr Keefe as being an adaptation of the draft business model. Was a copy of that actually provided to you? You see it’s addressed “Deputy Secretary through Mr Carter”?

THE WITNESS: Yes. I – I – “through” generally means that it’s provided to me. 30 MR WILSON: And do you recall what adaptations there were to the business model that were encapsulated within this document?

THE WITNESS: No, I don’t. I don’t recall. 35 MR WILSON: You recall – I’m sorry, you see that in the document itself under the heading “Current actions” it says:

We’ve developing a draft overarching project plan in accordance with 40 Departmental guidelines for a tier 1 project.

Did a tier 1 project involve any particular extra reporting to you as the division head?

THE WITNESS: A tier 1 project at that time – I think it was a fairly new project 45management approach in the Department. Essentially, I think it had three tiers to it. The tier 1 was the most significant project level and essentially had a level of documentation and reporting that was elevated because of that.

20.3.14 P-364 R.M. CARTER XN ©Commonwealth of Australia MR WILSON MR WILSON: Including reporting to you.

THE WITNESS: Including reporting to me, yes.

5MR WILSON: And you will then see that a steering committee has been established chaired by you.

THE WITNESS: Yes.

10MR WILSON: Who was on that steering committee?

THE WITNESS: I can’t recall who was on that steering committee at that time.

MR WILSON: Is that what then became the Project Control Group? 15 THE WITNESS: No. I think the Project Control Group was quite a – a different approach and I’m not sure who or where the suggestion for the Project Control Group came from, and I was reflecting on this since my statement, and I think it may have actually been from Medicare that – the suggestion to adopt that framework 20rather than the tier 1 project framework.

MR WILSON: Do you recall how many people were on the steering committee?

THE WITNESS: No, I don’t recall that. 25 MR WILSON: Was it four or five or 20?

THE WITNESS: I just don’t recall that steering committee.

30MR WILSON: Were minutes kept of the steering committee?

THE WITNESS: I would assume they were.

MR WILSON: And what was the task of the steering committee? 35 THE WITNESS: The – the steering committee would have been to make sure that the areas in the Department that were needed to deliver on the various actions under the project plan were aligned and that issues could be brought up that might need resolution across the Department. 40 MR WILSON: What’s described there looked to me as internal matters.

THE WITNESS: Yes. Yes.

45MR WILSON: Did the steering committee have anything to do with, for example, product type, training, delivery models – things like that?

20.3.14 P-365 R.M. CARTER XN ©Commonwealth of Australia MR WILSON THE WITNESS: I don’t recall that level of detail of it but I would have thought that the steering committee was more about the framework of being organised rather than the specific technical work that might need to occur within that project.

5MR WILSON: Then you will see there the second dot point:

We will present the draft risk management plan to Senator Arbib next week.

But were you aware that Senator Arbib had made a request for a copy of a risk 10assessment document or a risk management plan?

THE WITNESS: I – I wasn’t – no. I can’t recall what the request was other than that the meeting with Senator Arbib had been in place for some time.

15MR WILSON: What was Senator Arbib’s role in the HIP?

THE WITNESS: My understanding of Senator Arbib’s role was that he was the Parliamentary Secretary to the Prime Minister and was responsible for all of the stimulus package measures on behalf of the Prime Minister. 20 MR WILSON: So what does that mean?

THE WITNESS: That means that he had the responsibility to ensure that the package of measures was being progressed and implemented – would be my 25understanding of it, but - - -

MR WILSON: At a political level?

THE WITNESS: At a political level, yes. 30 MR WILSON: As matters moved forward, whilst you were still engaged with the HIP, did Senator Arbib play any particular role that you recall?

THE WITNESS: I don’t recall meeting with Senator Arbib after that meeting. 35 MR WILSON: Do you recall receiving communications or receiving advice from your Department that such and such was required by Senator Arbib or “We need to do this for Senator Arbib” – matters such as that?

40THE WITNESS: I don’t recall that.

MR WILSON: Now, in terms of the second page of that document, if we could just go to the “Brokerage and service delivery models” heading – a hybrid approach. Now, does that then indicate in the third paragraph that you had already identified at 45least four potential regional brokers?

20.3.14 P-366 R.M. CARTER XN ©Commonwealth of Australia MR WILSON THE WITNESS: Yes. And as I mentioned earlier, I recall I think a document that Spotless had provided to us that was essentially their version of what the model that we had in mind might look like.

5MR WILSON: And if we go towards the bottom of that page there’s a paragraph starting:

A procurement strategy with low transaction costs and risks for government.

10What did you understand, at that stage, were the risks for government?

THE WITNESS: I’m – I mean, it is a very general way that it’s expressed there but the approach that we had taken with other programs was that the Commonwealth in engaging with a few through a contract process gave – gave the Commonwealth 15great control over the terms of that contract and the way in which it was executed and that various requirements could be build into that contract to manage risks for government.

MR WILSON: Now, it seems, then, that the author of this document, who is Mr 20Keefe, is also – as at 26 March – at least commencing to look at a large market based approach. Do you see that in the last paragraph on that page?

THE WITNESS: Yes, I see that.

25MR WILSON: Do I read that correctly? That is, he’s looking at the model which was eventually put into place, that is, direct interaction between the Commonwealth and how ever many installers were under the program.

THE WITNESS: I don’t think that means that because - - - 30 MR WILSON: Right.

THE WITNESS: - - - I hadn’t discussed – or Kevin and I hadn’t discussed that model. I think what is being referred to there is that going to market for large 35consortia, that care needed to be taken to make sure that that provided for competition and access amongst installers within that model.

MR WILSON: Now, that document is dated 29 March 2009. So as at that date, demands of the Department were still regional brokerage model? 40 THE WITNESS: Yes.

MR WILSON: Now, did you then attend a meeting on 31 March 2009?

45THE WITNESS: I did.

MR WILSON: How did that meeting – how did you come to attend that meeting?

20.3.14 P-367 R.M. CARTER XN ©Commonwealth of Australia MR WILSON THE WITNESS: I can’t the detail of how I came to attend that meeting other than because it was of significance involving the Office of Coordinator-General and Senator Arbib, that I would accompany Kevin to that – to that meeting. And, as I mentioned earlier, we had prepared a preliminary risk assessment which had 5identified some concerns about meeting the announced objective of rollout on 1 July across Australia and we were wanting to discuss that issue, and I think if we go back to the earlier document you drew my attention to, the reference to potentially some change to announcements would have been referring to needing to announce those sorts of changes. 10 MR WILSON: You mentioned, in answer to a question that the Commissioner asked you before the break, that you went to the 31 March meeting with a different intent.

15THE WITNESS: Yes.

MR WILSON: Just explain. What did you understand, before you walked into the room, you were there to discuss?

20THE WITNESS: Well, we had been developing this business model. Kevin and I had discussed prior to the meeting that we were going to be discussing the business model, including the – that we had developed, including the potential hybrid elements of that and the risk to timelines that might require some adjustment of – of announcement. 25 MR WILSON: And did you know who was going to be at the meeting?

THE WITNESS: I’m – I’m not sure if I had the detail of who was going to be in attendance, but I knew it would be Senator Arbib and Office of Coordinator-General 30from Prime Minister and Cabinet.

MR WILSON: Do you now recall who was at that meeting?

THE WITNESS: I have struggled to recall the – all of the officers there. In fact, on 35reflecting on that since my statement, I’m not sure if – if Mr Mrdak was or was not there, but – but I think that Mr Andrew Wilson, Mr Hoffman and – and Senator Arbib were there.

MR WILSON: Mr Levey? 40 THE WITNESS: I was thinking about that issue as – as well. I can’t recall that, but he may have been – he may have been present.

MR WILSON: Anyone else from the Department of Environment other than 45yourself and Mr Keefe?

THE WITNESS: Not that I recall.

20.3.14 P-368 R.M. CARTER XN ©Commonwealth of Australia MR WILSON MR WILSON: And you refer to the meeting in paragraph 30 of your statement – that that led to a discontinuance of the department’s proposed business model. Can you, as best you recall, go through the meeting from when it commenced, what was discussed and by whom? 5 THE WITNESS: In – from – from my recollection of the – of – of the meeting, the – I think the draft risk assessment was the first item that was discussed, and then the Office of the Coordinator-General – and I think this was Mr Hoffman – produced a number of slides of a business model that had been prepared by – by the Office of the 10Coordinator-General.

MR WILSON: Let’s just bring those up. They’re annexure E to your statement. Can we bring up AGS.002.008.0646, please. So you referred to a number of slides. Was there, like, a presentation given to you, or how did this come about? 15 THE WITNESS: My recollection of that was that this was handed to us in a hard copy form.

MR WILSON: Yes. And who was talking to the document? 20 THE WITNESS: I think it was Mr Hoffman that was talking to the document.

MR WILSON: And if we go to the second page of that document, just tell us – was the document handed to you? You read it to yourself, or did he work you through 25the document?

THE WITNESS: It – it – worked through the document.

MR WILSON: Now, all of the content of this document was prepared by somebody 30other than the Department of Environment; is that your understanding?

THE WITNESS: Yes. That’s my understanding.

MR WILSON: And they were the objectives that you were told were held in respect 35of the HIP?

THE WITNESS: Yes.

MR WILSON: And the last item on that page, “Minimise government risk”: do you 40remember what Mr Hoffman said about that topic?

THE WITNESS: No. I – I don’t recall.

MR WILSON: If we go to the next page. Now, you had been working for two 45months at this stage on your proposed model, and then you’re shown this. What was your reaction?

20.3.14 P-369 R.M. CARTER XN ©Commonwealth of Australia MR WILSON THE WITNESS: Well, one of – of – of, I guess, surprise. We weren’t aware of a different model being prepared, and – and we were trying to get out heads around what the model that was being proposed was.

5MR WILSON: Did you say anything when this model is presented to you?

THE WITNESS: At – at the time, I – I recall that we were wanting to talk about the model that we had developed and – and its advantages. And on this model, I think we had it explained to us as to how it was envisaged it might work. 10 MR WILSON: And was it in the sense of, “We know what you are working on. Here’s something else. Let’s discuss which is the better one,” or was it more, “Here’s how you’re going to do it”?

15THE WITNESS: It was more, “Here’s how you’re going to do it.”

MR WILSON: So were you told at that meeting that the regional brokerage model was to be put to one side?

20THE WITNESS: Not – not as firmly as that at that point. I recall Kevin and I discussing on the way back from the meeting that because we weren’t sure of the components of this – of this model, that we would continue to develop the models we had been – we had been developing as well as – as this model.

25MR WILSON: So the first time that you were even aware of this proposal was at the meeting itself?

THE WITNESS: Yes.

30MR WILSON: You weren’t forewarned by either the Office of the Coordinator-General or the Department of Prime Minister and Cabinet?

THE WITNESS: No.

35MR WILSON: Can I get you to turn, then, to annexure E to your statement, which is AGS.002.008.0651. And was this another document that was provided to you?

THE WITNESS: I – I don’t recall that document in the meeting. My recollection is more of the slides, but it may have been. 40 MR WILSON: Just looking at the document, do you now recognise it as a document that was provided to the department, whether at that meeting or in the days following it?

45THE WITNESS: I – I understand it was provided as part of an email following the meeting.

20.3.14 P-370 R.M. CARTER XN ©Commonwealth of Australia MR WILSON MR WILSON: And you will see under the heading Methodology:

The scheme is designed to allow market forces to work and to deliver the efficiency effectiveness without providing a centralised solution. 5 So it was quite clear that it was departing from the regional brokerage model - - -

THE WITNESS: Yes.

10MR WILSON: - - - and letting the market rip.

THE WITNESS: Yes.

MR WILSON: And did anyone, either at the meeting on 31 March or in the days 15following, explain to you why they had come up with this model?

THE WITNESS: At the – at the meeting, I think the – the – the rationale for it was primarily that the government wanted full roll-out nationally on 1 July, and they wanted that to be a dispersed roll-out so that it occurred in regional and remote areas 20as well as in – in the metropolitan areas and that – and that it provided for – for, essentially, broad participation.

MR WILSON: And if we then go to the part of the document headed Authorised Installers. Do you see that? Now, prior to the commencement of the roll-out, your 25department was, in conjunction with states and territories where applicable and the centralised – sorry – the contractors processing centre, which I understand became Medicare:

...will compile a list of installers who are authorised. 30 Now what, to your knowledge, did your department do to liaise with states and territories about the proposed rollout?

THE WITNESS: The – yes. I can’t recall. 35 MR WILSON: You can’t recall if there was any liaise with states or territories?

THE WITNESS: No, I think there was liaison with states and territories but I can’t recall the detail of that. 40 MR WILSON: How? How was the liaison? Did someone pick up the phone? Did somebody send an email? Was there a meeting convened?

THE WITNESS: I’m not sure how that would have been done. Generally, we 45would have sought contacts in – in relevant state agencies. We would normally look to a relevant Commonwealth agency that may have those contacts, and we may have looked to – because I think the Coordinator-General had a network of state – state

20.3.14 P-371 R.M. CARTER XN ©Commonwealth of Australia MR WILSON and territory Coordinator-Generals that – that may have been part of that discussion on - - -

MR WILSON: Did you understand that as well as the Commonwealth Coordinator- 5General, a network of state Coordinators-General had been – if not put in place then were being made aware by the Commonwealth Coordinator-General of what was happening?

THE WITNESS: Yes. I understood that to take place. 10 MR WILSON: How it then possible for the Department, at its level, to liaise with states and territories? Is there a commensurate or a similar position at state level that you were able to communicate across or would it have to go up to the Coordinator- General, across to the states and then down? I’m just trying to understand how that 15worked.

THE WITNESS: My understanding of how the Coordinator-General’s work was that it was through the Commonwealth Coordinator-General that those conversations took place. 20 MR WILSON: But was it possible for the Department to liaise directly with the state counterpart?

THE WITNESS: I’m – I’m not aware of that. I think we would have gone through 25the Commonwealth Coordinator-General.

MR WILSON: So where it says, “the Department of Environment in conjunction with states and territories”, that’s something you understood had to be arranged through the office of Coordinator-General? 30 THE WITNESS: I don’t recall that particular part of the documents so I can’t – I would be speculating on that.

MR WILSON: And we just scroll down, then, to the “Program delivery manager” 35heading. Was it discussed with you that there needed to be a program delivery manager?

THE WITNESS: Yes. I think that was in the – as I say, the discussion was largely around the diagram, from my recollection, and that that role, I think, was envisaged 40to have been Centrelink.

MR WILSON: Who became the program delivery manager?

THE WITNESS: I think it was Medicare that became the actual deliverer. 45

20.3.14 P-372 R.M. CARTER XN ©Commonwealth of Australia MR WILSON MR WILSON: And was Medicare the repository of the installer details? That is, once installers registered under the program, their details would be kept by Medicare?

5THE WITNESS: I – I – that’s the best of my recollection. That’s - - -

MR WILSON: So then, if that installer submitted a claim for payment it would go through the computers to Medicare and the payment would be made to the installer.

10THE WITNESS: Yes. I understand that’s the mechanics.

MR WILSON: But the Department of Environment also maintained a role of monitoring or supervising who went onto the register?

15THE WITNESS: I’m not sure on how that worked. I do recall having some difficulty reconciling databases at one point but - - -

MR WILSON: That is – there seems to be no doubt that the Department devised some guidelines and developed some forms that people could fill in to certify that 20they had the requisite competencies under the program to become registered. Are you aware of that?

THE WITNESS: Yes, I’m aware of that.

25MR WILSON: I’m just wondering whether, then, those forms were checked by the Department or whether they simply went back to Medicare for entry into the system.

THE WITNESS: I – I can’t recall the transaction of that, how that occurred.

30MR WILSON: Could I then take you to document AGS.002.008.0643, please. Just familiarise yourself with that document, and I wanted to ask whether it was given to you on or shortly after 31 March, it being the date it bears.

THE WITNESS: I don’t recall that document. 35 MR WILSON: Does that mean that you don’t think it was given to you or you now just don’t recollect the content of it?

THE WITNESS: I just don’t recollect the content of it. 40 MR WILSON: Well, let’s see if some of it refreshes your memory. You will see in the second paragraph:

A meeting was held today with PM& C OCG staff, Department of Environment 45 staff, a representative from Minister Garrett’s office and Senator Arbib.

Now, you’ve told us you recall Senator Arbib being there.

MR WILSON: I asked you whether Mr Levey, a representative of Minister Garrett, was there and you couldn’t recall. 5 THE WITNESS: I couldn’t recall but this document indicates that a representative from his office was there and it would most likely have been Mr Levey.

MR WILSON: Then you have – I’m sorry. When you see PM&C/OCG, does that 10signify to you that there were people there from both the Department and from the Office of Coordinator-General or is that just an amalgam of the two?

THE WITNESS: I assume it’s an amalgam of the two but there may have been staff that weren’t formally in the Office of the Coordinator-General part of Prime Minister 15and Cabinet.

MR WILSON: And do you see the first program – first line there. I’m just wondering whether this jogs any memory of the discussions at the meeting.

20 The program must be in place for the announced 1 July launch date.

Was that made clear to you?

THE WITNESS: It was at the meeting, yes. 25 MR WILSON: By?

THE WITNESS: I think by the Officer of Coordinator-General. I can’t recall if – if Senator Arbib made that clear as well. 30 MR WILSON: And then to meet that timeline:

Full agreement by all relevant parties on the delivery model must be reached by 9 April. 35 That is, nine days. You had been working on the model for two months.

THE WITNESS: Yes.

40MR WILSON: What reaction was there to that?

THE WITNESS: I don’t recall that part of the document but I do recall that there was a subsequent meeting that involved, I think, my secretary, Ms Kruk, Mr Mrdak, I think the – I think the CEO of Centrelink, Mr Pratt – I think it was at that time – and 45I think representative from Medicare at a senior level as well. That for the purpose of agreeing on the delivery model.

20.3.14 P-374 R.M. CARTER XN ©Commonwealth of Australia MR WILSON MR WILSON: Do you recall at the meeting on 31 March being told that the model had to be in place and all agreed by 9 April?

THE WITNESS: I don’t recall being told that at that meeting, no. 5 MR WILSON: If you were told later than that, it would have given you even less time, wouldn’t it?

THE WITNESS: Yes. 10 MR WILSON: Did anyone – did you think of saying “This just isn’t possible”?

THE WITNESS: We were – as I’ve mentioned – quite surprised at the meeting. We hadn’t had time to prepare or consider the model or test its veracity, and we were 15unfamiliar with Centrelink and Medicare at that sort of detailed end of their capability and capacity.

MR WILSON: With all of those uncertainties, were you like a deer in the headlights or did you actually say, “Look, there’s all things that have got to be worked through. 20We just can’t do it by 9 April.”?

THE WITNESS: Those matters were happening at a very senior level so, no.

MR WILSON: So it wasn’t your place to resist what you were being told? 25 THE WITNESS: I didn’t feel that, no.

MR WILSON: Sorry, you didn’t feel that it wasn’t your place or you didn’t feel that you could resist? 30 THE WITNESS: I didn’t feel that I could resist.

MR WILSON: Because Senator Arbib and Office of Coordinator-General are saying, “This shall be done,” you just absorb that and do the best you can? 35 THE WITNESS: Yes.

MR WILSON: Just working our way through this document:

40 Program should be open to all insulation installers who meet the required registration standards.

Did you know, as at 31 March, whether those standards had even been settled upon?

45THE WITNESS: No. I didn’t.

20.3.14 P-375 R.M. CARTER XN ©Commonwealth of Australia MR WILSON MR WILSON: Did you know what types of products were going to be permitted to be used under the scheme as at 31 March?

THE WITNESS: No. I don’t think so, though I’m not sure if that had occurred for 5the phase 1 guidelines or – or not.

MR WILSON: Correct me if I’m wrong, but phase 1 essentially involved existing installation businesses continuing to carry on work until the program rolled out on 1 July, that is, experienced existing businesses were doing the work under phase 1. 10 THE WITNESS: Yes. Existing businesses.

MR WILSON: And the new entrants to the industry were going to occur as and from 1 July. 15 THE WITNESS: Well, I assume entrants to and from industry occurs all the time, but – but yes.

MR WILSON: The influx of new people was expected to occur after 1 July. 20 THE WITNESS: Certainly with the – the – the stimulus.

MR WILSON: And was it made clear to you at the meeting on 31 July that the objective was stimulus as opposed to energy efficiency? 25 THE WITNESS: That became – yes, that – that was made clear to us: that the primary objective of the – of the package was for the creation of and maintenance of jobs.

30MR WILSON: And, again, you may not have thought that this was your place, but did you say, “Well, that may very well be the objective, being stimulus, but you’ve still got to get all these things done properly before we roll this program out”?

THE WITNESS: We were certainly concerned because we felt we had developed a 35very sound business model for delivery, but as I mentioned, we – we weren’t aware of the different – the new model or the capability or capacity of Centrelink and Medicare other than that they were very large and capable organisations.

MR WILSON: Can we then just scroll down that page a little to “key issues”. Still 40open? Yes. Do you recall there being discussion at the 31 March meeting about who would be qualified to be an installer under the program, what competencies they would need to have?

THE WITNESS: I – I don’t recall a discussion about the specific requirements that 45– to become an authorised installer. But I – I do recall – and I’m not – I’m not sure if it was in this meeting alone, but – but that Prime Minister and Cabinet and the Office of Coordinator-General continued to – to propose a light-touch approach.

20.3.14 P-376 R.M. CARTER XN ©Commonwealth of Australia MR WILSON MR WILSON: What does that mean?

THE WITNESS: Their view – and I go back to my earlier comment that I understood that the government had selected this industry for the stimulus package 5because it didn’t have a lot of lead-in requirements to participate that – that PM and C were – were concerned that that additional or new requirements weren’t put in place.

MR WILSON: What about something as basic as making sure that this influx of 10new people into the industry were going to be competent?

THE WITNESS: I think there was a – an assumption that – and I think that industry had conveyed this as well – that – that installing installation – installing insulation was – was a relatively low-skilled part of the building industry and that – and that it 15would provide for employment and relatively easy entry into jobs.

MR WILSON: What about making sure that those people who were doing that work were aware of any dangers associated with it?

20THE WITNESS: There was certainly discussion around – around that over – over a number of – of – of months.

MR WILSON: Now, the model that you and your department had been working on, the regional model, placed a lot of responsibility on the intermediary to make sure 25that the work was done safely and competently, didn’t it?

THE WITNESS: It did.

MR WILSON: When that intermediary is removed and there’s direct interaction 30between the Commonwealth and the installers, did you give any thought to the need, then, to make sure that those activities that you thought the intermediary would be looking after didn’t fall away but, rather, were dealt with by the Commonwealth?

THE WITNESS: That – that was certainly part of the revision of the risk register 35and consideration of issues.

MR WILSON: What about at the meeting itself? Did you say, “”Well, hang on, if we change the model this way, all these problems are going to arise that we need to address”? 40 THE WITNESS: We certainly raised the – the concern that we would go from a model that involved relationship between the department and – and a few to potentially a relationship with – with many and that that involved a lot more potential complexity. 45 MR WILSON: How did you raise that?

20.3.14 P-377 R.M. CARTER XN ©Commonwealth of Australia MR WILSON THE WITNESS: I – I can’t recall the exact - - -

MR WILSON: Do you recall if it was you or Mr Keefe who raised that?

5THE WITNESS: I can’t recall if it was I or Mr Keefe or – most likely both of us in conversation.

MR WILSON: You’ve given us the general context that there would be an increased level of complexity. In what respect? 10 THE WITNESS: Just in the numbers of – of – of interactions that would need to occur.

MR WILSON: But whilst an intermediary might make sure that there was a training 15system in place, that would now be the responsibility, perhaps, of the Commonwealth?

THE WITNESS: The – I would go back to the earlier intent of government which – which – or consideration, as I understood it, of government that – that this was an 20established or existing industry that was operating at that – at that time.

MR WILSON: But it was an industry that was unregulated except in South Australia.

25THE WITNESS: I’m not sure that it was unregulated in – in – in that sense. My understanding was that there were general requirements for – for how people that operate in the building industry conduct themselves.

MR WILSON: That is, there were occupational health and safety prerequisites that 30had to be met by employers to employees?

THE WITNESS: Yes. And, I would assume, other – other frameworks in place at state levels around how those things occur.

35MR WILSON: What investigations, if any, did you make or, to your knowledge, did your department make about those state regulatory regimes?

THE WITNESS: I’m not aware of us making detailed examination of how schemes that were the responsibility of the states were operated. 40 MR WILSON: Did you become aware, for example, that in South Australia, insulation installers had to be licensed?

THE WITNESS: I – I was made aware of that, yes. 45 MR WILSON: At about this time?

20.3.14 P-378 R.M. CARTER XN ©Commonwealth of Australia MR WILSON THE WITNESS: I can’t recall the date that that occurred. It would have been in this period.

MR WILSON: Did you become aware that no other state or territory had a licensing 5regime?

THE WITNESS: Excuse me. I was aware that South Australia was the only state that had that regime.

10MR WILSON: Did you find out, for example, that there was an entity known as the Electrical Safety Office in Queensland?

THE WITNESS: I – I can’t recall at that time being aware of that office.

15MR WILSON: Or a similar office in other states and territories?

THE WITNESS: No. I had assumed there was a range of bodies in place.

MR WILSON: Do I draw from the evidence that you’re now giving that there was 20an expectation, and that the Commonwealth worked on an assumption, that occupational health and safety issues would be dealt with at a state level or as between employer and employee?

THE WITNESS: Yes. 25 MR WILSON: Can I take you, then, to annexure G to your statement, which is document AGS.002.007.2001.

MS ...... : ..... Mr Wilson. 30 MR WILSON: Sorry?

MS ...... : That document is not currently available .....

35MR WILSON: I see. I think the parties have, through the data room, Mr Carter’s statement with the annexures. Do you have a copy of that in front of you, Mr Carter?

THE WITNESS: Annexure G - - -

40MR WILSON: Annexure G - - -

THE WITNESS: Yes.

MR WILSON: Now, this is a brief to Minister Garrett - - - 45 THE WITNESS: Yes.

20.3.14 P-379 R.M. CARTER XN ©Commonwealth of Australia MR WILSON MR WILSON: - - - prepared by Mr Keeffe.

THE WITNESS: Yes.

5MR WILSON: Mr Hughes is the secondary contact. What position had he assumed at that stage? We’re talking, now, about early May 2009.

THE WITNESS: I’m not sure of the title of that position, but Mr Hughes had come in to assist Mr Keeffe as a director. Mr Hughes had quite some experience in the 10finance and procurement areas of the organisation.

MR WILSON: And do I understand from this document that the stage had been reached, by immediately prior to 7 May, that Medicare was going to be the delivery vehicle? 15 THE WITNESS: Yes. I think that that had been – my recollection of that was that the discussions that occurred at Centrelink – and I think it was in the week following 31 March, the meeting that we were discussing earlier. I think that at that meeting Medicare was identified as the most likely entity, and this confirms that later. 20 MR WILSON: And is this the document by which Minister Garrett is asked to approve – and just flick to the second page, Recommendations – approve not only the business model that involved Medicare, but also the phase 2 guidelines for both the Home Insulation Program and the low earnings, I think it is – below income 25people’s guidelines?

THE WITNESS: Yes.

MR WILSON: And were they then approved by the Minister, to your knowledge? 30 THE WITNESS: I believe so, yes.

MR WILSON: Now, at the same time as that was happening, were you provided with copies of the risk registers that were being developed within the department? 35 THE WITNESS: The risk register, I think, was a regular item at the project control group meetings.

MR WILSON: Before the project control group commenced, were you made aware 40that risk registers were being developed with the assistance of Ms Coaldrake?

THE WITNESS: I was aware they were being developed. As I mentioned, a preliminary risk assessment was sent to Prime Minister and Cabinet prior to the meeting of 31 March. 45 MR WILSON: And were you provided with draft risk registers for your input?

20.3.14 P-380 R.M. CARTER XN ©Commonwealth of Australia MR WILSON THE WITNESS: I can’t recall. I think those draft risk registers were – well, they were certainly part of the material for the 31 March meeting. I’m not sure if that was a complete register or the – or the high level summary of it. And the – and at project control group meetings, the register was a part of the papers for those meetings. 5 MR WILSON: Yes. Now, can I have brought up on the screen that first risk register document of 27 March. Everyone has got hard copies. Might be easier, rather than straining your eyes on the computer. Now, I’m told, if you turn to tab 1 of that document, that this is the risk register as at 27 March 2009, that is, before the 10meeting that you went to with the Office of the Coordinator-General and Senator Arbib. Do you see that?

THE WITNESS: I see that.

15MR WILSON: And box – are you aware of documents in this form?

THE WITNESS: Yes. I have seen documents in this form.

MR WILSON: And you will see in box 4, or heading 4, Installation Quality and 20Compliance, Poor Quality Installations, Compliance Costs, Safety – House Fire and Damage, insufficient number of auditors of the risks that are identified there.

THE WITNESS: I see that, yes.

25MR WILSON: When this is provided to you, was any explanation given as to what things meant in it?

THE WITNESS: I don’t recall this specifically. It doesn’t accord with what I recollect, the document that went to Prime Minister and Cabinet. 30 MR WILSON: It wasn’t in this format.

THE WITNESS: Yes, not to the best of my recollection. I thought it was a simpler format that drew attention to the – to the timing issue, in particular. But it may have 35been.

MR WILSON: Can I ask you – perhaps, if we can have brought up on the screen at the same as you’re looking at that – can we have Ms Brunoro’s statement, annexure 28. Is that possible to be brought up? You will see from the covering 40email that’s on the screen now that Ms Coaldrake is involved, at least, as at 24 March 2009.

THE WITNESS: Yes.

45MR WILSON: Some work had been done on the day before. Are you aware that there was a workshop done on 23 March?

20.3.14 P-381 R.M. CARTER XN ©Commonwealth of Australia MR WILSON THE WITNESS: I don’t recall that. I may have been aware of it.

MR WILSON: And a draft list of risks were sent through from Ms Coaldrake to officers in your division. 5 THE WITNESS: I can see that from the email, yes.

MR WILSON: Just scroll down, if we can, on that document. Do you see there there’s a document headed Outcomes of Risk Identification Workshop? 10 THE WITNESS: Yes.

MR WILSON: And there is an assignation of likelihood and consequence in the document. 15 THE WITNESS: Yes.

MR WILSON: And if we can just scroll slowly down, so the witness can follow down that document to tab – to box 15. Do you recall seeing a document like this for 20the risks that were identified by people in your own division – had been identified?

THE WITNESS: I don’t recall seeing this.

MR WILSON: Do you recall seeing a document where, for example, in item 15 – I 25pull this up for obvious reasons.

THE WITNESS: Yes.

MR WILSON: There’s: 30 …injury to installers from – poor quality installation.

And “installer injury”, asterisk, was identified.

35THE WITNESS: I see that identified, yes.

MR WILSON: Do you recall seeing a document where that risk, or risks, were identified?

40THE WITNESS: I don’t recall it, no.

MR WILSON: Because if we then go back to that first risk register, that risk seems to have dropped out a matter of a couple of days later.

45THE WITNESS: Yes. I can’t see it there.

MR WILSON: The best I can see is in box 4, “safety – house fire/damage”.

MR WILSON: Now, do I understand correctly that you were provided with copies of the risk registers in the format that I’m showing you now? 5 THE WITNESS: In this format?

MR WILSON: Do you recall having any discussion with any officer in your department as to the addition or deletion of particular risks? 10 THE WITNESS: No. I don’t recall any of those sorts of discussions.

MR WILSON: The document that’s on the screen speaks of:

15 Control by installers may be inadequate.

And that may lead to one of those consequences, which are described as likely with major outcomes. Having been identified by officers in your department, can you think of any reason why that wouldn’t be carried forward into the risk registers? 20 THE WITNESS: No. I can’t think of any reason.

MR WILSON: Moving forward, can you recall any discussion in the early stages of the Project Control Group process where the risk of injury to installers was discussed 25and whether or not that should be included in the register?

THE WITNESS: I – I can’t recall specific discussion around that. I can recall work health/safety issues being discussed in the Project Control Group.

30MR WILSON: Tell us about that.

THE WITNESS: I don’t have a – a detailed recollection of – of that other than as part of the – I think some of the requirements for – for installer participation – discussions about the role of supervisors and of training. There was reference to a 35white card, which I understood to be an occupational health and safety ticket required for – for people working on building sites. And – and once again, those discussions were generally in the context of there being existing state frameworks for managing those issues.

40MR WILSON: Did you make any inquiries yourself or, to your knowledge, did any of your officers make inquiries as to what having an occupational health and safety white card actually meant?

THE WITNESS: I – at the time, I think there was more detail gone into and that 45people had examined what that involved.

20.3.14 P-383 R.M. CARTER XN ©Commonwealth of Australia MR WILSON MR WILSON: Do you recall whether or not, prior to the end of April – just focus on that period – it was your understanding that all people working in the insulation industry, that is, business owners, supervisors and installers, in the sense of people getting into roofs, would receive training specific to insulation? 5 THE WITNESS: I don’t recall that.

MR WILSON: Would you expect that given the direct delivery model which was being proposed, such a training regime ought be put in place? 10 THE WITNESS: As I’ve mentioned, there was a general intent from – from government of not adding additional requirements or layers and an assumption that with an existing industry operating, that those arrangements were – were functioning.

15MR WILSON: An assumption from government means what?

THE WITNESS: It – it was a general assumption from – from – from people on the Project Control Group that there was a framework in place at state and territory level to deal with how people operated in the construction industry in a health and safety 20sense.

MR WILSON: Did you make any inquiries to determine whether or not any state or territory other than South Australia had any procedures in place that were in any way proactive as opposed to reactive, that is, obviously if there’s an accident, workplace 25health and safety investigate it, but steps that were proactive in the sense that making sure that people were trained, making sure that work conditions were safe and matters like that?

THE WITNESS: I – I was unaware of the detail of that or if inquiries were made. 30 MR WILSON: Were you aware of any competency standard being set under the Home Insulation Program?

THE WITNESS: I’m aware of work that we were looking at with the – and I forget 35what the acronym stands for – Skills Council on the sorts of competencies that – that might be incorporated into a training package.

MR WILSON: Do you recall whether, prior to the end of April, that skills package was going to involve training for all installers? 40 THE WITNESS: I – I don’t recall that, no.

MR WILSON: Just going back to the PCG process itself, you went to PCG meetings in the first couple of months of its existence? 45 THE WITNESS: I went to – to, I think, most of them, yes, but I don’t think all.

20.3.14 P-384 R.M. CARTER XN ©Commonwealth of Australia MR WILSON MR WILSON: And was it a process that involved full and frank debate, or was it a lot of nodding heads, with one person taking charge? Just describe to us that process.

THE WITNESS: It was, from my recollection, quite an open forum where – where 5both senior and – and other officers that were attending were free to express a view as part of the discussion.

MR WILSON: And when we see a decision recorded in the PCG minutes, is that a consensus decision, or is it the majority decision? 10 THE WITNESS: I don’t recall there being any voting, sort of, requirement in the meeting. It was, I think, more of a general consensus.

MR WILSON: And if views were expressed in different directions, one by the 15representatives of the Office of Coordinator-General and one from officers of the department, which usually prevailed?

THE WITNESS: It would be – be fair to say that the Office of the Coordinator-General had more authority than others. 20 MR WILSON: Going back to your statement, could I ask you, then, to turn to annexure I, which is document AGS.002.008.3362. Now, if we just scroll down to the bottom of the page first, you will see that’s an email from you to Mr Hoffman, who’s in the Office of the Coordinator-General, is he, or in the Department of Prime 25Minister and Cabinet?

THE WITNESS: He was in the Office of Coordinator-General within the Department of Prime Minister and Cabinet.

30MR WILSON: And he has, obviously, written to you about the Project Control Group meeting of 23 April?

THE WITNESS: Yes.

35MR WILSON: You speak there of the DEEWR, the Department of Employment element?

THE WITNESS: Yes.

40MR WILSON: And you express a concern.

THE WITNESS: Yes.

MR WILSON: What was the concern there? You speak about the government’s 45expectation perhaps as different to what the Department of Employment is looking at.

20.3.14 P-385 R.M. CARTER XN ©Commonwealth of Australia MR WILSON THE WITNESS: Yes. My – my understanding of how the Commonwealth department of – the DEEWR operated was that it ran the – the competency and training frameworks nationally but that – but that registered training organisations tended to provide actual training in response to – to demand and that – and that – that 5that would not meet the requirements of a program trying to create work and provide training, if you like, more proactively, but – so I was raising an issue of whether there’s scope for their funding to run more a targeted grant or incentive so that RTOs were providing courses ahead of there being demand.

10MR WILSON: So as at 23 April, the Department of Employment is engaged in aspects of the delivery of the HIP?

THE WITNESS: Yes. We were, I think, talking to them about – about how training is developed and provided. 15 MR WILSON: And then if we go to the email at the top of that page from Mr Mrdak to you on 24 April. Do you see that?

THE WITNESS: Yes. 20 MR WILSON: And I’m interested more in the second paragraph:

Have you now provided a formal brief to your Minister to agree the elements of the program roll-out? 25 See that?

THE WITNESS: Yes. I see that.

30MR WILSON: Is that the brief that we ..... minutes ago?

THE WITNESS: I would assume that – that that’s that brief, yes.

MR WILSON: 35 And is there a plan for ramp-up of the refund processing process?

Is that because under phase 1 of the program, it was taking some time to process the rebates? 40 THE WITNESS: Yes. We were struggling to – to process the – the refunds. I recall having, I think, a – a – I think it was an eight-week processing time, and – and we were starting to get a backlog of claims and complaints from people who had lodged those – those claims. 45 MR WILSON: Now, can I then get you to turn to annexure J to your statement which is AGS.002.007.1777. This is from an officer in your division, Mr Kimber.

MR WILSON: You knew he was working on the program?

5THE WITNESS: Yes. I think he was working for Ms Brunoro.

MR WILSON: Well, he may have, in fact, stepped into the position that Ms Brunoro formerly held.

10THE WITNESS: He may have at that point, yes.

MR WILSON: Now, the second page of that document is a weekly report, and you mentioned earlier that there was a template – is that a different document – AGS.002.007.1778. You mentioned earlier that there was a template document that 15was used to report to the OCG.

THE WITNESS: Yes, I did.

MR WILSON: Now, is this an example of such a document? 20 THE WITNESS: It certainly looks like that sort of document, if it was attached to that email.

MR WILSON: And some people refer to these documents as traffic light documents 25because of the colour status in the right-hand column?

THE WITNESS: Yes.

MR WILSON: Green means all good, proceeding as expected, does it? 30 THE WITNESS: Yes.

MR WILSON: In the second dot point under the Home Insulation Program you will see: 35 This management plan updated to reflect business model.

THE WITNESS: Yes.

40MR WILSON: So a copy of this document was provided to you?

THE WITNESS: Of the weekly report?

MR WILSON: Yes. 45 THE WITNESS: I – it may have been. I don’t recall it specifically.

20.3.14 P-387 R.M. CARTER XN ©Commonwealth of Australia MR WILSON MR WILSON: Well, is it a fair reading of that report to say that as at 30 April 2009 all amendments that were thought necessary for the risk management plan, phase 2 of the HIP, had been finalised?

5THE WITNESS: No, I wouldn’t interpret it that way. My understanding of risk management plans is that they are dynamic documents that continue to be – to be updated on a regular basis.

MR WILSON: Let me put it a slightly different way – that you had a risk 10management plan in place for your regional rollout model before 31 March?

THE WITNESS: We had done a preliminary risk assessment of that model.

MR WILSON: And you modified that as you thought necessary – when I say 15“you”, your division – thought necessary to accommodate the business model that you had been told to use at the 31 March meeting.

THE WITNESS: That would be how I understand that, yes.

20MR WILSON: You engaged CPSISC to do work on the training aspects of the program?

THE WITNESS: Yes, we did engage them.

25MR WILSON: And you’ve attached to your statement at annexure K – I don’t intend to go through it in any detail – the engagement of the Construction and Property Services Industry Skills Council and what they were engaged to do.

THE WITNESS: Yes. 30 MR WILSON: Thank you. Now, by June 2009 your involvement in the program had decreased?

THE WITNESS: Yes, it had. 35 MR WILSON: Did you still attend Project Control Group meetings after that time?

THE WITNESS: With less frequency, from my recollection.

40MR WILSON: And I want to deal with a meeting that you did attend on 8 May 2009. Could I bring up document AGS.002.007.1918, please. You’re, in fact – as you will see there – the chair of this meeting? Perhaps Mr Forbes was attending to other things.

45THE WITNESS: I see that, yes.

20.3.14 P-388 R.M. CARTER XN ©Commonwealth of Australia MR WILSON MR WILSON: Can I take you to agenda item 5, phase 2 business model update, and could I take you down to the second dot point of that, “Sign off of competencies and conditions”. Do you see that?

5THE WITNESS: I see that.

MR WILSON: Just read that to yourself.

THE WITNESS: Yes. I see that. 10 MR WILSON: Do I correctly read that as meaning that the Project Control Group decided that whereas previously all persons installing ceiling insulation had to have certain competencies, that was going to be changed so that only supervisors had to have those competencies? 15 THE WITNESS: Yes.

MR WILSON: What competencies would the actual installers need to have other than an OH&S white card? 20 THE WITNESS: I don’t recall the full spectrum of that but I – I do recall that it involved competencies of being tradespeople or working in the building industry for some time, those sorts of things.

25MR WILSON: I’m talking about the actual workers on the ground, not the supervisors.

THE WITNESS: The – the installers?

30MR WILSON: Mm.

THE WITNESS: I can’t recall what the requirement was there.

MR WILSON: Well, it was none other than an OH&S white card. Were you aware 35of that?

THE WITNESS: I can’t recall – I do recall a discussion on white cards so – so I would assume that I did know that at that time, yes.

40MR WILSON: And the decision is being made at this meeting to remove a pre- existing requirement that all installers have certain competencies to just requiring that supervisors have those competencies. Were you aware of that?

THE WITNESS: I am aware of that, yes. 45 MR WILSON: Was there any debate about that?

20.3.14 P-389 R.M. CARTER XN ©Commonwealth of Australia MR WILSON THE WITNESS: Yes, I think there was debate about that.

MR WILSON: In what sense?

5THE WITNESS: In the sense that I think the – that, once again, the issue of – of providing work for relatively unskilled workers was an overriding objective of the scheme and that having to require additional training or competencies for the installation of insulation above what was seen as being the requirements for work, health and safety on sites was going to be an additional piece of red tape. 10 MR WILSON: But the aim of this program is to get as many people as possible into this industry as a stimulus effect.

THE WITNESS: Yes. 15 MR WILSON: One of the ways of making – of taking steps to ensure that their workplace conditions were safe or that they were aware of risks was now being removed. Why was that happening?

20THE WITNESS: I once again go back to the assumption that there were existing frameworks in place that – that unskilled workers were coming on building sites in existing building industries and operating under those current arrangements, and I think the position was put in the Project Control Group that we shouldn’t be requiring additional barriers to the provision of employment opportunities to those 25workers.

MR WILSON: Somebody had thought before 8 May that imposing that sort of barrier was .....

30THE WITNESS: Yes.

MR WILSON: And that was someone within your department?

THE WITNESS: I agree with that, yes. 35 MR WILSON: Do you recall who was agitating or leading the debate on removing that requirement?

THE WITNESS: I – I don’t have a complete recollection of that but, to the best of 40my recollection, that was the Office of Coordinator-General representatives.

MR WILSON: And the rationale for that removal was that this would simply be imposing more red tape.

45THE WITNESS: Yes. I think that was one of the charges of the Office of Coordinator-General. Was to - - -

20.3.14 P-390 R.M. CARTER XN ©Commonwealth of Australia MR WILSON MR WILSON: Did anyone at the meeting, to your recollection, say, “No, we’ve got to look after the safety of these people”?

THE WITNESS: I think there was – there was a debate around that issue. 5 MR WILSON: Do you recall who was part of the negative campaign, if you like, that, “We shouldn’t remove this requirement”?

THE WITNESS: I don’t. I don’t recall that, no. 10 MR WILSON: Were you part of it?

THE WITNESS: I don’t recall my position, at that point, on it. No.

15MR WILSON: Just reflecting on it now, I appreciate we’ve got the benefit of hindsight. Think it was a good move to make on 8 May?

THE WITNESS: In – with the benefit of hindsight, I don’t think it was at all, no.

20MR WILSON: Why not?

THE WITNESS: Because, clearly, some of the supervisors that got involved in the program weren’t providing any local supervision or training, it would seem.

25MR WILSON: What about the training at the lower level? Do you think it’s a good idea to remove that requirement?

THE WITNESS: In hindsight, I don’t think that was a good idea, no.

30MR WILSON: Why not?

THE WITNESS: Because, as has emerged since there were – there were installers who weren’t supervising their staff.

35MR WILSON: No. Put aside the issue of supervision. What about training the actual people going into roofs of the dangers of the ceiling space?

THE WITNESS: Well, as I have said earlier, the assumption that – incorrect, though, in hindsight, it might have been – was that – was that there were existing 40arrangements that allowed – that allowed relatively unskilled workers to go onto building sites and undertake a range of activities, including insulation.

MR WILSON: And as well as removing the requirement for competencies of installers and imposing them only at the level of supervisor, was any thought given to 45actually mandating that the supervisors be on site? Because you know that didn’t happen, don’t you?

20.3.14 P-391 R.M. CARTER XN ©Commonwealth of Australia MR WILSON THE WITNESS: I am aware of that, yes.

MR WILSON: Was any thought given to mandating that supervisors actually be on site as supervisors, or was it just assumed that they would be? 5 THE WITNESS: No. I think there – I do recollect there being some debate around that issue.

MR WILSON: What was that debate? 10 THE WITNESS: The debate, I think, was that – was that in order to get the scale of potential employment – that supervisors may need to be supervising a number of sites in any one day.

15MR WILSON: And had to sign some sort of document to say that they had supervised people.

THE WITNESS: That – yes, I do seem to recall there being something of that nature. Yes. 20 MR WILSON: In your statement for the purpose of this inquiry, you’ve attached a copy of the statement that was prepared for the purpose of the coronial inquiry.

THE WITNESS: I have. 25 MR WILSON: In Queensland, I should say.

THE WITNESS: Yes.

30MR WILSON: That was prepared for you?

THE WITNESS: It was.

MR WILSON: You’ve made some comments, and in your statement, about – your 35statement for this inquiry – about aspects of that statement.

THE WITNESS: I have.

MR WILSON: Is there anything you wish to add to that? 40 THE WITNESS: No, there isn’t.

MR WILSON: Thank you.

45COMMISSIONER: Mr Carter, you realise how serious this is. In the last 10 minutes or so, you’ve agreed that the word “safety” was removed from the risk management plan in four or five days in March, and then somebody persuade the

20.3.14 P-392 R.M. CARTER XN ©Commonwealth of Australia MR WILSON committee to dispense with the requirement that had previously been recommended and accepted, that all installers have some training.

THE WITNESS: I do, Commissioner, yes. 5 COMMISSIONER: And you can’t remember any details of the discussion that gave rise to this removal of something that had previously been decided on.

THE WITNESS: I – as I’ve mentioned, the discussion that I recall was that the 10requirements were going to be a barrier for entrance into the program, and that wasn’t in keeping with the government’s intention that it be broadly available.

COMMISSIONER: Well, while it’s a barrier, it was something that was designed to make sure they were safe. 15 THE WITNESS: That – yes, Commissioner.

COMMISSIONER: All right. Mr Perry.

MR PERRY: I think you said to Mr Wilson that the business model that existed up 25until 31 March was in large part based upon, and incorporated, the work of Ms Mary Wiley-Smith. Is that how the business model was developed and what its content was?

THE WITNESS: It was certainly conceptually based on that approach, yes. 30 MR PERRY: And the approach developed by her was the concept on which it was based. By Ms Wiley-Smith – how she developed it was how the business program was, itself, conceptualised and then developed.

35THE WITNESS: Yes. The business model was - - -

MR PERRY: Thank you. That is the one up until 31 March.

THE WITNESS: Yes. 40 MR PERRY: Will you go, please, to STA.001.001.0271. Now, that’s the first page of Ms Wiley-Smith’s statement, who gave evidence on Monday. Where I want to take you through to is 0274 and paragraphs 23 and 24. Just read those to yourself, please. 45 THE WITNESS: Yes. I’ve read those.

20.3.14 P-393 R.M. CARTER XN ©Commonwealth of Australia MR PERRY MR PERRY: Those paragraphs encapsulate, to your knowledge, at that time, that aspect of the business model which existed up until 31 March; is that right?

THE WITNESS: The end-to-end business model that was proposed in – was similar 5to the Solar Cities program. Yes.

MR PERRY: Yes. But, more importantly, the reference by Ms Wiley-Smith to workplace health and safety in 23, managing the risks in 24 – those aspects were incorporated in the business model that existed up until 31 March, weren’t they? 10 THE WITNESS: Yes. They were.

MR PERRY: And they were, to your knowledge, incorporated in that program. That is, you understood that these were essential features of that business model. 15 THE WITNESS: In general, I would agree with that, that the business model incorporated a range of requirements that we would put into contracts.

MR PERRY: Of course, a range of requirements, but I’m focusing on those that 20Ms Wiley-Smith refers to in these two paragraphs. You understand that?

THE WITNESS: Yes, I do.

MR PERRY: You do. Now, will you turn up, please, RCI.006.001.0068. 25 MS ...... : Mr Perry, I’m afraid we don’t have that document.

MR PERRY: It’s transcript of the first day, so its starting page might be 006.001.0001. 30 MR ...... : Page 60 - - -

MR PERRY: 68 - - -

35MR ...... : 68 - - -

MR PERRY: Now, I want you to start just below line 25 on 68, and then read over to just above line 15 on 69. This is Ms Wylie-Smith touching upon, as you will see, matters in 23 and 24 of her statement that I just took you to. 40 THE WITNESS: Yes. I’ve read to the end of 45.

MR PERRY: That’s on 68. Will you now go over to 69 and read down to about line 15. That’s it. And the 54 that’s referred to around line 5 is para 54 of 45Ms Wiley-Smith’s statement. If you want to, we can turn that back up.

THE WITNESS: To where do you want me to - - -

20.3.14 P-394 R.M. CARTER XN ©Commonwealth of Australia MR PERRY MR PERRY: Just above line 15, where I ask a question. So stop at the witness:

Yes. So there was the element of training –

5etcetera. Do you see that answer?

THE WITNESS: I see that answer, yes.

MR PERRY: All right. Read those. 10 THE WITNESS: I have read those.

MR PERRY: Right. Thank you. As Ms Wiley-Smith is explaining, that is how the business model that was in place up until 31 March was meant to proceed with 15respect to this aspect of training and OH and S, wasn’t it?

THE WITNESS: Yes. From reading that reply, yes.

MR PERRY: Go back to page 68, then, please. Around line 40, there is an answer 20from her. Read that to yourself again, will you.

THE WITNESS: Yes. I’ve read that answer.

MR PERRY: Now, you spoke about the building industry to Mr Wilson just before 25he finished examining you. Just concentrate on the last two and a half lines of Ms Wiley-Smith’s answer there:

But we certainly understood that it was construction industry, and so, therefore, there had to be some level of due diligence and ensuring that people 30 were properly trained.

In the building industry or construction industry, the obligation is to ensure, as Ms Wiley-Smith said, people were properly trained. That was your mindset in the early part of 2009, surely. 35 THE WITNESS: Yes. That was the case.

MR PERRY: Thank you. Now, the way that the business model developed, as I read Ms Wiley-Smith’s statement of evidence, to ensure that people were properly 40trained is the next question and answer at the bottom of 68 and over the top of 69. Read that question and answer, will you.

THE WITNESS: I’ve read that, yes.

45MR PERRY: Right. So the way in which the training which she adverted to around line 40 as being something that had to be ensured was going to be met was by, in the

20.3.14 P-395 R.M. CARTER XN ©Commonwealth of Australia MR PERRY first instance, working with large established companies in the insulation industry, and that was how this business model, up until 31 March, was to proceed, wasn’t it?

THE WITNESS: Certainly by engaging with end-to-end providers, any training or 5other needs would have been – would have been built into those contracts.

MR PERRY: And could I ask you this just at this stage, then: when you talk about, as you have on a number of occasions, an established industry, what you were talking about is just the large established insulation companies that Ms Wiley-Smith 10was adverting to in this passage of her evidence and in her statement.

THE WITNESS: No. I – I wasn’t just referring to large – large companies. I assumed that in an industry that was delivering – and I don’t know the exact number, but I – I understand it was something in the order of 70 to 90 thousand installations a 15year, that there would be a variety of scales of – of company that might be involved in that work.

MR PERRY: Then if not the large companies that Ms Wiley-Smith was referring to, at least established insulation businesses. 20 THE WITNESS: Well, I go back to my earlier comment that – that – that I had assumed also that there were people that would move and out of elements of the building industry, including the insulation industry.

25MR PERRY: But people who had experience in the insulation industry, whether they moved in or out or were established over a long period.

THE WITNESS: Well, I would – I wouldn’t go so far as to understand the detail of that, sir, no. Whether they - - - 30 MR PERRY: But the point of it is, and the point of the business model up until 31 March was, that there was an existing knowledge and experience and competence base upon which the business model would draw in order, in part at least, to ensure the training of installers. 35 THE WITNESS: Well, that – that – you know, my – my understanding of the intent of government in choosing this industry was that – was that it was to leverage off an existing industry.

40MR PERRY: Thank you. Now, can you turn up, please, STA.001.002.0061.

COMMISSIONER: What was the last number? Double O - - -

MR PERRY: Six one. 45 COMMISSIONER: Six one.

20.3.14 P-396 R.M. CARTER XN ©Commonwealth of Australia MR PERRY MR PERRY: This is annexure 12 to Ms Brunoro’s statement. Now, this is a document, it would appear, generated by Ms Brunoro and Ms Wiley-Smith over that Australia Day weekend. Right? I want you to go to the last page of it, please. Good. Now, read “Commonwealth oversight” to yourself, please. 5 THE WITNESS: Yes. I’ve read that.

MR PERRY: Right. Now, can I go back to that transcript of Monday, please, which was RCI.006.001.0001, and in particular, after you arrive at the principal document, 10to page 70 of it, please. Right. Well, you start at about line 5. You will see:

I am asking her about just that paragraph of Commonwealth oversight that you touched on.

15Right? Read from line 5 down to line 30, please. Actually, down to line 40 would be better. Thank you. So if you go down to line 40.

THE WITNESS: Yes. I’ve read to there.

20MR PERRY: Now, what Ms Wiley-Smith agreed at about line 20 is that she was advising strongly against a large number of invoices and payments to installers or householders in each town or locality. That is the passage between about line 15 and line 30. You can relate that back to that passage in the Commonwealth oversight section of the document I showed you? 25 THE WITNESS: Yes. I can.

MR PERRY: And the reason for that then appears, in part, between line 30 and line 40: my question to her and her answer between those two sections: 30 The reason it should not involve, amongst other things – you couldn’t be content that such a large number of installers would either have the necessary experience in industry or, as a consequence, be able to train installers properly. 35 Her answer:

That was a consideration as well.

40She goes through a number of considerations. Do you see that?

MR PERRY: Was this document provided to you that she and Ms Brunoro 45generated?

THE WITNESS: It was sent to me, I think, yes.

20.3.14 P-397 R.M. CARTER XN ©Commonwealth of Australia MR PERRY MR PERRY: And sent to you at about the time it was generated, you would expect.

THE WITNESS: Yes. I think so.

5MR PERRY: Ms Wiley-Smith, who was, it seems, the principal author of the business model, seems to have a fairly clear position that she took, and which is confirmed by the approach she took in that document, that the aspects of training and OH and S which were necessary to ensure safety in a construction site were best served, firstly, by going to large or established insulation companies. That seems to 10be her position.

THE WITNESS: I would agree that the model that was proposed that involved both large installation companies and consortia was – was the – the business model that would best address those sorts of issues, yes. 15 MR PERRY: Thank you. And, indeed, the converse, as she seems to be strongly advising against, is not to go to a position where there is a large number of invoices and payments to installers or householders in each town or locality. And one reason that she strongly advised against that is that that model did not nearly have the same 20level of efficiency or effectiveness, in terms of OH&S safety, than the business model that you were advancing up until 31 March.

THE WITNESS: The business model we were advancing up until 31 March was, from my and the department’s perspective, a superior model. And I’ve already 25mentioned earlier that we were concerned about a model that involved a relationship with many, rather than a model with established end-to-end businesses. Yes.

MR PERRY: And, ultimately, as it rolled out, the model that came into being on and from 1 July was decidedly similar to that which Ms Wylie-Smith was strongly 30advising against, wasn’t it?

THE WITNESS: In terms of having relationships with many, yes, it was.

MR PERRY: And one of the consequences of the model that was ultimately rolled 35out is just that which Ms Wiley-Smith was adverting to – was in her mind back in January and February – namely, there couldn’t be the same level of confidence that the model, as it eventually existed, would provide sufficient competence and training to installers so that their safety could be properly protected.

40THE WITNESS: The model that we had been working on, that originated from that Solar Cities concept that Ms Wylie-Smith had put into the submission, as I’ve mentioned, we considered to be a superior model because you could build in those requirements into those arrangements.

45MR PERRY: And you couldn’t build it into the model as it was eventually rolled out.

20.3.14 P-398 R.M. CARTER XN ©Commonwealth of Australia MR PERRY THE WITNESS: No, you couldn’t.

MR PERRY: And once you couldn’t build it into the model, that aspect that Ms Wylie-Smith referred to in her evidence about: 5 As it is a construction industry, there had to be some level of due diligence and ensuring that people were properly trained.

And that’s at transcript 68. That couldn’t be met in the model as it was eventually 10rolled out, could it?

THE WITNESS: Well, as I’ve mentioned, the assumption that was made throughout the other model, the Commonwealth to many model, was relying on existing frameworks that were in place. But, no, you could not then put those 15requirements into – in the same way that you could into the business model we had been developing.

MR PERRY: May I take you, please, to AGS.002.008.0664.

20COMMISSIONER: Got a problem, Mr Perry.

MR ...... : It’s annexure D.

MR PERRY: Annexure D ..... statement. 25 MR ...... : Yes.

COMMISSIONER: There’s another copy of it in the database, somewhere. Do you have another reference for it? 30 MR PERRY: Yes. The minute - - -

COMMISSIONER: It’s all right. They’ve found it, Mr Perry.

35MR PERRY: Thank you. Sir, bearing in mind the time, we might try and - - -

COMMISSIONER: We will adjourn for lunch.

MR PERRY: Good. Thank you. 40

ADJOURNED [12.58 pm]

45RESUMED [2.16 pm]

20.3.14 P-399 R.M. CARTER XN ©Commonwealth of Australia MR PERRY COMMISSIONER: Mr Perry.

MR PERRY: Thank you, sir. What I had asked immediately prior to lunch is if we could turn up AGS.002.008.0664, which I think was annexure D to Mr Carter’s 5statement. That’s the one. Now, just scroll down a little, will you, please. Just stop there. Do you have that up on your screen, Mr Carter?

THE WITNESS: I do.

10MR PERRY: See the third dot point? Was a national or state register of trained installers ever developed?

THE WITNESS: I don’t recall whether that register was developed.

15MR PERRY: But it was considered to be a relevant point or an important point, that is, the register would not just be for putative installers but trained installers.

THE WITNESS: I – I – yes, I assume so.

20MR PERRY: And why was it considered to be of sufficient significance to be in these dot points known as key decision points?

THE WITNESS: I would assume that – to ensure that there was a register and a track of those who were participating. 25 MR PERRY: And that the people participating in the scheme would be appropriately trained.

THE WITNESS: Yes. That installers would meet the requirements. 30 MR PERRY: And what requirements? Of training?

THE WITNESS: Yes.

35MR PERRY: And the requirements of training being those, for example, that Ms Wiley-Smith referred to in the original business model.

THE WITNESS: Well, I think that as the business model was evolved, the – the requirements for installers included experience on building sites and those sorts of 40things.

MR PERRY: As the business model evolved, was there any agreement as to the level of training other than the white card?

45THE WITNESS: As I’ve mentioned a number of times, the – the instruction on – or intent of the program was not to – not to create additional entry burden for participants.

20.3.14 P-400 R.M. CARTER XN ©Commonwealth of Australia MR PERRY MR PERRY: Let’s consider that statement another way. The intent of the program was not to mandate any training at all other than the white card.

THE WITNESS: I – I – I don’t know that. 5 MR PERRY: Yes. You do. It’s the converse – isn’t it just exactly what you were saying? You describe it as not putting regulatory barriers or hurdles in front of people. What it meant on the ground was this program was rolled out on the basis, ultimately, that the training for installers would only be, as required, the white card. 10 THE WITNESS: For installers, as I understand it, there was a mix of requirements that included experience in the building industry.

MR PERRY: For installers, as compared to supervisors. 15 THE WITNESS: If by installers you’re meaning people who were employed to do installation other than the supervisors, then yes, the white card was my understanding of what was required.

20MR PERRY: And that was all that was required.

THE WITNESS: That was my understanding, yes.

MR PERRY: Just scroll down a little further, would you, please. A bit more. 25Right. Stop there. Do you see under the paragraph commencing “We have commissioned”?

THE WITNESS: Yes.

30MR PERRY: Second sentence:

As anticipated, the program overall has a high level of overall risk with extreme –consequences.

35See that?

THE WITNESS: Yes.

MR PERRY: At that time it was the understanding of the participants who received 40this minute that the program had a high level of overall risk with extreme consequences. Was that the program as at 31 March or post 31 March or both?

THE WITNESS: If this was prior to 31 March, it was that model.

45MR PERRY: And nothing that happened on 31 March or thereafter had any prospective impact at all on reducing either the level of risk or the consequences, did it?

20.3.14 P-401 R.M. CARTER XN ©Commonwealth of Australia MR PERRY THE WITNESS: Well, in – in terms of how high level of overall risks are determined, and extreme consequences, that can include a wide range of factors that can include financial loss to the Commonwealth or – or to industry. So, yes, I’m not sure exactly what the roll-up of that – of that overall risk was. It may have also 5included the risk of not meeting the – the government’s announced intent.

MR PERRY: Let’s see how extreme consequences were described. Will you go, please, to MIM.002.001.3926. You might have to start – 3925 might be the first page of this document. Go to 3926, the box marked 6. “Installer injury”: do you see 10that? The third dot point?

THE WITNESS: I do, yes.

MR PERRY: Right. Now, the number – just scroll up, would you, please, so we 15can just see the column that has the numbers 5, 5 in it. That’s the level of risk, isn’t it? Go to the previous page if that helps, would you, please. Right. “Likelihood and consequence”: see that?

THE WITNESS: Yes. I do. 20 MR PERRY: Right. Back down to box 6. 5 was the highest number, installer injury, at that time? Right? Then you see on the right-hand side the red EE. That’s extreme.

25THE WITNESS: The – the grouping of issues that are underneath installation quality, yes, gave rise to an extreme rating of risk.

MR PERRY: And that included at that stage installer injury?

30THE WITNESS: It did include that, yes.

MR PERRY: So one gathers that that was a component which had the appropriate level of risk and consequence?

35THE WITNESS: I would assume it was part of that assessment of extreme risk.

MR PERRY: Thank you. Well, let me just think about extreme risk and consequence and the statement that we were just considering in that minute: “a high level of risk with extreme consequences”. That would comprehend with it, if 40properly looked at, would it not, the risk to installers of injury and the consequences of such injury?

THE WITNESS: Yes. It would.

45MR PERRY: So at this stage, at least, it was anticipated across both documents that this program contained with it a high level of risk that installers would be injured and

20.3.14 P-402 R.M. CARTER XN ©Commonwealth of Australia MR PERRY that those injuries would fall into the extreme consequences category, namely, death or serious bodily injury.

THE WITNESS: I don’t know what the basis of that installer injury meant, but I do 5see the extreme risk in that column.

MR PERRY: And extreme consequences, hence the level number 5 or, indeed, on the right-hand column, if you want to go down, the red bar with “E” in it.

10THE WITNESS: Yes.

MR PERRY: Thank you. Now, can I take you to the risk register, please. I think you were given a hard copy, weren’t you?

15THE WITNESS: Yes.

MR PERRY: Right. Will you go to the fourth one, and you will see in the index the way this is described. The first three drafts – you see that in the index? I hope you’ve got an index. Right at the front? 20 THE WITNESS: I’m sorry. I can’t – I can’t see where the draft is.

MR PERRY: Right at the very front of the plastic-faced booklet, you should have a document called Key Document Bundle – Risk Registers. 25 THE WITNESS: Yes.

MR PERRY: Right. You see the first three are described as drafts?

30THE WITNESS: Yes. I see that.

MR PERRY: I want to go to the fourth, which is 9 April.

THE WITNESS: Yes. 35 MR PERRY: That seems to be the first one not described as a draft.

THE WITNESS: Yes.

40MR PERRY: Now, in that, will you go to box 3.

THE WITNESS: Yes.

MR PERRY: “Time available”. 45 THE WITNESS: Yes.

20.3.14 P-403 R.M. CARTER XN ©Commonwealth of Australia MR PERRY MR PERRY: Right? Go to the third column across, which is “Recommended management plan”.

THE WITNESS: Yes. 5 MR PERRY: Do you see the second last dot point:

Simplify business model where possible to reduce time constraints.

10Can you help us as to what that might mean?

THE WITNESS: No. I’m afraid I can’t.

MR PERRY: No? 15 THE WITNESS: No, sir.

MR PERRY: Okay. Go down to the next box, 4, where we have references Mr Wilson took you to, not to installer injury but “safety – house fire/damage”. Do 20you see that?

MR PERRY: Right. Go across to the fourth box, which is “Management plan”. 25 THE WITNESS: Yes.

MR PERRY: Now, the fifth dot point, “Regulation communication”: do you see that? 30 THE WITNESS: Yes. I see that.

MR PERRY: Right. So the management plan as at 9 April, at least, was that what would be required was: 35 ...regular communication with state and territory regulatory bodies in –

“place”, it should be, rather than “palce”, obviously. See that?

MR PERRY: You have, as I understand your evidence, no belief at all that there was between your department and the, say, Queensland regulatory offices which are relevant, that is, OH and S or Electrical Safety Office – that there was no regular 45communication or communication effectively of any kind.

THE WITNESS: Not – not that I was aware of.

20.3.14 P-404 R.M. CARTER XN ©Commonwealth of Australia MR PERRY MR PERRY: Not that you’re aware of, notwithstanding this management plan. Tell me, were you provided with this risk register in the PCG meetings and so forth?

THE WITNESS: The risk register was provided to PCG meetings. 5 MR PERRY: Who actually checked, for example, in this risk assessment and management system that, for example, on and from 9 April, regular communication with state and territory regulatory bodies, in fact, took place? Whose job was that, to see that the management plan was effected? 10 THE WITNESS: I don’t know whose specific that – job that was to - - -

MR PERRY: Would someone be tasked to do that?

15THE WITNESS: Yes. Normally someone - - -

MR PERRY: And who would know who that would be? Mr Keefe, if not you?

THE WITNESS: Mr Keefe would mostly likely know. 20 MR PERRY: Thank you. Now, go to the last dot point under “Management plan”:

Technical working group with industry covering safety and quality of product.

MR PERRY: Do you know of a technical industry working group that, in fact, convened?

30THE WITNESS: I understood that the consultation with – with the industry association groups was my understanding of what that was.

MR PERRY: Did that occur after 9 April?

35THE WITNESS: I’m not sure. I don’t know.

MR PERRY: Who would have been, from your department, a part of that? Again Mr Keefe?

40THE WITNESS: Mr Keefe would have – had that under his - - -

MR PERRY: Under his wing?

THE WITNESS: Yes. 45 MR PERRY: Thank you. Can I take you over to box 9, the third column now. Now, box 9 is:

20.3.14 P-405 R.M. CARTER XN ©Commonwealth of Australia MR PERRY Complex legal issues associated with the program may not be fully understood.

THE WITNESS: Yes.

5MR PERRY: Right?

THE WITNESS: Yes.

MR PERRY: Then the last dot point: 10 Review impact of legal risk as part of decisions on the appropriate business model.

Tell me, was legal advice ever taken, either from Mr Hoitink or anyone else, as to the 15legal issues affecting or concerning the business model as it was rolled out after 31 March?

THE WITNESS: I – I can’t recall.

20MR PERRY: Thank you. May I take you to box 11.

THE WITNESS: Yes.

MR PERRY: “Regulation.” Do you see in the management plan – sorry. Let me 25start again. Do you see the third column?

THE WITNESS: Yes.

MR PERRY: The first dot point, “Choose a regulatory approach.” 30 THE WITNESS: Yes.

MR PERRY: What this seems to indicate is what should be done is that a regulatory approach consistent with program methodology etcetera should be chosen. 35 THE WITNESS: Yes.

MR PERRY: Right. Next one:

40 Likely need to include specific regulatory aspects into contracts as the core focus of regulation.

See that?

45THE WITNESS: I do, yes.

20.3.14 P-406 R.M. CARTER XN ©Commonwealth of Australia MR PERRY MR PERRY: Now, you recall prior to lunch I took you to some parts of Ms Wiley-Smith’s evidence, and she rather seemed to proceed upon the business model that she preferred and, I take it, you preferred – carried with it, by dint of the previous experience your department had had, just such an incorporation into 5contracts in a detailed way regulatory obligations.

THE WITNESS: I’m not sure if “regulatory” is the – if I interpret that as legal, but in terms of – of requirements within the contract that had that effect, yes.

10MR PERRY: That not only didn’t happen but everyone knew couldn’t happen once the business model changed after 31 March to the way in which OCG required it to be changed.

THE WITNESS: That’s the case, yes. 15 MR PERRY: And under the management plan, you see the last dot point?

THE WITNESS: Yes. I do.

20MR PERRY:

Aligning program-specific regulation with state or territory regulations.

That couldn’t happen and didn’t happen under the business plan that was imposed by 25OCG either, could it?

THE WITNESS: No. In terms of the – the way the contracts were envisaged to work with the – the end-to-end providers was that if there were state and territory requirements, the contract would require compliance with those requirements. 30 MR PERRY: Right. Then, lastly, would you go to box 16, please: “training”.

THE WITNESS: Yes.

35MR PERRY: The one point I will just highlight – but one perhaps needs to read all of the boxes under this heading – is the last dot point under “Management plan”.

THE WITNESS: Yes. I’ve read that.

40MR PERRY: To your knowledge, the states were never consulted about training delivery, were they?

THE WITNESS: Not – not that I’m aware, no.

45MR PERRY: Right. And the first dot point:

20.3.14 P-407 R.M. CARTER XN ©Commonwealth of Australia MR PERRY A communication strategy to raise awareness of training availability amongst potential suppliers to be delivered from end June.

The potential suppliers who had any training capacity are only those large or 5established bodies that Ms Wiley-Smith spoke about in the evidence that I took you to this morning; isn’t that right?

THE WITNESS: I’m not sure what that - - -

10MR PERRY: Means.

THE WITNESS: - - - what that management plan - - -

MR PERRY: Right. Thank you. 15 THE WITNESS: - - - refers to.

MR PERRY: Put that down, will you, please.

20COMMISSIONER: Before you leave that, Mr Perry, this document number 4 that we’re looking at: is this based on the pre-31 March position, that is to say, on having 15 organisations roll it out rather than having 10,000?

THE WITNESS: I think so, Commissioner, yes. That it - - - 25 COMMISSIONER: Yes. It’s - - -

MR PERRY: But it’s 9 April.

30COMMISSIONER: Yes. I know.

MR PERRY: Yes.

COMMISSIONER: But the plan is continuing on, isn’t it? 35 MR PERRY: Well, a plan is referred to, but the plan had died, as I understand this witness, that is, the previous plan had died clearly, succinctly and absolutely on and from 31 March.

40COMMISSIONER: Except that the risk management plan isn’t - - -

MR PERRY: Doesn’t seem to have caught up with that.

COMMISSIONER: This one reads to me fairly clearly as though it’s the old one 45going forward.

MR PERRY: Can I take you to your statement, please. Do you have that?

20.3.14 P-408 R.M. CARTER XN ©Commonwealth of Australia MR PERRY THE WITNESS: Yes.

MR PERRY: Para 31. Just tell me when you’re there, Mr Carter, would you, please. 5 THE WITNESS: Yes. I’m there.

MR PERRY: Just the last few words of the paragraph. By what mechanism did OCG closely monitor what the department was doing? Your department. 10 THE WITNESS: There are a number of mechanisms in place for that. I’ve already mentioned the weekly reporting that – that was undertaken. But in addition, the – the OCG was – was represented on the Project Control Group.

15MR PERRY: Right. Can I take you to 39. Now, in this particular, as I read it, what you’re talking about is moving away from the model you had developed, but you are talking about aspects which that model, which was ditched, actually comprehended or relied upon.

20THE WITNESS: Yes. That the – the - - -

MR PERRY: For example, the last sentence starts about three lines up from the bottom – in relation this particular point, which is workplace health and safety issues – all right – as I understand what you’re saying is the assumption which underlay 25your model up until 31 March was that there was an established industry that was currently insulating homes, etcetera.

THE WITNESS: My recollection of that was that that assumption continued right through the program development. 30 MR PERRY: After 31 March?

THE WITNESS: Yes. That it was - - -

35MR PERRY: And after 31 March, the whole program moved manifestly away from engaging principally with an established industry group and went into a circumstance where a very, very large number of installers, experienced or not, were able to install insulation and claim money.

40THE WITNESS: There was – yes, a shift from – as we’ve discussed – from a consortia based model to one that allowed smaller providers to participate.

MR PERRY: And that being the case, that assumption could hardly continue after 31 March as being a valid assumption, couldn’t it? 45 THE WITNESS: My – as I’ve said, that was the assumption that was – that carried through.

20.3.14 P-409 R.M. CARTER XN ©Commonwealth of Australia MR PERRY MR PERRY: I know that’s what you say. What I asked you was bearing in mind how the business model changed and how it was anticipated that the installer group would change, the assumption that you speak about could hardly validly be said to apply to the post-31 March model, couldn’t it? 5 THE WITNESS: Well, I wouldn’t argue with – in hindsight – the validity or otherwise but that was the assumption that was – that was in place.

MR PERRY: Well, when you say you wouldn’t argue, do I take it you agree that 10after 31 March such an assumption was – or at the best for you, now proven to be an invalid assumption?

THE WITNESS: I think, in hindsight, the assumption was invalid. Yes.

15MR PERRY: But that invalidity must have been anticipated by anyone thinking about this program because the whole point of the change on 31 March was to go away from the Departmental business model to one which necessarily comprehended a very large number of installer bodies or people or companies with a light regulatory touch over them. 20 THE WITNESS: I would still say, though, that the assumption was that there was an existing industry that was operating in a non-consortia way, so that was operating at all sorts of scales from individuals and sole traders through to small companies through to larger consortia, and that they were operating under existing workplace 25health and safety regimes in states and territories.

MR PERRY: What about training? These new bodies coming in could hardly have any capacity to provide the training that Ms Wiley-Smith spoke of being provided under the original business model by the existing – and in particular – significant 30players.

THE WITNESS: The issue of eligibility for participation which we’ve already discussed, I think, went to a number of criteria that included involvement in the building industry, supervision for entrants that were required to have a white card but 35I would agree that the consortia model had a distinct advantage in being able to layer in training into those requirements.

MR PERRY: And the non-consortia model had no capacity to layer in training for these new entrants. 40 THE WITNESS: It didn’t have the same capacity, no.

MR PERRY: Nothing like it. Surely. Nothing like it.

45THE WITNESS: They were completely different models, yes.

20.3.14 P-410 R.M. CARTER XN ©Commonwealth of Australia MR PERRY MR PERRY: With completely difference capacities in respect of precisely the installers who were being targeted by the program.

THE WITNESS: The program was seeking to create job opportunities across a wide 5– across Australia. Yes.

MR PERRY: Can I take you to 45, please. The last couple of sentences – do I take from that that at some time there was a concern that DEEWR, the Department of Employment, were not able to provide training in a detailed way rapidly? 10 THE WITNESS: Yes, I expressed my concern earlier in evidence that my understanding of the DEEWR framework was that it provided the framework for competencies and training to be development but the RTOs – registered training organizations – responded to providing that training based on existing demands, so a 15commercial return for them and that if training was to be provided in a timely way it needed to be available without – well, prior to the demand, if you like, so places needed to be available and that was the point that I was making earlier that I raised with Mr Mrdak.

20MR PERRY: And training would need to be available and be completed prior to the rollout commencing on 1 July so that there would not be untrained installers operating in the industry.

THE WITNESS: Well, there was the mention that an assumption that – sorry, I 25haven’t that – that at the commencement of the program the rate of update would commence with those that were already in the industry and that it would then progressively build. That was not the case.

MR PERRY: It was not the case. So, for example, by the time Matthew Fuller was 30killed in October of 2009 the training regime was still in a process of development, was it not?

THE WITNESS: I’m not sure on the date that that came out so - - -

35MR PERRY: Can I take you, then, please to 67.

THE WITNESS: Yes.

MR PERRY: You’ve got that. Do I take it from what you say there that you 40thought the use of metal staples in stapling insulation to the roof timbers was the only way in which insulation could be fixed to roof timbers because you were never aware of plastic staples?

THE WITNESS: I haven’t turned my mind to that issue at all. I just recall being 45surprised when the issue of banning metal staples arose because I had not heard of an alternative to a metal staple.

20.3.14 P-411 R.M. CARTER XN ©Commonwealth of Australia MR PERRY MR PERRY: I want to take you now, please, to some evidence you gave before the coronial inquiry. The document is QIC.002.001.0761 – that should be the first page. And the page I want to go to to begin with is 35, so that’s then finished 0795. Thank you. Now, at about line 10, I ask you this: 5 I don’t think that’s responsive. This program at its core -

Do you see that question?

10THE WITNESS: I see that question.

MR PERRY: You got that – and your answer, “yes”. Right. The program that I asked you about and which you responded to was the one post-31 March, wasn’t it?

15THE WITNESS: It was. Yes.

MR PERRY: Thank you. And then you go a little further down to line 30. You remember I asked you about the validity of the assumptions. What you agreed with there was that the assumptions the Department relied upon had feet of clay. You 20agree with that?

THE WITNESS: Yes.

MR PERRY: Thank you. Now, in terms of what was done ultimately after the first 25and indeed ..... the second of the deaths was this. Can you please go to page 29 of the transcript. Now, this is Mrs Earner asking you some questions. Just scroll down a little, please. That will do. Now, do you see from about line 15 – this is counsel assisting, I think, and it’s in relation to risk assessment. Do you see that? “Isn’t it the case”. 30 THE WITNESS: Yes. I see that.

MR PERRY: Right. Now, read to yourself from there down to about line 40.

35THE WITNESS: Yes, I’ve read that.

MR PERRY: Now, these are all things that occurred after the death of Matthew Fuller, aren’t they?

40THE WITNESS: Yes.

MR PERRY: And the staples one was done by the State, by a Ministerial regulation. They just banned the use of metal staples.

45THE WITNESS: I understand that to be the case, yes.

MR PERRY: Yes. The others were done by the Commonwealth, were they not?

20.3.14 P-412 R.M. CARTER XN ©Commonwealth of Australia MR PERRY THE WITNESS: I think they were done by the Minister, in terms of the program guidelines.

MR PERRY: Supervisors were to be on site. Mandatory training, which is of 5installers, was required. Site risk assessment prior to commencing work was required. Plastic staples, power to be turned off – all of these things were done after the death of Matthew Fuller - - -

THE WITNESS: As I understand it, that was the case. 10 MR PERRY: - - - and were, obviously, done fairly readily and fairly easily.

THE WITNESS: They were put in place, yes.

15MR PERRY: Readily, very readily, and very easily - - -

THE WITNESS: I don’t know. I can’t comment as to the ease or readiliness of - - -

20MR PERRY: And things, obviously, that could have been put in place and should have been put in place prior to the program rollout on 1 July.

THE WITNESS: Well, I can’t comment on that, other than to say that, in hindsight, having those things in place - - - 25 MR PERRY: Yes, would have saved, amongst others, Matthew Fuller’s death.

THE WITNESS: They may well have.

30MR PERRY: And all they had to do to be put in place was for the relevant issue to be identified and the means found. And that may well have included, of course, liaising, as the risk management plan referred to, with the state regulatory authorities.

THE WITNESS: I can’t speculate on that. I would assume that that could be the 35case.

MR PERRY: You would assume that would be right. All right. Will you then go ahead, please – but, of course, I should add, none of those things were done prior to the rollout. It took Matthew Fuller’s death for someone to actually take these 40relatively simple and proactive steps. That’s the case, isn’t it?

THE WITNESS: That’s my understanding of what occurred, yes.

MR PERRY: All right. Can you go ahead, please, to page 32. See, at about line 25, 45you’re talking about development of a program having the same – the assumption. That’s the program both before and after 31 March.

20.3.14 P-413 R.M. CARTER XN ©Commonwealth of Australia MR PERRY THE WITNESS: Yes. The development of the program had that fundamental assumption.

MR PERRY: Now, then, go to the next page, 33. You actually fill out that 5assumption a little. The assumption – now, the question was, at about line 25:

You wouldn’t. How would you describe such a failure to liaise with the state and territory authorities?

10You see that question, yes?

THE WITNESS: I see that question.

MR PERRY: You do. All right. And your answer: 15 Because what we were talking about, you and I, was a failure to liaise with the State Government. The assumption of the program was that there was an established, existing industry of some scale that was operating –

20etcetera:

…in accordance with OH&S and building standards, and that the program was providing a supplement to that industry.

25The program after 30 March, at its very heart, had, as you said earlier, this notion: a very large number of unskilled and untrained individuals coming into the industry. That was hardly a supplement to an existing industry, was it?

THE WITNESS: Well, my understanding was the decision to choose this industry 30was to leverage off the existing – the existing industry. But, clearly, it was at a very large scale.

MR PERRY: But the whole plan was, in fact, to bypass the regional provider model, to abandon the sort of contractual relationships that Ms Wylie-Smith was 35talking about, in fact, to move away from the established industry, because, consistently with the light regulatory touch, OCG directed you to put no barrier at all in the face of, or to impede, a large number of unskilled, untrained people coming into the industry. That’s the reality, is it not?

40THE WITNESS: It was certainly a consistent message from OCG that a light touch should be applied to any kind of restriction.

MR PERRY: And the light touch meant a very large number of untrained and unskilled people coming in, and what you were directed to do was ensure that there 45not be – by way of training, or contractual provisions, or OH&S regulation, or inspection, or qualification, anything like that – there should be no impediment, at

20.3.14 P-414 R.M. CARTER XN ©Commonwealth of Australia MR PERRY all, in getting as many untrained and unskilled people into this business. That was the position, was it not?

THE WITNESS: Was certainly the case that a key objective of the program was to 5provide employment for unskilled workers.

MR PERRY: Didn’t answer my question. Would you reconsider it and answer my question.

10THE WITNESS: Well, you went through a lot of elements there, and - - -

MR PERRY: Yes. Well, you can address them, if you wish.

THE WITNESS: Well, could you go through them each. 15 MR PERRY: Yes. The whole point of the program was to bypass the contractual, regulatory model that Ms Wylie-Smith had developed, which was the regional provider model. Now, that part is accurate, isn’t it?

20THE WITNESS: The – it was an alternative model to that, because OCG didn’t feel that the model – our preferred consortia model was going to deliver on the government’s intent.

MR PERRY: And the government’s intent was to get as many untrained and 25unskilled people into this program on and from 1 July.

THE WITNESS: It was to provide employment for unskilled - - -

MR PERRY: And the target base for the employment was as many untrained and 30unskilled people as the program could possibly comprehend.

THE WITNESS: Well, in terms of the scale of it, it was to – yes, to provide employment throughout Australia for unskilled workers.

35MR PERRY: And the reason you went away from your model to the new model was so that, by providing the payment method through Medicare, there would be no timetable constraint or capacity constraints, so as to enable this large body of untrained and unskilled people to come into the business and to be paid for doing so.

40THE WITNESS: It was certainly seen as a – as a mechanism that would facilitate participation and entry. Yes.

MR PERRY: And as a part of facilitating the participation of that group of untrained and unskilled people, there was not to be placed as an impediment in front 45of that happening any training or regulatory – or any other possible aspect which might stop the government’s desired intention from being achieved on and from 1 July.

20.3.14 P-415 R.M. CARTER XN ©Commonwealth of Australia MR PERRY THE WITNESS: The – as I’ve said, the message from the OCG was that we should rely on and leverage off the existing arrangements that were place for the – for the industry, and not place additional burden.

5MR PERRY: You were asked about the New Zealand experience and what had happened in 2006 and 7; you recall that?

THE WITNESS: I do recall being asked about - - -

10MR PERRY: Were you aware that from July 2009, or ’08/’09, New Zealand were, in fact, running a home insulation scheme themselves?

THE WITNESS: No. I don’t recall that. No.

15MR PERRY: May the witness please see QIC.006.001.3826. And, for the records, these documents were exhibit Z28 in the coronial inquiry. Who is Sascha Kaminski? Do you know?

THE WITNESS: Yes. I think she was an officer within the – within the 20department.

MR PERRY: What division, section, whatever?

THE WITNESS: I don’t know precisely where she was. She would have been, I 25think, in Mr Keeffe’s branch.

MR PERRY: All right. Will you firstly go to page, in that section, 3828. On 20 October, that is, a few days after Matthew Fuller’s death, Mr Speranski from New Zealand, eeca.gov.nz – Mr Speranski was responding to a request from 30Ms Kaminski. I assume it’s a miss. I may be wrong. If so, I apologise to him. Now, in October, Sascha Kaminski contacted New Zealand people for the first time – that is, October, after Matthew Fuller’s death – and asked them about what New Zealand had done about foil, after Matthew Fuller’s death. Here, on 20 October, Gleb Speranski replies. Can you see the centre paragraph, “It is a real shame”? 35 THE WITNESS: I do see that, yes.

MR PERRY: Right:

40 It is a real shame that another installer had to die, fitting foil under the floor. We –

that’s New Zealand –

45 stopped using foil on EECA-funded projects as of 1 July 2008, and we never regretted that. I have to admit it was not that easy. EECA had a strong push

20.3.14 P-416 R.M. CARTER XN ©Commonwealth of Australia MR PERRY back from some stakeholders as alternative products were and still are more expensive. However –

says Mr Speranski – 5 what is the value of a human life?

Now, New Zealand banned foil in 2008 as a result of, it would appear, their experience in installer deaths by driving metal staples through electrically conductive 10foil into power cables. That was your knowledge of what did happen in New Zealand, isn’t it? People died that way.

THE WITNESS: At the coronial, you certainly made that clear to me, sir, yes.

15MR PERRY: Yes. And what was New Zealand’s response to those installer deaths? To ban foil but to stand strong against industry pressure. Tell me, why might it be that our government departments could not have the same moral courage the New Zealanders did in the face of the New Zealand experience which your department was aware of on and from February 2009? 20 MR HOWE: I object to that question. It’s put at the level of the moral courage of the entire government.

COMMISSIONER: Can we delete the words “moral courage”, Mr Perry, please. 25 MR PERRY: Fortitude.

MR HOWE: Speaking still directed to the entire government of Australia. Really, it’s an impossible question to answer. If the witness says yes or no, what assistance 30is it to you, Commissioner?

MR PERRY: I said “your department”, not “the government of Australia”.

COMMISSIONER: That’s true. I think he can answer it in respect of his 35department.

MR PERRY: Yes. That’s what I asked: “your department”.

COMMISSIONER: Mr Howe, you accept that? 40 MR HOWE: No. It’s not. You asked about the government.

THE WITNESS: Sorry. Could you repeat the question?

45MR PERRY: Yes. In the light of the stance taken by the New Zealanders in response to deaths of installers, such deaths occurring in precisely the same manner that Matthew Fuller died and such deaths which your department were aware of on

20.3.14 P-417 R.M. CARTER XN ©Commonwealth of Australia MR PERRY and from 18 February 2009, can you tell me why it is that the position of your department was different to that taken in New Zealand, that is, why did your department not ban the use of foil in this particular way?

5THE WITNESS: I – I don’t know.

MR PERRY: Now, what happened thereafter is that – if you now go to page 3827. You will see that Mr Speranski is asked some questions by Sascha Kaminski. You can see how the questions are in bold and then the answer appears to be in ordinary 10type. That’s how the tenor of the email seems to go.

MR PERRY: See that? Just read through it quickly. I’m not going to ask you about 15insulation in detail, obviously. Read quickly.

THE WITNESS: Yes. I’ve read to the bottom of the page.

MR PERRY: Yes. It provides, doesn’t it, a fairly compelling basis for the New 20Zealand decision and provides, does it not – sorry. Just answer that question first.

THE WITNESS: It – it does, yes.

MR PERRY: Yes. And would have provided a very useful information base for 25your department concerning the use of foil in this particular way if only a question had been asked of the New Zealand authorities at any time prior to Matthew Fuller’s death?

THE WITNESS: Clearly if that information had been available, yes, it would have 30made quite a difference.

MR PERRY: But, you see, we know that from 18 February, Mr Ruz informed your department, in particular Mr Keefe and those at the meeting on that date, and then by email the next day, in very clear and concise terms, informed Ms Brunoro of what 35the issue was here, namely, insulation being stapled to roof timbers. Now, in the light of that information being provided to the department eight months before Matthew Fuller’s death, can you assist us with any reason why it might be that it would appear that no contact at all was made with anyone in New Zealand to see what they may have done about those issues and/or those deaths? 40 THE WITNESS: No. I don’t have an explanation for that.

MR PERRY: Because had it been done and this information provided that Mr Speranski so promptly provided in October after Matthew Fuller’s death, you 45would agree, wouldn’t you, that that would have raised for very careful consideration a particular issue with the insulation program?

20.3.14 P-418 R.M. CARTER XN ©Commonwealth of Australia MR PERRY THE WITNESS: Certainly the nature of the information in that email would have, yes.

MR PERRY: And bearing in mind the ease with which these problems were 5addressed after Matthew Fuller’s death, it would have provided, and there was available, a ready vehicle to overcome the particular issue.

THE WITNESS: Certainly if that information had been available, yes, it does seem - - - 10 MR PERRY: Well, it was clearly available, that is, available in New Zealand. The question is it was simply not sought by anyone from your department, it would appear.

15THE WITNESS: It would appear. I – I don’t know that.

MR PERRY: You’ve been shown, I think, the email from Mr Ruz to Ms Brunoro.

THE WITNESS: I have been shown that. 20 MR PERRY: Yes. And you read it

THE WITNESS: Yes.

25MR PERRY: In the light of what was said in Mr Ruz’s email and what happened the day before in the meeting, your expectation of proper administrative procedure from your department would have been that those issues, bearing in mind the seriousness of them, ought to have been explored? Is that fair?

30THE WITNESS: I would have expected that – that if officers had been made aware of an issue, they would have researched that issue.

MR PERRY: And the research would necessarily, from the perspective of a department such as yours, have included contacting their equivalents or a similar 35body in the New Zealand government to see what they did about the issue.

THE WITNESS: Yes. I would agree that – that if it had been explored, it would have been appropriate to contact New Zealand.

40MR PERRY: So is, from your perspective, this – we have the meeting on 18 February. We have the Ruz email. We have your expectation that it would have been researched and, in particular, contact made with the relevant people in New Zealand. We know what Mr Speranski’s response would have been. We know what was done in November. In the light of all of those things, would you agree that there 45was a ready and available and simple way to prevent the death of Matthew Fuller?

20.3.14 P-419 R.M. CARTER XN ©Commonwealth of Australia MR PERRY THE WITNESS: It would seem to me that if those dots had been joined, that that information would have been available earlier, yes.

MR PERRY: And the steps taken after Matthew Fuller’s death taken prior to his 5death or prior to 16 October, obviously?

THE WITNESS: If that information had – had been available, I would assume it would have fed into the design of the program, yes.

10MR PERRY: And if those steps that were taken after his death were taken prior to the middle of October, the very real prospect is that Matthew Fuller’s death would have been prevented.

THE WITNESS: I’m not sure. 15 MR PERRY: Think of it logically.

THE WITNESS: Well, I would agree with the logic that if those things were in place - - - 20 MR PERRY: Thank you, sir.

COMMISSIONER: Thank you. Thanks, Mr Perry. Mr Windsor.

MR WINDSOR: Thank you, Commissioner. Mr Carter, I represent the interests of 30a group of organisations which were in operation as installers or in this installation industry prior to the commencement of the HIP. Do you understand?

THE WITNESS: Yes.

35MR WINDSOR: Thank you. First of all, you were in the department in late 2008, early 2009. You went on holidays when in either late 2008 or early 2009?

THE WITNESS: I think from the Christmas period through till the end of the long weekend in January. 40 MR WINDSOR: Thank you. Now, over that period of time, did you have some respite from looking at business emails?

THE WITNESS: Yes. 45 MR WINDSOR: Thank you. Before you went on your Christmas vacation, had you become aware that the Minister, Mr Garrett, had been to New Zealand?

MR WINDSOR: Well, are you aware that he travelled to New Zealand for the purposes, in part, of looking at the home installation industry in that country? 5 THE WITNESS: I can’t recall whether I was aware of that or not.

MR WINDSOR: Do you recall subsequently finding out that he had been to New Zealand for such a purpose and that he had been prior to 3 February 2009? 10 THE WITNESS: No. I – I don’t recall the Minister doing a trip to New Zealand.

MR WINDSOR: All right. Or of anyone telling you that he had done so for that purpose? 15 THE WITNESS: No, not to the best of my recollection.

MR WINDSOR: Thank you. Now, I want to ask you about the costings that were undertaken by Ms Wiley and Ms Brunoro in that long weekend. You come back to 20work and you’re told, shortly after you’ve arrived back at work after the long weekend, that they’ve done the costings; that right?

THE WITNESS: Yes. That was part of the .....

25MR WINDSOR: Did you review their costings shortly after you came back to work?

THE WITNESS: No. I didn’t review their costings.

30MR WINDSOR: I’m sorry?

THE WITNESS: No. I didn’t review their costings.

MR WINDSOR: Did you, personally, do any further costings of an HIP? 35 THE WITNESS: No. I’ve not personally done any costings.

MR WINDSOR: Do you know who did further costings for the HIP between 3 February and 18 February? 40 THE WITNESS: No. I would have assumed that was Ms Brunoro, but – if costings were done. But .....

MR WINDSOR: Did you ever see any costings for a two and a half year period 45during which the HIP might be in operation?

THE WITNESS: I do – I think I recollect the costings covering that period, yes.

20.3.14 P-421 R.M. CARTER XN ©Commonwealth of Australia MR WINDSOR MR WINDSOR: When you say you recollect the costings, I want you to assume that Ms Brunoro’s costings were for a period of two years and for five years. Did you see some costings for a period of two and a half years?

5THE WITNESS: I may have. I don’t recall them.

MR WINDSOR: Thank you. Now, in any event, when you reviewed the costings, were you to understand, at that point in time, that those costings were to assist in determining the nature and extent of a stimulus package which was to be announced 10by the government?

THE WITNESS: I didn’t review the costings. I was given a copy of the costings that had occurred.

15MR WINDSOR: Prior to the HIP being announced in early February 2009, had you turned your mind to the nature of the scheme as it was to be rolled out?

THE WITNESS: I hadn’t turned my mind to the nature of the scheme until I returned from leave, no. 20 MR WINDSOR: All right. Were you aware, prior to 3 February 2009, that the scheme was to be one – or it was proposed that it should be one which was to be controlled by regional – or such entities which, in turn, would arrange for installers to go out to households in that region? 25 THE WITNESS: Yes. That was the – consistent with the preferred model.

MR WINDSOR: And that was the preferred model that you had been told about by Ms Brunoro. 30 THE WITNESS: By Ms Wiley-Smith – yes.

MR WINDSOR: Thank you. And was that one that you agreed with?

35THE WITNESS: Yes. It was one consistent with models that we had used, as I mentioned, for Solar Cities.

MR WINDSOR: Thank you. And did you also take the view, as I understand Ms Wiley and Ms Brunoro took, that for the stimulus package to work under that 40regime, then it should proceed over five years, rather than two years?

THE WITNESS: Ms Wiley-Smith had informed me that she had put five years into her submission to the Prime Minister and Cabinet, and the broad reasons for that, and I agreed with those – with those reasons. 45 MR WINDSOR: And what did you understand her reasons to be?

20.3.14 P-422 R.M. CARTER XN ©Commonwealth of Australia MR WINDSOR THE WITNESS: Primarily, well, a few aspects of that – and I might add a couple of my own to it, as well.

MR WINDSOR: Please do. 5 THE WITNESS: That an extremely rapid increase in an industry, but potentially with a cliff at the other end of it, might have deleterious effects on the industry.

MR WINDSOR: Just stopping there, what do you mean by “cliff at the other end”? 10 THE WITNESS: Well, if funding was to be expended over a short period of time, and then that funding cease, that could cause some difficulty for industry, to ramp up and then come to an end at that point. The other issues that I think Ms Wiley-Smith discussed with me were about supply chain and production issues that – needing time 15to put those things in place and beginning to build the industry up. The other issue that we discussed a number of times in 2008, around a range of measures, was a – if you like, a strategic desire for any investment that government might make – to use the leverage of that to leave business models in place that might be more sustainable in the longer term, in terms of offering energy efficiency services. 20 MR WINDSOR: Anything else?

THE WITNESS: That’s all I can recall at this point.

25MR WINDSOR: Thank you. Was it your view, prior to the announcement, but after having spoken to Ms Brunoro and/or Ms Wiley, that the stimulus impacts of the package, as costed, could be maintained as effectively over the five year as the two year time span?

30THE WITNESS: I didn’t form an opinion on that. I think that’s more the territory of economists.

MR WINDSOR: All right. Did you speak to Mr Isaacson or someone else at the Department of Finance about that issue? 35 THE WITNESS: I don’t recall doing that.

MR WINDSOR: Did you speak to anyone else at any other department about that issue? 40 THE WITNESS: I don’t recall those discussions.

MR WINDSOR: Thank you. Could I then ask you to go to the risk register which you were asked about before. Could I ask you to go to the pages that Mr Perry was 45taking you to. Do you have tab 4?

THE WITNESS: Yes, I have tab 4.

20.3.14 P-423 R.M. CARTER XN ©Commonwealth of Australia MR WINDSOR MR WINDSOR: Could you please go to the third page of tab 4. Do you have that?

THE WITNESS: Yes. I have that page.

5MR WINDSOR: And does that page have at the top of it, in the left-hand corner, Communication and Planning?

THE WITNESS: Yes, it does.

10MR WINDSOR: Now, I want to go to box number 9, which is the next one following that; you see that?

THE WITNESS: Yes.

15MR WINDSOR: You’ve been asked a series of questions about the boxes which follow the number 9. I want to ask you some further questions about those boxes. First of all, what is meant – or could you tell this hearing what you understand is meant by the words “privacy/safety liability issues” which appear in the first box, beside the word – or beside the letter – number 9 ..... 20 THE WITNESS: No, I don’t – I can’t help with expanding on those. I assume that, as the heading above that said – that complex legal issues that may not be fully understood – that they were areas that may not be fully understood at that point.

25MR WINDSOR: All right. Is it the case that the safety issues were not – the legal complications or implications of safety issues were not fully understood at the time that this document was prepared?

THE WITNESS: I would deduce that, yes. 30 MR WINDSOR: Thank you. If I can ask you to go to the next box, still along from the number 9. It has got:

…litigation … substantial additional costs to rectify consequences of poor 35 legal risk management, including paying damages, political fallout … early termination.

Can I ask you what’s meant, or what you understand to have been meant, by the words “early termination”? 40 THE WITNESS: I would – I would assume that that meant early termination of the program.

MR WINDSOR: Of the HIP - - - 45 THE WITNESS: Yes. That’s how I would interpret that.

20.3.14 P-424 R.M. CARTER XN ©Commonwealth of Australia MR WINDSOR MR WINDSOR: That is, you understood that in reading that – or, at the time that this document was prepared, the HIP was to proceed for two and a half years.

THE WITNESS: That was my understanding. Yes. 5 MR WINDSOR: And there was a concern, at least in government, or at least an awareness in government, that there could be a risk of the government being liable in the event that there was early termination of the HIP.

10THE WITNESS: That would be how I would read what has been put here, yes, that it was seeking to identify what the possible risks were.

MR WINDSOR: And the government, or the person who, at least, prepared this document, was aware that that would cost the government. And that reference there 15to the numbers 15 and 30, next to the litigation costs, would seem to indicate that to you, would it not?

THE WITNESS: I’m not quite sure how those – the – any costs might have been derived. But that is what it would seem to indicate to me, that it was the costs of 20litigation.

MR WINDSOR: Can I please move along to the fourth box along from the number 9. It’s, on this occasion, under the heading Management Plan.

25THE WITNESS: Yes.

MR WINDSOR: Do you have that? The first bullet point says:

…currently drafting a legal risk management plan. 30 That wasn’t the expression that was used when Mr Perry was asking you the question. But what I want to ask you is, what is a “legal risk management plan”?

THE WITNESS: I’m not sure. 35 MR WINDSOR: Who would, within your department, be responsible for drafting such a document?

THE WITNESS: At that time, I would have assumed our legal area in the 40department would have been - - -

MR WINDSOR: And who was, then, the person in the senior position within the legal area of the department?

45THE WITNESS: I don’t recall who that was at that time.

20.3.14 P-425 R.M. CARTER XN ©Commonwealth of Australia MR WINDSOR MR WINDSOR: Is the reader to understand, looking at this document, that that legal risk management plan had been instituted or, at least, was underway?

THE WITNESS: It does say “currently drafting” so I would assume you could infer 5that it was – work on it was underway.

MR WINDSOR: And looking at the next bullet point, “Investigating legal issues to inform the business model”, was that the business model as identified in January or was it the business model that you became of in late March, early April? 10 THE WITNESS: I – I’m not sure.

MR WINDSOR: Thank you. If you could put that document aside, please. Might the witness be shown AGS.002.008.0643. This is a diagram we were looking at 15earlier on. It may be 0646, so 002.008.0646. Thank you very much. Could you go to – scroll down to page 3 which is at 0648. Thank you very much. You have that diagram in front you. I apologise, Mr Carter.

THE WITNESS: Yes, I have the - - - 20 MR WINDSOR: This is a document you were looking at earlier on today.

THE WITNESS: Yes.

25MR WINDSOR: And you told us that you didn’t see that until you went to the meeting.

THE WITNESS: That’s right.

30MR WINDSOR: Would it be fair to say that you and Mr Keefe were completely blind-sighted by what you were confronted with when you attended that meeting when it came to the context of this new model?

THE WITNESS: It would, yes. 35 MR WINDSOR: Thank you. Now, were you provided with a copy of this report to take away at the end of this meeting?

THE WITNESS: I – I can’t recall if we were given a hard copy of that but I think 40we were emailed it subsequent.

MR WINDSOR: Were you provided with a copy of this document that’s you’ve got in front of you before someone started to speak about the document?

45THE WITNESS: No. It was provided – the slides were placed in front of us as that was spoken to.

20.3.14 P-426 R.M. CARTER XN ©Commonwealth of Australia MR WINDSOR MR WINDSOR: Do you know whether the Minister’s office – that is, your Minister’s office – was provided with a copy of it?

THE WITNESS: I – I don’t know if they were provided with it but as I’ve had 5raised with me, it seemed Mr Levey attended the meeting so he may have been provided with it.

MR WINDSOR: Thank you. Now, did you understand that this page that you have in front of you was part of a report by consultants? 10 THE WITNESS: I – I didn’t understand that, no.

MR WINDSOR: Who did you understand had prepared that slide or that part of the report? 15 THE WITNESS: I thought it had been prepared by - by the Office of the Coordinator-General in Prime Minister and Cabinet.

MR WINDSOR: All right. What, if any, involvement did you understood – or 20understand any outside agency had had in preparing the document?

THE WITNESS: I wasn’t aware of there being any – anyone else involved.

MR WINDSOR: Do you know whether KPMG had any involvement in preparing 25the model which became the plan which took effect on 1 July?

THE WITNESS: I – I don’t recall that we may have continued their work on business models. I don’t recall that.

30MR WINDSOR: Do you know who was the source of this document in the sense of who – who created the idea?

THE WITNESS: No. I don’t know that.

35MR WINDSOR: It was simply presented to you by those from the Office of Prime Minister and Cabinet during the course of the meeting?

THE WITNESS: From the Office of the Coordinator-General.

40MR WINDSOR: Thank you.

THE WITNESS: Yes.

MR WINDSOR: Thank you. I’m finished with that document. Prior to Mr Keefe 45becoming involved in the HIP, did you know whether he had any direct dealings with the Minister or the Minister’s office?

20.3.14 P-427 R.M. CARTER XN ©Commonwealth of Australia MR WINDSOR THE WITNESS: I can’t – I can’t recall whether he did or didn’t on this matter, no.

MR WINDSOR: Do you know whether the Minister or the Minister’s office had any input into whether he would be the person having departmental responsibility for 5the HIP?

THE WITNESS: No, I don’t know what occurred at the Ministerial level.

MR WINDSOR: Do you know whether the Minister or anyone from the Ministerial 10office had or expressed dissatisfaction about Mr Keefe’s performance as the person within the Department responsible for the HIP?

THE WITNESS: No. I hadn’t had any of those concerns raised with me.

15MR WINDSOR: Did anyone from the Ministerial office or the Minister himself say that Mr Keefe needed a project manager for the HIP?

THE WITNESS: I – I – not to the best of my recollection. I don’t recall that.

20MR WINDSOR: Do you recall whether Mr Keefe was provided with a person who effectively performed the role of project manager for the HIP?

THE WITNESS: At a – at some point, I do recall Ms Avril Kent being brought in and I thought that she had been in the – as I think I mentioned earlier – the water 25group of the Department that had a project management area, so I assumed she had the project management skills that were being brought in.

MR WINDSOR: So you understood that that was her role when she moved across to work with Mr Keefe? 30 THE WITNESS: That’s what I understood.

MR WINDSOR: Yes. Now, if I could ask you to take up your statement. I’ve got just a few questions about some aspects of that. Could you go to paragraph 20, 35please. Could I ask you to remind yourself what you’ve written in the last sentence of paragraph 20.

THE WITNESS: Yes, I’ve read that.

40MR WINDSOR: What was the difficulty in getting the government’s decision relating to the HIP?

THE WITNESS: As I’ve mentioned above, the usual process - - -

45MR WINDSOR: Yes.

20.3.14 P-428 R.M. CARTER XN ©Commonwealth of Australia MR WINDSOR THE WITNESS: - - - for developing a Cabinet submission means that the agency that develop it – develops it has not only the Cabinet submission but then, following that, the minute of the Cabinet decision returned to it.

5MR WINDSOR: Indeed, and as you explained to the Commissioner earlier on today.

THE WITNESS: Yes.

10MR WINDSOR: But I’m asking for further clarification about the last sentence.

THE WITNESS: We were – and had I asked the Office of the Coordinator-General a number of times, I think, for a copy of the decision. I’m not sure what the context of it was because a lot of the issues had been spelt out or one of them – sorry – had 15been spelt out in the – in the announcement itself. But I can recall we tried to get the decision. I just can’t recall whether I saw it or not. I had a recollection that Mr Keefe may have been shown that decision.

MR WINDSOR: When was the decision made? 20 THE WITNESS: I don’t recall the date.

MR WINDSOR: And for how long were you attempting to obtain a copy of the decision? 25 THE WITNESS: I don’t recall the timeframe.

MR WINDSOR: And was this the decision that led to or, as you understood it, result in the announcement made on 3 February? 30 THE WITNESS: Yes.

MR WINDSOR: And is the Commission to understand that unless you understood the terms of the Cabinet decision you would not be in a position to proceed with the 35planning for whatever scheme was to be introduced for home insulation?

THE WITNESS: It’s difficult without – as I mentioned – the usual process of being involved in the development of the detail of a Cabinet submission and then the Cabinet minute conveying the decisions of Cabinet against that. So you would have, 40in effect, the policy authority across all aspects of the decision. So we were given the – we had our input to the process, we had the announcements that were made, and then we had information from the Office of Coordinator-General on the dimensions of the project but I can’t recall seeing that documentation around the Cabinet - - - 45 MR WINDSOR: Thank you.

MR WINDSOR: Could I ask you now to go to paragraph 21, please.

5THE WITNESS: Yes.

MR WINDSOR: Thank you very much. Now my question is as follows: you understood that at least so far as the decision to go ahead with the HIP was concerned, one of the reasons for it happening was because of the global financial 10crisis?

THE WITNESS: That – it was my understanding that was the primary reason for it happening.

15MR WINDSOR: Do you know whether that was the primary reason that your Minister had in mind?

THE WITNESS: I don’t know what was in the Minister’s mind.

20MR WINDSOR: Did anyone within the Minister’s office tell you what his – that is, the Minister’s – primary reason was for the program?

THE WITNESS: I – I can’t recall being told what that was. No.

25MR WINDSOR: Thank you. If I could ask you to go to paragraph 31. Do you have that?

THE WITNESS: I do have that.

30MR WINDSOR: Could you just remind yourself of the content of the first sentence, please.

THE WITNESS: Yes.

35MR WINDSOR: You say that your attendance with Mr Keefe was unusual in this context. Do you see that?

THE WITNESS: Yes, I see that.

40MR WINDSOR: And then you’ve offered an explanation but you’ve said it could have been because of certain thing or things. Do you see that?

THE WITNESS: Yes.

45MR WINDSOR: Are you speculating there or you know that that was the situation?

20.3.14 P-430 R.M. CARTER XN ©Commonwealth of Australia MR WINDSOR THE WITNESS: I’m – I’m speculating there. It would not be totally unimaginable that officers would meet with another Minister and now I’ve been refreshed on the fact that Mr Levey may have been present at that meeting, that makes it less unusual if a – if a Ministerial advisor was present. 5 MR WINDSOR: Thank you. Could I ask you to go to paragraph 32, please. Just refresh your memory about what’s contained in paragraph 32 on page 7.

THE WITNESS: Yes. 10 MR WINDSOR: Was it the situation that you anticipated that the business model that was being prepared at that time – that is, in February of 2009 – was one that would achieve broad participation of people – that is, employing people across the country? 15 THE WITNESS: It was certainly our anticipation that that model would – would provide for that and, as discussed, there was some – I think an email raised with me earlier that Mr Keefe might have written that raised the issue of hybrid models that involved, I think – take into account small business. 20 MR WINDSOR: But what I want to focus on is your business model, as has been worked out in February – of March of 2009 was one that, first of all, was going to employ people?

25THE WITNESS: Yes.

MR WINDSOR: Employ people across the country.

THE WITNESS: Yes, though in a – in a way that would have been phased because, 30as I mentioned, when we looked at how the business model might rollout that – that we thought that more densely populated and metropolitan areas would be easier to get those arrangements in place but that different or hybrid models may be needed for remote or regional areas to get them in place.

35MR WINDSOR: So that it was going to give employment not only in CBDs of large cities of this country but in regional and distant locations?

THE WITNESS: That was the model we were working on, yes.

40MR WINDSOR: And it was going to give employment to people who were young?

THE WITNESS: I assume, of any age.

MR WINDSOR: Thank you. And it was going to give, you anticipated, 45employment to people who were unskilled?

THE WITNESS: Yes.

20.3.14 P-431 R.M. CARTER XN ©Commonwealth of Australia MR WINDSOR MR WINDSOR: Thank you. And when I say “across this country”, I’m talking about every state and the territories.

THE WITNESS: Yes. 5 MR WINDSOR: Thank you. Could I ask you to go to paragraph 33, please.

THE WITNESS: Yes.

10MR WINDSOR: This takes up some of the subject matters that you’ve just been talking about. Were you personally engaged with the Minister or the Minister’s office in telling him or them – that is, the people within that office – about what you anticipated your model would bring in terms of employment opportunities in various regions in Australia? 15 THE WITNESS: I can’t recall the specifics of what – of what we discussed most likely with the Minister’s advisor but I know that we had had quite a number of discussions about some – particularly the hybrid elements of the model to do with disadvantaged households and potential partnerships with bodies like the 20Brotherhood of St Laurence and with – potentially with indigenous groups as well.

MR WINDSOR: But even using those hybrid models, you anticipated – certainly during the time that you were designing the model that you – or hybrid models that you had in mind that there would be a massive economic stimulus in the short term 25in the insulation industry generally.

THE WITNESS: We anticipated that it would – it would involve significant stimulus, yes.

30MR WINDSOR: Thank you very much. Could I ask you to go to paragraph 39. You’ve been asked some questions about this but I just want to seek clarification about one issue. Could you read the first half of paragraph 39, please.

THE WITNESS: Yes. I’ve read that. 35 MR WINDSOR: Could I ask you to turn your mind to the sentence which is four lines down. “There were risks”: do you see that?

THE WITNESS: Yes. I see that. 40 MR WINDSOR: You’ve identified two particular types of risk: delivery, or deliver quality – I’m not quite sure. What were you meaning? There was a problem with delivery and there was a problem with quality as well?

45THE WITNESS: I – I think I intended that to be with the quality of – of – of installation in - - -

THE WITNESS: - - - in terms of achieving the – you know, the R rating.

5MR WINDSOR: So it was concerned with the quality of the insulation which might ultimately be fitted into persons’ roofs.

THE WITNESS: Yes, that could lead to a less effective energy efficiency outcome through gaps or whatever it might be. 10 MR WINDSOR: Thank you. That’s the first risk. You then refer to the risk of fraud.

THE WITNESS: Yes. 15 MR WINDSOR: And you were perceiving these risks up-front in the sense of before the program is under way?

THE WITNESS: In – in terms of how I framed this statement, it was clearly – it 20was clearly done in – in March this year. So I’m not sure how much of – of – of hindsight was involved in that. But my understanding of how we developed the consortia models and the way that we had used them previously was that we could – through that kind of contracting, we would reduce the relationship of the Commonwealth from one to many to one to a few and that – that the risk of fraud 25was decreased with that.

MR WINDSOR: Because of your experience in those other programs, you were aware of these types of risks.

30THE WITNESS: We – we had been aware that we had been able to manage those risks effectively with those kinds of – of contract approaches.

MR WINDSOR: Getting to the nub of the sentence, if you wouldn’t mind, you talk about the whole gamut of risk issues. What did you perceive to be the whole gamut 35of risk issues as at the time that the planning was being undertaken for the HIP in February and March of 2009?

THE WITNESS: I – I can’t expand on that further. I just felt that with a consortia approach, when we identified concerns and risks as part of developing the tender 40requirements and the contract requirements, we could layer those into the requirements more easily.

MR WINDSOR: Thank you. Could you go to paragraph 51, please.

45THE WITNESS: Yes. I’ve read that.

20.3.14 P-433 R.M. CARTER XN ©Commonwealth of Australia MR WINDSOR MR WINDSOR: All right. Was it your belief that no matter whether the model that – or models that were being contemplated in February or March of 2009 or the model that was proposed from April 2009 – that it was not possible to have everything in place by 1 July 2009? 5 THE WITNESS: It – it became evident as we proceeded through the models that we couldn’t have – we just couldn’t build the capability quickly enough, particularly in the compliance, audit and inspection areas.

10MR WINDSOR: Inspection being audit areas?

THE WITNESS: Part of. My understanding is part of the audit process.

MR WINDSOR: Thank you. And does compliance include training? 15 THE WITNESS: Compliance with requirements of the – of the program.

MR WINDSOR: Did that include training?

20THE WITNESS: It would have included those elements, yes.

MR WINDSOR: And certifications?

THE WITNESS: Any requirements of the program – compliance would have meant 25seeking to ensure that that was occurring.

MR WINDSOR: Thank you. Could I ask you to move on, then, and go to paragraph 69.

30THE WITNESS: Yes. I’ve read that.

MR WINDSOR: I don’t want to underscore or diminish the effects it may have had on you and others within your department. First of all, I want to ask some questions about the stress of the whole HIP. Did Mr Keefe have to leave his position because 35of stress associated with attempting to manage the HIP?

THE WITNESS: I – I don’t know the reasons Mr Keefe left.

MR WINDSOR: All right. I take it that you’re not meaning to exclude, when 40you’re talking about the stresses of the HIP, the effects it had not only on members of your department but members of the government in general?

THE WITNESS: Yes. I was trying to be inclusive. That – the community concern that the program generated, I had assumed, had wider - - - 45 MR WINDSOR: When you talk about the community concern, that would include those members of industry who had committed themselves to the program?

20.3.14 P-434 R.M. CARTER XN ©Commonwealth of Australia MR WINDSOR THE WITNESS: I was being quite – quite general in my comments there, yes.

MR WINDSOR: That would include them?

5THE WITNESS: It – it would include them, yes.

MR WINDSOR: And your concern for them was in part because they had been confronted with a situation of falling off a cliff, hadn’t they?

10THE WITNESS: That was always a concern when we were looking at the – at the models that were put forward – was about sustainability of business models, and in – in – in the energy efficiency industry, it had been something that was at the core of – of our strategic agenda – was that we should leverage on both regulatory and any subsidy or other programs to not only achieve the objectives of – the immediate 15objectives of government but also to – to seek to leave a legacy from those investments in the longer term.

MR WINDSOR: And the legacy from those investments would include that the businesses would continue, that is, the businesses involved in the Home Insulation 20Program would continue?

THE WITNESS: Our – our strategic objective with – with energy efficiency business models was that – was that we were hoping to see them evolve in Australia to a point where they offered a mix of services to – to households. The sort of 25analysis we had done through 2008 came to the not surprising conclusion that every – every household is different in the way that it manages its – its energy and what the prime drivers of that were and that – that – that if there were businesses in existence that – that could meet those – those particular needs or provide those services, that that would be in the long-term interests of Australians. 30 MR WINDSOR: Right. So you would want those evolving businesses to continue? In short form, that seems to be your answer.

THE WITNESS: Indeed, that was one of the things we were seeking to achieve. 35 MR WINDSOR: You would want people who had got the jobs within the industry during the course of the HIP to – able to continue to work in this evolving industry?

THE WITNESS: Indeed, one of the issues around that – and we had seen some 40models where – where, you know, people may get employment within the industry, but as the range of services potentially expanded, they may get further career opportunities.

MR WINDSOR: Right. And you would want the capital investments which had 45been made during the course of the HIP and capital investments made by the industry – I’m sorry – the companies or entities involved in the industry to have continuing benefit to those entities?

20.3.14 P-435 R.M. CARTER XN ©Commonwealth of Australia MR WINDSOR THE WITNESS: I – I would – I would accept that having made capital investments – that having value from them is – is – is highly desirable. And, in fact, to have a sustainable industry that dealt with energy efficiency issues – that that – that was a very desirable outcome, yes. 5 MR WINDSOR: And that a sudden, unexpected, unplanned-for termination of the HIP would place in jeopardy those sorts of long-term outcomes that you’ve just referred to?

10THE WITNESS: Certainly it was a concern, as we discussed earlier, with a short timeframe for the program, that there was that – that end point to it.

MR WINDSOR: Well, not only because of the short timeframe but because in this instance, it was terminated without notice to the industry, wasn’t it? 15 THE WITNESS: That’s my understanding, yes.

MR WINDSOR: And the termination without notice of itself placed those people who were in the industry over the cliff. Do you agree with that? 20 THE WITNESS: I – I don’t have sufficient knowledge of what occurred in the industry as a result of that to comment.

MR WINDSOR: Excuse me. Thank you, Commissioner. Thank you very much, 25Mr Carter.

COMMISSIONER: Thank you. Before you start, Mr Keim - - -

MR KEIM: Yes, your Honour. Yes, Commissioner. 30 COMMISSIONER: Mr Wilson, just a question you might be able to help me with. This risk register – people have referred to the document number 4 there. Now, that document number 4 is dated 9 April, I think. But I have the impression, although it’s not clear, that it relates to the regional rollout plan, rather than the non-regional 35rollout plan. Am I right?

MR WILSON: Partly - - -

COMMISSIONER: Yes. 40 MR WILSON: That is, it was the document that was used going forward, and you will see that it’s in the same format, although the wording on the fourth or fifth column across changes slightly. That’s a matter which will, hopefully, be explained by Ms Coaldrake. 45 COMMISSIONER: Okay.

20.3.14 P-436 R.M. CARTER XN ©Commonwealth of Australia MR WINDSOR MR HOWE: Could I, perhaps, just seek to assist on that. There is a document, number 002.007.1778, which is the weekly report of 30 April, which makes reference to the risk management plan having been undertaken, presumably in the preceding week, to reflect the new model. 5 COMMISSIONER: Yes.

MR HOWE: So that’s the first explicit reference that we’re aware of. So it does rather suggest that as at 9 April - - - 10 COMMISSIONER: They were carrying on with the old model.

MR HOWE: Exactly so.

15COMMISSIONER: Yes. That’s the impression I had, but that’s what I wanted to clarify. So you’ve clarified it.

MR HOWE: Yes.

20COMMISSIONER: Even though the old plan was dead as at 31 March, as at 9 April the plan, to me, looked as though it was the pre-31 March – being incorporated into the risk management plan.

MR HOWE: Yes. We would just wish to add this qualification. I think the 25document which recorded what had been discussed at the 31 March meeting also made reference to the fact that the Department of Environment proposed to continue with the old model, for the time being – continue developing it because of some uncertainties it still entertained, as to the new model. So when you say “dead in the water”, that might, objectively, have been the case. But the department at least 30hadn’t, at this time, as at 31 March, necessarily viewed it that way.

COMMISSIONER: Yes. No. Thank you for that. And the reason I raise it – and you feel free to comment on it, Mr Carter – is I just was starting to get the impression that, even though the 31 March was an instruction, your team was still sort of saying, 35“Well, we might change their mind back,” and were carrying on with the old plan for a week or two, “Until they really sit on us, and they just change it to the new plan.”

THE WITNESS: That’s correct, Commissioner. We were still optimistic that the - - - 40 COMMISSIONER: .....

THE WITNESS: - - - original model might proceed.

45COMMISSIONER: Yes. Okay. Thank you. Yes, Mr Keim.

20.3.14 P-437 R.M. CARTER XN ©Commonwealth of Australia MR WINDSOR MR KEIM: Commissioner, thank you. That’s also confirmed – what my learned friend Mr Howe referred to is confirmed in paragraph 47 of this witness’s affidavit, where the reference is to an email from William Kimber dated 30 April 2009, saying:

5 The risk management plan is updated to reflect the business model.

So that’s probably the source document for the entry in the report.

COMMISSIONER: Thank you. 10 MR KEIM: And, your Honour, I seem to recall that Ms Brunoro also gave evidence that it wasn’t absolutely clear to her until about mid-April.

COMMISSIONER: No. You get this feeling there’s just reluctance to implement 15the 31 March decision.

MR KEIM: Thank you, Commissioner.

MR KEIM: Mr Carter, Ms Wiley-Smith and Ms Brunoro were both in your division. That’s correct, is it not? 25 THE WITNESS: That’s correct. Yes.

MR KEIM: Ms Wiley-Smith, up until, I think, 15 February, reported directly to you. 30 THE WITNESS: She continued to report directly to me.

MR KEIM: But didn’t work on - - -

35THE WITNESS: But didn’t work on the Home Insulation Program.

MR KEIM: Yes. And Ms Brunoro – her reporting line was through Ms Wiley-Smith and, subsequently, through Mr Keeffe; is that correct?

40THE WITNESS: Yes. That’s my understanding of - - -

MR KEIM: Okay. But both of those women were involved in consultations with industry about the process, part of which became the home insulation plan. That’s correct, is it not? 45 THE WITNESS: I can’t recall if both of them were involved in subsequent consultations.

20.3.14 P-438 R.M. CARTER XN ©Commonwealth of Australia MR KEIM MR KEIM: What I was going to suggest to you was that Ms Wiley-Smith had been involved in a lot of consultations during 2008, leading up to 3 February 2009, and that Ms Brunoro was involved in running the consultations subsequent to 3 February.

5THE WITNESS: Yes. That seems correct.

MR KEIM: And against that background I want to ask you this question about the meeting on 31 March. And I accept that you were blindsided and surprised by the meeting. But did you go to the meeting – or, as a result of those consultations and 10the processes by which information was fed up and down the line, when you went to that meeting, were you in a position to raise in the meeting, provided you were given an opportunity, the sorts of important information that had been obtained in the consultation process, particularly with industry?

15THE WITNESS: My recollection of the meeting is that we didn’t have an opportunity to go into a great deal of detail in that regard. I can’t recall if we – if we did or didn’t discuss the – I think I mentioned earlier the kind of model that – I think Spotless had provided an example of how it might work to us. I can’t recall if we went into that detail. But we had certainly promoted, to some extent, the model that 20we had been developing. But the majority of the meeting was on the slides that were provided.

MR KEIM: Yes. I was more interested in your state of mind or your state of knowledge, your ability. I will proceed with that theme but ask it in this way. 25Mr Perry has highlighted with you the function of the regional model with regard to delivering on workplace health and safety and training, as those concepts were understood by Ms Wiley-Smith. Do you remember those questions and that discussion you had with my learned friend, Mr Perry?

30THE WITNESS: I do, yes.

MR KEIM: Okay. Now, my question to you, really – were you and Mr Keefe – but you can really only answer for you. If you were given a chance to make an objection, were you in a position to say, “But, look, that regional model is really 35important with regard to delivering on workplace health and safety. If you go from that model, you will have to compensate in some way”? Did you have sufficient information from the processes that had been going on below you in the department to be able to make those sorts of points?

40THE WITNESS: We certainly had the – the information which – which I think carried through from when we had originally provided advice to Prime Minister and Cabinet and our experience with the Solar Cities model – of the veracity of the model that we were proposing, and it included incorporating a range of those elements into it. 45 MR KEIM: I’m really asking you to be more specific because I’m particularly interested – and I meant to tell you that I act for the family of Mitchell Sweeney, one

20.3.14 P-439 R.M. CARTER XN ©Commonwealth of Australia MR KEIM of the young men who died as well. I’m particularly interested in the importance of the regional model in delivering on workplace health and safety issues and, related to that, in delivering on training both for quality delivery but also with regard to safety.

5THE WITNESS: So - - -

MR KEIM: Were you in a position to articulate the importance of that in terms of your knowledge?

10THE WITNESS: Well, in – in terms of the – the way that we had considered and developed that – that model, yes, those factors were part of the issues that would build – would build into it. But, back to your – your earlier point, the – the meeting was predominantly concerned with the new model that was – that was tabled at the meeting. 15 MR KEIM: Okay. I will just explore it slightly differently in this way. The consultation processes had revealed, for example, some information with regard to what requirements for training there might be in the case of expanding the insulation industry. For example, Ms Wiley-Smith had a teleconference with regard to the 20system that operated in England in this area, which included training of more than several weeks. Were you aware of that sort of information which had come from the consultation process so that you could pass that on in the discussions if you got the opportunity?

25THE WITNESS: I wasn’t aware of that level of detail, no.

MR KEIM: Okay. And in the same vein, on the other half of it, the consultation processes the commission has heard produced warnings about electrical safety and, in particular, the Ruz information of the deaths in New Zealand on 18 and 3019 February which you discussed with my learned friend, Mr Perry. Were you aware of that at that time and in a position to raise it at that meeting?

THE WITNESS: As I mentioned, I wasn’t across all of the detail of – of what was coming out of the consultations. 35 MR KEIM: Okay.

THE WITNESS: So - - -

40MR KEIM: So - - -

THE WITNESS: So - - -

MR KEIM: So not even that important warning with regard to the electrocution 45deaths in New Zealand. That had not been passed up to you at any stage?

20.3.14 P-440 R.M. CARTER XN ©Commonwealth of Australia MR KEIM THE WITNESS: I – I have said a number of times I can’t recall when the New Zealand – when I became aware of the New Zealand matter. But it certainly wasn’t something that I was across the detail of for that meeting.

5MR KEIM: Okay. Now, you can’t speak to Mr Keefe’s state of knowledge, but did he seek to raise any of those detailed matters going to the importance of the regional plan in terms of training and workplace health and safety in the meeting?

THE WITNESS: I – I can’t recall the detail of that – of that conversation. And, as 10I’ve mentioned, I think that the predominant conversation in the meeting was around the alternative model, not the – not the consortia model.

MR KEIM: So you can’t recall whether he did or not, but you think he probably didn’t get the opportunity? 15 THE WITNESS: My recollection would be he probably didn’t get the opportunity to go into any level of detail.

MR KEIM: Okay. Now, I’m interested in whether you and Mr Keefe, as you sort 20of got your breath back after the meeting and realised what you had been struck with – did you have any discussions at that point about the implications if this change of model went ahead, particularly with regard to workplace health and safety and training? Did you say to each other, or did he raise with you, “If they’re going to do that, we will have to make sure that workplace health and safety issues are addressed 25properly, and we will have to make sure that the training is able to be delivered”? Were there any discussions in the hours after the meeting between you and Mr Keefe addressing those sorts of issues?

THE WITNESS: I don’t recall a specific discussion around that. I do recall that we 30were – I think the term that has been used was “blindsided” or “surprised”, and we were coming to grips with the – the model that had been proposed.

MR KEIM: I suppose “shell-shocked” might be the appropriate description of you after the meeting. 35 THE WITNESS: I – I – necessarily use the term “shell-shocked”, but we were certainly very surprised that – that we hadn’t been given any sort of advanced indication of the – of the model or opportunity to understand it before it was presented in that way. 40 MR KEIM: Okay. Now, I want to take that process a little bit further. In the ensuing day or maybe several days, did you put any process in place by which you consulted with Mr Keefe and Ms Brunoro and anyone else in your division that you considered might have relevant information in order to, I suppose, spell out the 45implications or work out the implications of the change of model in terms of particularly the matters that I’ve raised generally but also going to workplace health and safety and training? Did you have an internal discussion where you said, “Well,

20.3.14 P-441 R.M. CARTER XN ©Commonwealth of Australia MR KEIM what are the implications of the change of the model? If we don’t have the regional players to deliver, what implications does that have for achieving what we’ve been asked to achieve?”

5THE WITNESS: I don’t recall having a discussion of – of – of specifics in the – in the following immediate days after that. I do recall having a – a discussion about continuing to work on the business model that we – that we proposed, that we shouldn’t cease developing that model. We were, I think, still optimistic at that point, and there was a subsequent meeting, as I mentioned earlier, at a senior level 10that – at a secretary CEO level that, I think, brought that to an end, and the other model was the one that was going to be pursued from then on.

MR KEIM: So I take it from the fact that you didn’t have a meeting of that kind in which you drew upon the knowledge in your division – I take it that there was no 15attempt to provide that sort of information by email or letter afterwards either up through your line or more directly to the Office of Coordinator-General, saying, “If you’re going to make those changes, these are the implications for safety and other matters that you will need to come to terms with.”

20THE WITNESS: I don’t - - -

MR KEIM: Nothing along those lines?

THE WITNESS: I don’t recall that occurring after the – the model, but clearly the 25Office of the Coordinator-General had been involved in our development of the model that we were working on up until that time and – and I would assume were aware of the advantages of it – of the consortia-based model in relation to those issues.

30MR KEIM: You say you don’t know when you were aware of the New Zealand deaths, but you didn’t think it appropriate or it didn’t cross your mind that in the role of giving frank and fearless advice, it wouldn’t be a good idea to bring to the attention of these people, who were obviously making decisions without much input from you, that there were significant detrimental implications arising from the 35decisions they seemed to be about to make?

THE WITNESS: We had been strongly advocating the model that we were developing up until – up until that time. But that, if you like, direction from the Office of the Coordinator-General on a – on a different model was a – a firm 40direction that was confirmed by a very senior – senior meeting.

MR KEIM: I will just get off my theme of workplace, health and safety and training for a moment. It seems that – from your statement – that you think a factor in choosing a different model from the one that had been preferred up to that point in 45time was that your division’s risk register identified the risk of not – of your model not being able to deliver everything by 1 July. Were you of the opinion that

20.3.14 P-442 R.M. CARTER XN ©Commonwealth of Australia MR KEIM changing to a new model also raised a whole lot of implications in terms of being able to deliver by 1 July?

THE WITNESS: My view was that – was that the model that we had been 5proposing was an appropriate model that did need – or would result in some phasing and potentially some delay in the 1 July rollout, and my understanding was that the alternative model was based on having national rollout from 1 July occur, that our model was looking at not being able to achieve that full national rollout – that it would be more progressive. I’ve lost my train of thought. 10 MR KEIM: Well, I will just stop you there and ask a different aspect of the question. You didn’t – well, were you of the opinion that if you think this is a big risk of having to phase in a little bit from 1 July, if you go here, you might have something starting on 1 July but it’s something that looks a lot like a disaster? Was 15that – did you have an opinion along those lines at that stage or did you just not consider that?

THE WITNESS: No. I think the – the issue was more that the model that was being proposed involved partnering with large agencies that I wasn’t familiar with their – 20with their capabilities – Centrelink or Medicare – and so I was unaware of what capability or capacity they had to deliver across the model that was being proposed.

MR KEIM: Yes. So you didn’t feel qualified to comment in that way.

25THE WITNESS: No, it was a – as I said, the models that we were familiar with were from the programs we had been – we had been running.

MR KEIM: Coming back to my pet themes, your Department did have plenty of expertise in terms of the implications in terms of workplace health and safety and 30training because you had considered those factors and consulted about those factors in some detail.

THE WITNESS: In terms of identifying those issues and needing to develop them, we had certainly been working on that. I don’t think that we were – that we were an 35expert in training competencies and that – of that nature. That’s why we engaged the Skills Council to develop that kind of material.

MR KEIM: I guess I was suggesting that Ms Brunoro, at that stage, had a fair bit of knowledge with regard to the training means of the sector. So, if I – I will just – 40sorry, I did pause. Just to finish that question – so as to properly brief the Skills Council.

THE WITNESS: I think that – that Ms Brunoro has – had a very good understanding of quite a broad range of the issues involved. I always found Ms 45Brunoro a very diligent officer.

20.3.14 P-443 R.M. CARTER XN ©Commonwealth of Australia MR KEIM MR KEIM: Yes. I wanted to go back to the updating the skills register which you refer to in paragraph 15. This is what the Commissioner was commenting upon and asking about – sorry, at paragraph 47.

5THE WITNESS: The risk register?

MR KEIM: Yes, of your statement.

THE WITNESS: Yes. 10 MR KEIM: I wanted to ask you whether – you’ve told me there were no discussions about what the implications would be in the days immediately after 31 March so that you could go back to the decision makers and brief them as to what they might be getting themselves into. But in terms of the risk register, did you cause any strategic 15discussion to take place with regard – using people like Ms Brunoro and Mr Keefe to say, well, we’re changing the model, we’ve developed a statement of the risks associated with delivering it this way; if we change the point of delivery, change the means of delivery, what are the different risks that flow out of that? Was there any action that you caused to take place to make sure that those matters were considered 20in an informed and properly considered way rather than just left to an outside consultant who might have experts in drawing up the sorts of templates we’ve seen but not experts in understanding the sort of program that was happening here?

THE WITNESS: I wasn’t involved in the day-to-day management of the risk 25register or the processes that went into populating it. I would have assumed that the process of updating that risk register – as I think I mentioned earlier – happened on a regular basis, that risk registers are meant to be a dynamic document that is – that is updated as circumstances change or information becomes available.

30MR KEIM: But this wasn’t just a weekly update. You were really face here with a whole – you had a whole means of dealing with a whole number of risks which had been developed, and that was thrown completely out the window. You didn’t – you didn’t, from your position at any stage, think “We have to make sure that all of those factors are picked up and put into the ongoing processes of the division and the 35program”.

THE WITNESS: Well, the risk register process was already in place and designed to accommodate shifts and changes in the way that it operated, and I had to assume that those processes were taking place. And I think that the email that Mr Kimber 40provided indicated that work had been progressing on updating the risk register for that date.

MR KEIM: Yes. In paragraph 61 of your statement, you put forward the proposition which you repeated at some length – I think because you were 45questioned about it in your evidence-in-chief – that the industry – in paragraph 61 and about the third line you say:

20.3.14 P-444 R.M. CARTER XN ©Commonwealth of Australia MR KEIM Division staff did discuss issues such as who could be involved in a program and the adequacy of the existing requirements but there was an assumption that those things were already working in this industry.

5In your statement, you seem to suggest that that was an opinion held by the officers of your Department. Is that what you’re intending to say there?

THE WITNESS: Well, my understanding was that there was a – a general assumption that came, really, from the commencement of the – of the government’s 10decision to choose this industry, that there – you know, that there were state and territory arrangements in place, that it was an existing industry.

MR KEIM: Well, that’s why I wanted to ask you the question because in your evidence-in-chief, when you expressed it and when you just expressed it now, you 15seem to be saying that this was a view that was received from above, from beyond your division, from the government – whatever that concept means. Is that what you’re saying? This was a view that was handed down to you which you then accepted as a working hypothesis or are you saying that it’s a view that came from your officers as a result of their investigations? 20 THE WITNESS: I – I don’t think I can answer that in that way. I can’t recall it being – being, if you like, handed down as an assumption. It just – it just was the assumption that I understood was in place. I don’t know if that came from within the division but it was certainly an assumption that was raised across the Office of the 25Coordinator-General as well as in the Department.

MR KEIM: Well, for example, did you think that that was a section that Ms Brunoro held as a result of her consultations?

30THE WITNESS: I don’t know.

MR KEIM: What about the other people involved in the consultations?

THE WITNESS: I don’t know whether they held that perception. I was unaware of 35Industry raising major concerns about the safety of their industry and the way it was being operated in Australia.

MR KEIM: But that was the hypothesis that you worked on?

40THE WITNESS: It – the hypothesis or the assumption I was – that was in place was that the existing industry was operating in Australia and weren’t aware of major issues around that.

MR KEIM: And no-one from your division or anywhere else provided you with any 45information that caused you to question that assumption?

THE WITNESS: No. I had that assumption for quite some time. Yes.

20.3.14 P-445 R.M. CARTER XN ©Commonwealth of Australia MR KEIM MR KEIM: And that assumption obviously guided a lot of your decisions of the input you put into group decisions?

THE WITNESS: It guided the decisions that were occurring in the Project Control 5Group, yes.

MR KEIM: Certainly, if that view was held in the Project Control Group, you would not have said anything to question it because you shared that view?

10THE WITNESS: I certainly shared that assumption, yes.

MR KEIM: You were asked those questions about the Project Control Group meeting on 8 May 2009. That was the decision that reduced the training requirements to supervisors only. I’m not sure whether you can recall this but am I 15right in thinking that no-one present at that meeting from the Department of the Environment said that that would be a dangerous decision, that taking training away or reducing the training requirement only to supervisors was likely to produce danger to those installers, dangers to property, danger to householders?

20THE WITNESS: I can’t recall the detail of that discussion. Those views may have been put but I also recall that the issue was raised, I think, by the Office of the Coordinator-General about the participation and that supervision should be sufficient.

25MR KEIM: I just want to go back to the duty to give frank and fearless advice again. If that information was available to your department, that such a decision might be dangerous to the point of life as well as limb as well as property, if that was available to your department and had been conveyed to you, it would have been your duty to raise that danger in that decision, wouldn’t it – in that discussion, wouldn’t it? 30 THE WITNESS: If it had been raised and the – as I’ve mentioned, the discussion that occurred I think touched on those issues in the meeting. It wasn’t briefing material that I had prior to the meeting that I can recall that raised that concern.

35MR KEIM: Okay. You would remember, wouldn’t you, if somebody from your department in that meeting had said, “If you’re going to do that, that’s a very dangerous decision. People could die as a result.” You would remember that if it was said, wouldn’t you?

40THE WITNESS: If – I would think that I would recall that being said explicitly in that way. However, these were events of many years ago now.

MR KEIM: But you can’t remember any warning of that strength being made?

45THE WITNESS: I can’t recall that strength of statement being made, no.

20.3.14 P-446 R.M. CARTER XN ©Commonwealth of Australia MR KEIM MR KEIM: Were you ever briefed by anybody to the effect that training was a major way of addressing workplace health and safety issues?

THE WITNESS: I don’t recall any specific briefing around that. 5 MR KEIM: Okay. Were you ever briefed that subsequent to the change in model, training was really the only remaining way of addressing workplace health and safety problems?

10THE WITNESS: I don’t recall a briefing of that nature.

MR KEIM: Thank you, Commissioner.

COMMISSIONER: Thank you. Mr Bradley. 15

20MR BRADLEY: Commissioner, just a few questions. Mr Carter, my learned friend Mr Perry asked you some questions earlier this afternoon arising out of paragraph 67 of your statement, and I appreciate it has been a long day for you. To help refresh your memory, Mr Perry listed a number of measures taken after the death of Matthew Fuller, including banning the use or introducing the use of plastic staples, 25the requirement for site risk assessments, mandating training and turning off power. Do you recall that exchange?

THE WITNESS: I recall him raising those issues. Yes.

30MR BRADLEY: You agreed with Mr Perry that the use of plastic staples was something dealt with by the states?

THE WITNESS: I don’t have knowledge of how that was given effect. My involvement with the program was decreasing very dramatically through October 35and ceased entirely in November.

MR BRADLEY: And the part that you’re referring to in this statement is late October – is the time you’re referring to in paragraph 67?

40THE WITNESS: Yes. And I haven’t been involved in the direct discussion around those issues. I was just aware of – that that issue had come up.

MR BRADLEY: And you’re aware that in Queensland, by subordinate legislation, the use of metal or conductive fastenings for foil ceiling insulation was banned with 45effect from 1 November 2009?

THE WITNESS: I am aware of that.

20.3.14 P-447 R.M. CARTER XN ©Commonwealth of Australia MR BRADLEY MR BRADLEY: You weren’t suggesting that that same step was taken by any other state?

THE WITNESS: I don't have knowledge of what occurred in detail at that point, no. 5 MR BRADLEY: Are you aware that by the same subordinate legislation that Queensland also mandated risk assessment training for all installers?

THE WITNESS: As I mentioned, my involvement was extremely curtailed and 10didn’t continue into that period. So I - - -

MR BRADLEY: Are you aware that it mandated documented risk assessments dealing with electrical safety risk?

15THE WITNESS: I was aware that risk assessments became mandated but I wasn’t aware of where they became mandated.

MR BRADLEY: So we shouldn’t understand your evidence in the exchange with Mr Perry to suggest that those matters were dealt with only by the Commonwealth? 20 THE WITNESS: Well, as I say, I wasn’t involved in the detail of that. So I was aware that the Minister at that time made some changes to the program but I’m aware now that there were other actions taken as well.

25MR BRADLEY: Thank you, Commissioner.

COMMISSIONER: Thank you. Mr Barrow.

MR BARROW: Thank you, Commissioner. Mr Carter, I appear for Jessica Wilson. Her brother died of hyperthermia in Western Sydney. I just have a question – I 35wanted to ask you some questions just about that decision to move away from training for the installers themselves and to rely on supervision. I wonder if the witness could be shown – it’s AGS.002.018.1937. So this document is one of the weekly reports that has been referred to from time to time during your evidence.

40THE WITNESS: Yes.

MR BARROW: And it’s dated 7 May 2009.

THE WITNESS: I see that. Yes. 45

20.3.14 P-448 R.M. CARTER XN ©Commonwealth of Australia MR BARROW MR BARROW: And I wanted to just ask you about the second dot point under the Home Insulation Program box, where there’s reference being made there to a training workshop that was to occur on the following day, on the Friday of 8 May.

MR BARROW: That was the same day that the meeting of the Project Control Group occurred, where this decision seems to have been made to drop the need for training for installers. That's right? 10 THE WITNESS: Yes. It took place on 8 May. Yes.

MR BARROW: Yes. Do you know whether this training day took place, possibly even at the same time as your meeting was going on? 15 MR CARTER: I don’t know.

MR BARROW: Do you know whether there was any cross-over in terms of people who attended your meeting and who would have been a participant in this workshop 20to develop competencies?

MR CARTER: I don’t know.

MR BARROW: The meeting that you went to, did it have an agenda? Did people 25receive an agenda about the items that are going to be the subject of discussion in advance?

MR CARTER: I can’t recall the format of those meetings. I would assume it had an agenda and the – and attachments where relevant. 30 MR BARROW: I think you said just a few moments ago that your impression was that this particular issue was coming from the Officer of the Controller-General, that it was coming from above.

35MR CARTER: In terms of the discussion of where that decision ended up, that was certainly my recollection that it was a view from the Office of Coordinator-General. I can’t recall if there was any documentation around that issue.

MR BARROW: So it’s possible that it was something that came for discussion 40without notice?

MR CARTER: Quite possible, yes. The process of working through the issues that arose with this program were incredibly truncated. The timeframe involved in developing it was – was very short indeed. 45 MR BARROW: It would seem from this document that there was a group that were charged with the job of establishing training prerequisites. Do you know whether

20.3.14 P-449 R.M. CARTER XN ©Commonwealth of Australia MR BARROW there was any discussion about seeking the views of that group, about the appropriateness of what was being proposed?

MR CARTER: I don’t recall. No. 5 MR BARROW: Subsequent to the meeting on 8 May, did you have any involvement in communicating to those charged with that job of establishing the training modules of the change that was to occur?

10MR CARTER: No, my role, as I have mentioned, was more at a strategical higher level. I wasn’t involved in the day-to-day.

MR BARROW: Would someone from your department have had responsibility for communicating the change in approach to those charged with establishing the 15training units?

MR CARTER: Yes. I would assume there was communication throughout the teams involved with the program.

20MR BARROW: Would that be most likely Mr Keeffe or Mr Kimber?

MR CARTER: It would be Mr Keeffe or staff reporting to him, yes.

MR BARROW: So Mr Kimber, I think, reported to him. 25 MR CARTER: Yes.

MR BARROW: He was, at that time, the director of the HIP. Thank you. Thank you. 30 COMMISSIONER: Thank you, Mr Barrow. Mr Williams, you are standing in for Mr Potts. Is that right?

MR WILLIAMS: I am. Thank you, Commissioner. I have just one brief question. Mr Carter, we act for Mr Murray Barnes, the father of Rueben Barnes who was 40killed. Can I just – paragraph 61 of your statement has been spoken about at length today and my learned friend, Mr Keim, has – in your exchange with him has summarised your position with respects to the assumption that essentially state that regulations were quite adequate at the time with respect to training and I think your words were just then that everything was working well. Can I ask the witness to be 45shown document number QIC.006.001.2893. This is an industry consultant meeting on 29 June 2009.

20.3.14 P-450 R.M. CARTER XN ©Commonwealth of Australia MR WILLIAMS ASSOCIATE: Mr Williams, is that the first number that’s on the page.

MR WILLIAMS: It is, that’s page 1.

5ASSOCIATE: And it was 2813.

MR WILLIAMS: 2893.

COMMISSIONER: 2893. 10 ASSOCIATE: Thank you.

MR WILLIAMS: Could we first scroll down to page 2.

15MR CARTER: Page 2?

MR WILLIAMS: Page 2, agenda item 4 is Installer Training. And then the action for that particular agenda item is on page 10, if we can scroll down there. Mr Keeffe is present during this meeting as is Mr Warwick Batt, general manager of Autex. 20And I will just get you to read those dot points at item 4.

MR CARTER: Yes, I have read those dot points.

MR WILLIAMS: So, essentially, an industry rep, Mr Batt, is explaining for 25DEEWR the training is not compulsory, why would anyone do it? 80 per cent of installers don’t have the standards. My question to you is, did Mr Keeffe discuss this with you in the subsequent days after this meeting? Can you recall?

MR CARTER: I don’t recall having a discussion about those matters. 30 MR WILLIAMS: Taking into account that the roll out was due two days later, after this particular meeting, you don’t recall any discussion with Mr Keeffe in relation to the lack of standards being followed or the lack of compulsory training?

35MR CARTER: No, I don’t recall discussing those – those dot points.

MR WILLIAMS: Thank you. That’s my questions.

COMMISSIONER: Thank you, Mr Williams. Mr Howe. 40

45MR HOWE: Mr Carter, you have been asked a lot of questions about the seemingly critical transition from the delivery model to the new model, that from your point of view commenced unpredictably at the meeting on 31 March 2009. Do you

20.3.14 P-451 R.M. CARTER XN ©Commonwealth of Australia MR HOWE remember all of those questions and the evidence you gave about that meeting and what followed?

MR CARTER: Yes, I do, that the meeting was a – a surprise in terms of the model 5that was put forward.

MR HOWE: And I think it has been suggested to you by a number of counsel that the number of possible fault lines arose in the course of that transition referable to role delineation, role responsibilities, communication and so on with respect to 10management of ongoing risks. Do you recall that line of questioning?

MR CARTER: Yes, that it has been quite a – well, a very fundamental shift in the business model.

15MR HOWE: Yes. Now, without suggesting to you that those fault lines were absent, I do just want to take you to annexure E to your statement which sets out, as I understand it, the original conception of the new model that you were presented with on 31 March and, in particular, the document entitled Energy Efficient Homes Package and it’s AGS.002.008.0651. 0651. 20 MR CARTER: Yes, I have that.

MR HOWE: One more, I think. Now, as I understand it, this was part of the materials presented to you at the meeting on 31 March and then subsequently 25emailed to you as referred to in paragraph 37 of your statement?

MR CARTER: As I indicated, I recall more the diagrammatic slides from that meeting, but, yes, this material was provided after the meeting as well.

30MR HOWE: All right. Can you say whether or not this particular document formed part of what you were presented with at the meeting on 31 March or you simply can’t recall one way or the other?

MR CARTER: I can’t recall one way or the other. My recollection was of the 35diagrams of the model and a discussion around that, but I don’t recall other detail.

MR HOWE: All right. I take it the purpose of you being sent these documents was to indicate to the department in solid, as it were, terms what the design features of the alternative model might be. Is that right? 40 MR CARTER: If it was for us to be informed of what the details were.

MR HOWE: Yes. Now, just looking under the heading on the first page, Methodology, there’s reference to each householder being sent an information pack. 45That’s in the very first line after that heading.

MR CARTER: Yes.

20.3.14 P-452 R.M. CARTER XN ©Commonwealth of Australia MR HOWE MR HOWE: And then in the paragraph commencing, “If the householder suspects”, the sentence in there - - -

MR CARTER: Yes. 5 MR HOWE: - - - following that, “The information pack will advise that the government has compiled a list of qualified installers who are authorised to install the installation.” Do you see that?

10MR CARTER: I see that, yes.

MR HOWE: And then there’s reference at the end of that paragraph, “It is likely that all installers will be attempting to get on the list.” Do you see that?

15MR CARTER: I see that, yes.

MR HOWE: So that paragraph contains some possible tension, as it were, between the reference to qualified installers on the one hand and the likelihood that all installers would attempt to get on that list. Do you see that? 20 MR CARTER: I can understand that. Yes.

MR HOWE: Yes. Some light is shed on that over the page, under the heading Authorised Installers, if you could go to that. And you will see that a second 25paragraph under that heading refers to “reduction in the number of dodgy installers, particularly unqualified new entrants.” Do you see that?

MR CARTER: I see that, yes.

30MR HOWE: And then there’s reference to what an installation company would need to do to get on the list of authorised installers. Do you see that? And there are a series of four things.

MR CARTER: Yes. I see that. 35 MR HOWE: Now, the language might not have been strict but the natural complexion of it suggests that it was still apprehended at this stage that to some extent, at least, most of the installers would be corporate entities.

40MR CARTER: Yes, certainly the term “installation company”.

MR HOWE: Yes. And it refers to paragraph number 2 – they will sent an information pack which explains what the program is. And then after the bracketed words, “and what the requirements are to be an authorised installer”. Do you see 45that?

MR CARTER: I see that, yes.

20.3.14 P-453 R.M. CARTER XN ©Commonwealth of Australia MR HOWE MR HOWE: And they were to be advised of the controls that would be put in place to prevent profiteering, scamming etcetera, in brackets - “(audits, one strike out rule and so on). Do you see that?

5MR CARTER: I see that.

MR HOWE: Now, that seems to be part of the upfront architecture of the new model, do you agree?

10MR CARTER: Yes, I would agree that that was attached to it. Yes.

MR HOWE: And then paragraph 3 says, “The installer will then need to complete a form giving details, such as ABN bank account details location” and then these words, “qualification or experience in industry”. Do you see that? 15 THE WITNESS: Yes. I see that.

MR HOWE: And then in paragraph 4:

20 The architecture of the new scheme seems to have contemplated that there would be some assessment of the acceptability of the qualifications or experience in the industry.

Do you see that? 25 THE WITNESS: I see that. Yes.

MR HOWE: Continuing:

30 Before the installer would be added to the list and authorised to participate in the program.

Do you see that?

35THE WITNESS: I do. Yes.

MR HOWE: That’s starting to reveal itself as something that didn’t endure to fruition in the program as it commenced on 1 July 2009. Do you agree?

40THE WITNESS: I’m not sure of the detail of how that – how some of that did or didn’t carry through, sorry.

MR HOWE: Right. Well, I think you’re perhaps at a disadvantage because your involvement ceased a little before 1 July 2009 or your primary involvement. Is that 45right?

THE WITNESS: That's correct.

20.3.14 P-454 R.M. CARTER XN ©Commonwealth of Australia MR HOWE MR HOWE: If you could go over the page though, there’s a heading toward the bottom of the page, Training for New Entrants. Now, this again, I remind you, is describing the conception of the architecture of the new model at its earliest point of being raised with you. And under this heading it says: 5 Minimum standards should apply to any installers wishing to be included on the authorised list.

THE WITNESS: I see that. Yes. 10 MR HOWE: Now, that’s pretty emphatic and it’s clear, isn’t it?

THE WITNESS: It is.

15MR HOWE: And then your department was to work with the Department of Education to implement a training regime that:

New entrants must meet before they can be included on the list.

20Again, that’s pretty clear and emphatic.

THE WITNESS: Yes.

MR HOWE: And the Commissioner might well be satisfied in due course that a lot 25of what I have just taken you to, referred in this document, didn’t in fact form part of the architecture of the scheme as it was rolled out as and from 1 July 2009. Now, on that assumption, are you able to explain for the Commissioner why that might have occurred?

30THE WITNESS: No, I’m not. I think the standards and the terminology around installers and companies is something that might be unclear in how that was – it was later developed.

MR HOWE: All right. And then another critical milestone appears to be the PCG 35meeting on 8 May 2009, at which training and competency requirements for all installers were reduced so as to apply only to supervisors. Do you recall that?

THE WITNESS: I do recall that, yes.

40MR HOWE: And is there anything more apart from that of which you have given evidence that you can offer to the commissioner to explain that particular milestone?

THE WITNESS: No. I don’t think so.

45MR HOWE: And just to put each of those three milestones in context: we have the earlier model existing, as it were, at 30 March 2009, which we were informed yesterday contemplated new entry training of up to five days; then we had 31 March

20.3.14 P-455 R.M. CARTER XN ©Commonwealth of Australia MR HOWE 2009, which involved the new model entering the scene; and then we had or have the project control meeting on 8 May. And those milestones represent substantial diminution in the originally or then conceived training requirements. Do you follow that? 5 THE WITNESS: I follow that. Yes.

MR HOWE: And does that accord with your understanding?

10THE WITNESS: As you’ve set it out, it does. Yes.

MR HOWE: Now, Ms Coaldrake was on the scene prior to 31 March 2009. Is that right?

15THE WITNESS: Yes, she was.

MR HOWE: And was she in attendance at the meeting on 31 March 2009?

THE WITNESS: I don’t think she was. 20 MR HOWE: But she was at the meeting on 8 May 2009?

THE WITNESS: I would think so. Yes.

25MR HOWE: Well, the minutes for the meeting record her being in attendance.

THE WITNESS: Yes. From my recollection, she attended most of the meetings.

MR HOWE: Now, you recall being asked some questions about – I’m sorry, by 30Mr Perry about the risk register and the risk ratings.

THE WITNESS: Yes.

MR HOWE: We heard some evidence yesterday from Ms Brunoro that the risk 35ratings were applied on the basis of the risks not being mitigated. Is that your understanding as well?

THE WITNESS: That is the usual approach to risk registers.

40MR HOWE: And you also recall being asked some questions along the lines of various control measures not having been introduced until the death of Mr Fuller. Do you recall that?

THE WITNESS: I do recall that. Yes. 45

20.3.14 P-456 R.M. CARTER XN ©Commonwealth of Australia MR HOWE MR HOWE: Were you aware that prior to Mr Fuller’s death, the installer advices were giving increasing emphasis to the need for actual close supervision by supervisors of what was happening in the roof space?

5THE WITNESS: I was aware that the advices had been being updated and included more detail. Yes.

MR HOWE: And is that partly because the Commonwealth itself became aware, as a result of the invoicing, that a single supervisor might in fact be rendering accounts 10referable to alleged supervision rendered at district houses in a particular area on the same morning or the same day and that raised an issue - - -

MR WILSON: That’s a lovely piece of evidence from Mr Howe but hasn’t it all been established whether this witness was provided with any of these details to draw 15that conclusion?

MR HOWE: I was asking him.

COMMISSIONER: You have got to allow the basis for it. 20 MR HOWE: Yes.

COMMISSIONER: Go on.

25MR HOWE: Were there concerns about the level of supervision in the early days after the rollout?

THE WITNESS: But the – what you were just talking about does – I do recall there being some discussion about the – some supervisors seeming to have been 30supervising multiple jobs that were not physically impossible for them to have been doing. I do recall that.

MR HOWE: And the architecture of the program as at 1 July 2009 didn’t contemplate that? 35 THE WITNESS: Not from my understanding, no.

MR HOWE: Now, you were also asked some questions about the integration or otherwise of the New Zealand experience with the stapling of the foil. Do you recall 40those questions?

THE WITNESS: I do recall those questions.

MR HOWE: And your evidence was that you would have expected that the New 45Zealand experience would have been explored by your department?

20.3.14 P-457 R.M. CARTER XN ©Commonwealth of Australia MR HOWE THE WITNESS: I would have expected that if we were aware of an issue that we would have researched it further. Yes.

MR HOWE: Are you aware of the inclusion of any specific warnings against the 5use of metal staples in connection with foil insulation that appeared in the pocketbook that was published?

THE WITNESS: Yes. I think I was made aware of that at the coronial inquiry. As I’ve mentioned, I wasn’t involved in a lot of the detail, technical work, or 10development of materials.

MR HOWE: Yes. And in paragraph 68 of your statement you make reference to the Skills Council. Were you aware that it had included, as part of the material to be canvassed by all of the training providers, both a warning against the use of metal 15staples with foil insulation and a diagrammatic depiction of the danger of so doing?

THE WITNESS: I do recall that. Yes.

MR HOWE: And can you assist the Commissioner with the composition, role or 20function of the Skills Council? We’ve heard it mentioned a number of times, but was it a peak body, a representative body, a industry body, a specialist training provider itself, or what?

MR CARTER: My understanding of Skills Councils is not comprehensive but I 25understood that they involved relevant experts and industry participants in the council itself.

MR HOWE: Yes. Just pardon me a minute.

30COMMISSIONER: It’s funded by the Commonwealth, isn’t it through the Department of Education?

MR CARTER: Yes. My understanding is the councils are supported by the Department of Education and Employment and Workplace Relations. 35 MR HOWE: And they were contracted by the department to undertake this task, is that right?

MR CARTER: Yes. My understanding of that was that the councils had a 40programme of work in place and I seem to recall that to get work done, sort of bumped up the priority list, in effect, we had to contract to get that work undertaken.

MR HOWE: Yes. Well, I would just like to know what the direction of input was. Was it the department relying upon the expertise of the Skills Council to construct an 45appropriate training program or was it the Skills Council being told by the Commonwealth what the composition of the training was to be, or was it a combination of both?

20.3.14 P-458 R.M. CARTER XN ©Commonwealth of Australia MR HOWE MR CARTER: My – my understanding was that the Skills Council was the appropriate expert body to develop the training competency or material, that that’s why we were contracting them.

5MR HOWE: And that’s training referable to unskilled workers being up in roof spaces installing various types of insulation including foil. Is that right?

MR CARTER: I’m not across that detail, to be honest.

10MR HOWE: That will do, I think.

COMMISSIONER: Thanks, Mr Howe. I think Mr McLeod.

MR McLEOD: I have no questions, Commissioner. 15 COMMISSIONER: No questions.

MR WILSON: I will be very brief given the time. Were you aware that the Department of Employment actually had interaction with the Skills Council.

25MR CARTER: I wasn’t aware of the complexity of the framework of our competencies and skills and training was developed. I did mention earlier that I had some understanding that it was a framework that involved Skills Councils but that on-the-ground training was provided by RTOs.

30MR WILSON: But you were aware from your role in the Project Control Group meetings that it was the Department of Environment who was given the task of organising training and it did so by liaising with the Skills Council.

MR CARTER: Yes. That we went to the Skills Council for that. 35 MR WILSON: That is, there was no direct interaction between your department and the Skills Council.

MR CARTER: I – I can’t recall that, I don’t know. 40 MR WILSON: If you accept that the decision was made on 8 May at the Project Control meeting, to remove as one of the competencies that the installers undergo training beyond having an OH&S white card, doesn’t that make the training courses academic? 45 MR CARTER: Well, not if they were in place for new supervisor entrants.

20.3.14 P-459 R.M. CARTER XN ©Commonwealth of Australia MR WILSON MR WILSON: So were you aware that one of the competencies under the scheme was that someone who had a previous trade qualification qualified to be an installer?

MR CARTER: Yes, I was aware of that. 5 MR WILSON: So someone that was a bricklayer or a plasterer who may never have been in a ceiling in their life was qualified or competent under the scheme.

MR CARTER: That was my understanding, yes. 10 MR WILSON: That person could then set up a business and employ completely unskilled people to actually do the work in the ceiling.

MR CARTER: Well, my understanding was that people involved in the building 15trade were familiar with the dimensions of risks on construction and building sites and that, yes, they could then employ unskilled workers or labourers.

MR WILSON: Thank you. Could I take you please to AGS.002.029.0929. While that is being brought up, were you aware that parts of the read under the leadership of 20Mr Keeffe were carrying out various workshops, including as you will now see, a technical workshop?

MR CARTER: I was aware that there was a range of technical workshops being undertaken. 25 MR WILSON: And were you kept advised as to the outcomes of those workshops?

MR CARTER: Not that I can recall, no.

30MR WILSON: Just have a look down through that email, which is from Mr Keeffe to members of his team, about the workshop on 3 April. Were you aware, for example – could we just scroll up a little bit please. Were you aware that the department was seeking expert advice from those people mentioned there?

35MR CARTER: No, I wasn’t.

MR WILSON: So no one told you as the head of the division that the department was spending money engaging these independent experts?

40THE WITNESS: It was common practice in the division for – for the line areas to be engaging with experts as they needed.

MR WILSON: No-one told you that fact?

45THE WITNESS: Not in the specifics; it was a common practice.

MR WILSON: Did anyone tell you what those people had advised the department?

MR WILSON: Now, can we just go down then to the heading Safety Issues. These seem to be a list of issues that had discussed at a technical workshop by officers of 5your department with experts. “High likelihood of catastrophic consequence, death, or serous injury.” Can I ask you two questions about that: first, did anyone draw that to your attention?

THE WITNESS: Not that I recall. 10 MR WILSON: Well, do you think that if something as serious of that came out of a technical workshop, that someone would bother to tell you?

THE WITNESS: I would have thought that would have been raised. Yes. 15 MR WILSON: So is it likely that you were told?

THE WITNESS: I can’t recall being told about - - -

20MR WILSON: Is it likely that you were told?

THE WITNESS: I’m indicating I can’t recall being told that. So - - -

MR WILSON: No. I understand your problems with your recollection, but, given 25your position, is something as serious as that likely to have been passed on to you?

THE WITNESS: In general risk assessment that was – that was occurring, the issues that were being identified are not likely to be passed onto me in detail.

30MR WILSON: And what about the third point? The risk plan needs to cover all of those things, including dangers in existing and old buildings, hazardous materials, perhaps there’s asbestos in ceilings, electrical; were those things passed onto you?

THE WITNESS: No. I’m - - - 35 MR WILSON: At a technical workshop conducted by officers of your department had either discussed or raised these sort of safety issues?

THE WITNESS: No. I don’t recall. 40 MR WILSON: Are you telling this commission to accept that you were kept in the dark about that?

THE WITNESS: I don’t put it in those terms, no. The – we had a large division 45that was undertaking a lot of activities and tasks - - -

MR WILSON: And this is the biggest project that it was undertaking, wasn’t it?

20.3.14 P-461 R.M. CARTER XN ©Commonwealth of Australia MR WILSON THE WITNESS: It was one of many projects that we were undertaking.

MR WILSON: This was the biggest project.

5THE WITNESS: It was the biggest project. Yes.

MR WILSON: And it was a project that was giving rise to lots of problems.

THE WITNESS: It was – it later gave rise to lots of problems. 10 MR WILSON: It was giving rise to lots of problems shortly before 3 April, because you were dragged into the Coordinator General’s office and told to change the business model.

15THE WITNESS: Yes. That’s correct.

MR WILSON: So if officers of your department were being told at a workshop, or raising themselves at a workshop, only three days later, that there were all these safety issues, are you seriously asking the Commissioner to accept that you didn’t 20know about that?

THE WITNESS: Yes. The detail of what was being identified in terms of risks, I go to, once again, the methodology of risk assessment, where they are intended to be comprehensive in possible risks, then a likelihood and probability is attached to those 25risks and then mitigations are developed, and I would not expect, at the identification stage of risk, to necessarily be informed of all of them. I would expect a risk assessment to be comprehensive and then to work through what were the mitigations around that.

30MR WILSON: Now, Mr Keefe plainly knew about them.

THE WITNESS: If he was in - - -

MR WILSON: He’s the person sending the email. 35 THE WITNESS: Yes.

MR WILSON: He was with you at the meeting three days earlier, where you were told that there should be a different business model. 40 THE WITNESS: Yes.

MR WILSON: Did he come to you and say, “We’ve got to go back and tell these guys that this isn’t a good idea”? 45 THE WITNESS: Not in those terms. No.

THE WITNESS: As I’ve already said, we were concerned at the change in business model, and didn’t understand the full ramifications of the other participant – the 5Centrelink and Medicare and that.

MR WILSON: But in terms of the delivery model, you have taken out the intermediary. He’s going to be looking after these sort of risks. Did anyone think of going back to the Office of Coordinator-General and saying, “Your plan is not going 10to deal with this”?

THE WITNESS: As I’ve said, the risk register was in place and was then updated and I would have assumed that as these risks were identified and consideration of what would mitigate or otherwise them, that that would flow into that register. 15 MR WILSON: I don’t expect you to do this on the run, Mr Carter, but what I ask you to do is to go through the risk registers and you tell the Commissioner where electrical risk, OH&S safety risk to installers is dealt with in the risk registers. Can you do that for us please? 20 THE WITNESS: Yes, I can do that.

MR WILSON: Thank you. That’s all I have. Thank you, Commissioner.

25COMMISSIONER: ..... to come back tomorrow morning, Mr Wilson, or - - -

MR WILSON: Stand - - -

COMMISSIONER: Do you want him to come back tomorrow or just at a - - - 30 MR WILSON: No, I’ve finished. I’ve finished.

COMMISSIONER: You’re finished.

35MR WILSON: I’m happy for Mr Carter to tell us that in due course.

COMMISSIONER: So you don’t have to come back, Mr Carter. It’s just let us know that if you could. Okay.

40THE WITNESS: Yes, Commissioner.

COMMISSIONER: Thank you very much for your attendance today. I know it has been a very long day.

45THE WITNESS: Thank you, Commissioner.

COMMISSIONER: You better tell us who the witnesses are for tomorrow.

20.3.14 P-463 R.M. CARTER XN ©Commonwealth of Australia MR WILSON MR WILSON: At 9.30 tomorrow morning we have got Mr Peter Ruz and then we will call Mr Matt Levey.

COMMISSIONER: And he will have the rest of the morning, will he? 5 MR WILSON: I suspect so. Yes.

COMMISSIONER: Yes. Adjourned until tomorrow.

MATTER ADJOURNED at 4.58 pm UNTIL FRIDAY, 21 MARCH 2014

ROSS MALCOLM CARTER, AFFIRMED P-326 EXAMINATION-IN-CHIEF BY MR WILSON P-326 EXAMINATION BY MR PERRY P-393 EXAMINATION BY MR WINDSOR P-420 EXAMINATION BY MR KEIM P-438 EXAMINATION BY MR BRADLEY P-447 EXAMINATION BY MR BARROW P-448 EXAMINATION BY MR WILLIAMS P-450 EXAMINATION BY MR HOWE P-451 EXAMINATION BY MR WILSON P-459 THE WITNESS WITHDREW P-464

5Index of Exhibits and MFIs