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Transfield snags extra $10m in pink batt contract cheques

Infrastructure firm Transfield Services, contracted to clean up the federal government’s troubled pink batts program, has won a series of funding boosters from its contract.

Infrastructure conglomerate Transfield Services has shoehorned an extra $10 million from Australian taxpayers to complete safety inspections under the government’s ditched home insulation scheme.

Tender documents uploaded to the AusTender website this year reveal Transfield’s contracts have been bolstered twice from the original $26 million disclosed in April 2011 for a total additional bounty of $108 million.

Transfield had been charged with carrying out 20,000 inspections and rectifications under the government’s Home Insulation Safety Program after the initial pink batts scheme was shut down in March 2010. Its axing followed a false media storm that incorrectly suggested an increased prevalence of fires and electrocutions.

Last September the Transfield contract was “amended” to $124 million and again in January to $134 million. And the tender website shows that on June 29 this year — one day before the initial contract was due to expire — the firm was granted an extension of one month.

The company reported a profit of $85 million for the 2011-12 financial year and has been on the end of other forms of government largesse. Last year it signed a $133 million deal to help build the National Broadband Network.

The 2011-12 Budget allocated $111 million for the inspections, adding to the previous $318 million that had been previously spent. In total, about 20% of the $2.45 billion scheme has been spent on checks of already-completed installations.

Before it was scrapped, roughly 1.2 million households had received installations at a total cost of about $1.45 billion. The unexpended amount — less the $500 million spent on rectification — has been progressively returned to bolster the Budget bottom line or allocated to a contingency reserve.

Officials from the Department of Climate Change are expected to be grilled on the issue in Senate Estimates next week. A spokesperson for opposition climate spokesman Greg Hunt office told Crikey that Coalition Senators would ask why the contract was bolstered, whether it was properly tendered and whether it represented value for money.

Previously, the government had committed to carrying out inspections on 150,000 homes with pink batts and 50,000 with foil insulation. This year, many of the inspections were initiated by households themselves; until June 30 worried residents were able to call a hotline to summon an inspector to their roof.

The government ended the original scheme — designed to bolster investment in the aftermath of the global financial crisis and address the energy inefficiency of Australian households — in March 2010 after sustained media pressure over the deaths of installers and house fires. However the government and the then-minister Peter Garrett was exonerated by a subsequent CSIRO report, which found the rate of fire in houses with insulation before and after the program were about the same and were actually expected to drop as the inspection regime rolled out.

But the damage had already been done. The blow-up is credited with effectively ending Garrett’s political ambitions. He is likely to be replaced as the member for Kingsford Smith by recently-elected Botany Mayor Ben Keneally in 2016, according to a senior NSW Labor source.

As Crikey hit deadline a Department of Climate Change and Energy Efficiency spokesperson issued the following statement, admitting the value of the contract could increase again:

The Home Insulation Safety Program contract was based on a contracted price per service basis rather than a fixed contract value, therefore the value of the contract could change over time as determined by the number and complexity of the inspection and rectification services delivered by Transfield.

Contracts of this nature are updated on a regular basis – within approved budget allocation. The figures will be further revised and Austender will be updated with the final value accordingly.”

Transfield has been contacted for comment and we will include their response when we receive it. (UPDATE: Transfield referred queries back to the department).

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    potatoes
    Posted Wednesday, 10 October 2012 at 5:20 pm | Permalink

    Andrew please dont refer to the home insulation scheme as pink batts. Pink Batts is a brand. Everytime you refer to this poorly administed and consequently dangerous government policy in the context of “Pink Batts” you defame that product and its owners who have done nothing wrong. I dont know who owns Pink Batts but I do feel sorry for them every time I read an article like this that joins those dots. It was a home insulation scheme. Please.

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