The annals of Commonwealth public sector maladministration have a new entry, and a big one.

Several reviews have described how badly the Rudd government’s Green Loans program was administered by the Department of the Environment but yesterday’s ANAO report, initiated by Green senator Christine Milne, can only be described as a systematic and savage demolition of a department.

Make no mistake, Green Loans is destined to join the Midford case and the Hughes case as classic examples of disastrous public service mismanagement, textbook cases of serious maladministration. Previous high-profile ANAO audits like that of the Regional Partnerships Program — where fault primarily lay with pork-barrelling ministers — pale in comparison. The problems with the Green Loans program lay not with the minister – ministers can be easily sacked or changed – but in the public service itself.

The list of major failings found by the ANAO is extensive and, eventually, exhausting to recount. The most serious ones are:

  • The Environment Department vastly under-resourced the program and, until June last year, it was run by the same branch as the one in charge of the insulation program. The then-branch head told the ANAO that the HIP took up all of his time and he could only look at Green Loans issues “after hours”.
  • There was too little executive oversight of the program; an executive steering committee set up to oversee the Department’s new program responsibilities primarily focused on the insulation program and eventually stopped meeting altogether. Quarterly “project status reports” sent up to senior management were inaccurate and failed to flag problems as they arose.
  • The program was primarily run by junior and inexperienced staff, and between June 2009 and the end of that year there were four successive branch heads overseeing the program, ensuring no corporate memory or effective oversight.
  • The Department did its sums wrong in calculating the program’s budget requirements in the face of much higher-than-expected uptake.
  • The Department’s briefing of Minister Peter Garrett was “generally poor” and “inaccurate, incomplete and untimely”, eventually prompting Garrett to complain to the Department about the poor quality of advice he was getting. “At no time throughout 2008–09,” said the ANAO, “did DEWHA provide the minister with comprehensive status reports on progress of the program.”
  • Basic program implementation functions like an implementation strategy and a risk management plan were never carried out properly.
  • There was “extensive” non-compliance with Commonwealth Procurement Guidelines and departmental procurement requirements, including multiple breaches of Financial Management Act regulations.
  • The Department had no information on, or control of, how many assessors were being trained under the program.
  • The Department’s contact centre for handling assessment bookings was little short of an expensive disaster, and one company, Fieldforce, was given what the ANAO politely terms a “market advantage” over everyone else.
  • There were “numerous administrative deficiencies” in the Department’s procurement of assessment services.

In fact, it is hard to identify any aspects of the Department’s management of the program that were not, in the eyes of the ANAO, seriously flawed. This is as bad as it gets.

The problems clearly spring from the fact — as borne out by the home insulation program — that the Environment Department lacked expertise and experience in large-scale program management. Green Loans was a complex, multi-stage program involving the massive expansion of a boutique industry, and the administration of payments for household assessments and government-subsidised loans for energy efficiency measures (the ANAO also found some financial institutions had been disadvantaged in the development of loan arrangements). Lack of program implementation skills should be easily rectifiable through greater training, more sharing of skilled staff across departments and the development of program implementation toolkits that give bureaucrats establishing new programs a set of must-haves like risk management plans and evaluation frameworks.

That won’t necessarily help address the problem of governments giving public servants extremely tight timeframes to roll out programs, as happened repeatedly under the Rudd government (Green Loans wasn’t a a stimulus program, but it was an election commitment and therefore prioritised by the government), but the failings of the Environment Department demonstrate a real need to address the lack of program implementation skills.

But the failure by the executive of the Environment Department to keep an eye on the program as it turned into a debacle is more serious, even accepting that much of their time was taken up with the insulation program. Worse, they badly failed their minister in allowing him to be, in effect, misled by the Department as to the program’s implementation. This was a significant failure of leadership and one for which then-Secretary Robyn Kruk, who is currently on sick leave, must eventually answer should she ever return to the public service.

Of equal concern is the extensive breaches of Commonwealth procurement policies by junior-level public servants, including actual breaches of regulations. This was identified in Patricia Faulkner’s review of the program earlier this year, and the ANAO endorsed her findings. There has been a long, slow process of dragging Commonwealth procurement to a higher level of probity, fairness and administrative effectiveness since the debacle of the Hughes case in the 1990s. Along the way, plenty of public service procurement managers have found themselves under attack from colleagues for being “unresponsive” and overly bureaucratic in their insistence that procurement guidelines be followed.

The Green Loans program shows the lessons of good procurement still haven’t been learnt. The list of failings identified by the ANAO — contract splitting to get below procurement guideline thresholds, inconsistent treatment of tenderers, unexplained reliance on direct sourcing, failure to obtain properly-delegated approval and loss of control of contract budgets — reads like the sort of greatest hits list of what not to do in procurement that is used in public service training courses.

The report has received strangely muted media coverage, perhaps because it so clearly emphasises that Garrett was badly served — to the point of being misled — by his own Department. But it should go off like a cannon inside the public service. Which departments can be sure that they have none of the failings so clearly demonstrated in the Environment Department?