Audit Office Report on the Administration of Climage Change Programs

Last week, the Australian National Audit Office (ANAO) released a report regarding the administration of the Government’s climate change programs.

The report examines a sample of three grant programs and two rebate schemes designed to reduce greenhouse gas emissions and to promote renewable energy technologies.

Grant Programs: Low Emissions Technology Demonstration Fund / Solar Cities / Greenhouse Gas Abatement Program

According to the report, the assessment and selection of climate change projects under the Low Emissions Technology Demonstration Fund (LETDF) and Solar Cities programs was transparent, with criteria used to assess all proposals. Generally, ANAO considers there was a high degree of rigour and technical expertise applied to the assessment process.

The ANAO report has found the assessment and selection process for projects under the Greenhouse Gas Abatement Program (GGAP) was inadequate and the rigour of the cost-benefit and technical analysis could have been improved. The $400 million allocated to the program was consistently underspent throughout the life of the program. As at 30 June 2009, the actual expenditure was $132million.

The report notes that a more targeted consultation with industry early in the life of the program would have helped as the program did not attract a sufficient pool of competitive proposals that met the program criteria. “This seriously weakened the capacity of the department to deliver the anticipated abatement.”

The report notes that effectively engaging with industry and prospective stakeholders in the first instance would have addressed this problem.

Rebate Schemes: Solar Homes & Communities Plan / Renewable Remote Power Generation Program

For the two rebate schemes, the Solar Homes and Communities Plan (SHCP) and the Renewable Remote Power Generation Program (RRPGP), demand outstripped available funds – particularly for SHCP. As a consequence, the SHCP has substantially contributed to growth in the uptake of renewable energy in Australia.

However the report finds that in terms of abatement, this has come at a high unit cost of $447 per tonne of CO2-e. The report also says abatement achieved by the RRPGP program is very expensive, especially when compared to a possible ETS market carbon price closer to $20 to $30 per tonne of CO2-e.

High Level Weaknesses

The ANAO believes that the lack of concise, outcome-orientated objectives of the programs has made it more difficult to target resources and set administrative priorities because of the uncertainty in relation to the ultimate outcome being sought by governments.  The report notes that each program had different administrative issues and challenges and the effectiveness of some of these programs was constrained by weaknesses in program implementation and design.

ANAO Recommendations

In order for climate change programs to be effective, the ANAO believes greater consideration needs to be given to:

1. Setting clear and measurable objectives;
2. Assessing and implementing appropriate risk mitigation strategies;
3. Applying a rigorous merit-based assessment of applications for competitive grants;
4. Effective reporting on performance.

 To access the report on the Administration of Climate Change Programs, click here.

Executive remuneration reforms

In 2009 the Productivity Commission was asked to undertake a public inquiry into the regulatory framework around remuneration of directors and executives of companies regulated under the Corporations Act.

The Commission was requested to consider:

• trends in director and executive remuneration in Australia and internationally;
• the effectiveness of the existing framework for the oversight, accountability and transparency of director and executive remuneration practices;
• the role of institutional and retail shareholders in the development, setting, reporting and consideration of remuneration practices;
• any mechanisms that would better align the interests of boards and executives with those of shareholders and the wider community; and
• the effectiveness of the international responses to remuneration issues arising from the global financial crisis.

The Productivity Commission’s Inquiry Report was released on 4 January 2010 (click here).

The Government has largely endorse the recommendations of the inquiry, and will introduce legislation later this year with the changes to take effect from 1 July 2011, following public consultation on an exposure draft.

Some of the key recommendations of the PC inquiry included:

- Remuneration reports will be required to have a plain english summary of remuneration policies and report actual remuneration received and individual’s total company shareholdings.
- A 25% shareholder ‘no’ vote on a remuneration report will trigger an obligation for the company to explain in a subsequent report how shareholders’ concerns have been addressed. A subsequent 25% ‘no’ vote will activate a resolution for elected directors to submit for re-election within 90 days.
- A declaration of ‘no vacancy’ at an AGM will need to be agreed to by shareholders.
- Institutional investors will be encouraged to voluntarily disclose how they have voted on remuneration reports and other remuneration-related issues.

The Government will also undertake consultation on a proposal to clawback bonuses paid to directors and executives in the event of a material misstatement of a company’s financial statements. This proposal is aimed at ensuring that, to the extent that pay packets are inflated by incorrect information, that money is returned to shareholders. A discussion paper will be released in coming months.

Click here to read the joint media release from The Hon Wayne Swan MP Treasurer and Senator The Hon Nick Sherry Assistant Treasurer.  A full copy of the Government’s response, including details of all recommendations is available here.

Article 13 Case Study

This week, Article 13 published a case study about AGL’s sustainability performance.

Article 13 are based in London, and contacted us late last year for permission to highlight our organisation on their website after hearing about our inclusion on the Dow Jones Sustainability World Index (DJSI World).

Click here to access the article via the Article 13 website.

New Customer Charter

Last week, AGL published a new Customer Charter. The Charter outlines what you can expect from us as an AGL customer, and also provides a benchmark against which we’ll measure our service to you.

The charter speaks to the critical success factors, each of which we will measure and report on, both on our website and in our annual Sustainability Report:

• We will deliver quality service.
• We will provide value for money.
• We will understand our customers’ needs and deliver to them.
• We will be there with the answers for our customers.

Click here to access the Charter, and check back soon to see how we are performing against our charter.

New AGL Bill Design

If you are an AGL electricity or gas customer, you might notice some changes when you get your next bill.

AGL has listened to feedback from both customers and employees and has redesigned the format of both electricity and gas bills to make them easier to understand.

A new interactive ‘bill explainer’ has been published on our website which helps explain each part of your bill. Click here to access the bill explainer.