The ACT Government has rejected claims the manager of loans for the Sustainable Household Scheme is in financial trouble.
Interest-free financer Brighte is responsible for checks and assessments for people making loans through the scheme, as well as chasing up ‘doubtful debts’ – accounts receivable which could become bad debt in the future.
The Chief Minister and Office of Climate Action officials were questioned by the Canberra Liberals during budget estimates about whether Brighte was in danger of insolvency.
The Opposition drew on an article in The Australian which mentioned the company had pulled in revenues of $33.5 million for the 2021/2022 financial year ending 30 June, while expenses had risen to $78.3 million.
Filings to corporate regulator ASIC (Australian Securities and Investments Commission) also showed Brighte’s employee expenses had grown by 160 per cent year on year, while marketing spend quadrupled to $6.43 million.
The company had filed a $42.3 million loss after tax, which was a loss of $9 million a year earlier.
Based on the numbers, the Canberra Liberals questioned what the government would do if the company went under.
Office of Climate Action executive branch manager Kieran Lawton explained a “warm standby [financial] provider” had been found to take over from Brighte should the need arise.
“We’re underway in setting up an SPV (Special Purpose Vehicle) at the moment,” he said.
An ACT Government spokesperson said the SPV Trust arrangement was part of ongoing reviews of the program, and represented the “gold standard” in security.
“In the very unlikely case of an insolvency, an administrator would step in and the loans would then be managed by another financial provider,” the spokesperson said.
“This is done as part of normal processes of contract management.”
It’s expected the back-up finance company would establish the SPV Trust on behalf of the government, act as a trustee and security trustee, and be the “warm standby servicer” if Brighte defaulted.
“The procurement has been finalised in the last four weeks, and contracting with the selected finance company is underway,” the spokesperson said.
“We expect to have these new arrangements in place before the end of the year.”
Given a recent Auditor-General report which found issues with the government’s procurement process, Climate Action Minister Andrew Barr was questioned about whether he felt the company’s procurement was up to scratch.
Mr Barr said he was not advised anything about the process had been “deficient” in any way.
“The procurement process was done in accordance with the ACT Government’s requirements,” he said.
The government was also questioned about the doubtful debts coming through the scheme, and how those payments were ensured.
Mr Laughton said 17,900 loans had been applied for since the scheme’s launch, with about 15,000 approved.
As of Monday (24 July), 34 of those accounts were in arrears by one to 15 days, one account by 16 to 30 days, six accounts by 31 to 60 days, one account by 45 to 90 days, and another account by 90-plus days.
“We’ve had very few defaults under the scheme … we’re yet to have our first proper default,” Mr Laughton told the hearing.
While $150 million has been settled in loans, about 60 per cent of these go to rooftop solar.
“For such a small jurisdiction, it’s a great outcome,” Mr Lawton said.
In the 2023-24 Budget the government has shifted its focus to increasing solar uptake in multi-unit dwellings and developments, with rebates and concessional loans to be made available through a partnership with the Commonwealth.
This has made 92 per cent of apartment buildings eligible to apply under the scheme.
It’s planned the next stage of the scheme will also focus on helping homes transition to electric appliances.
This includes upgrading heating and cooling systems, installing hot water pumps and electric stove tops, as well as for buying electric vehicles, charging infrastructure and battery storage systems.
A media release from Brighte on 9 September, 2022, noted its financial difficulties at that time and what it had done to turn its prospects around.
This included reducing its Australian-based team by 27 per cent.
“We’re sad to farewell our colleagues and today’s difficult decision is no reflection on their passion and contribution to Brighte,” company founder and CEO Katherine McConnell said.
“We appreciate it’s never easy to make roles redundant and have tried to be as empathetic as possible to those of our team that have been impacted.”
The company also secured $200 million in investor support through a climate bonds deal in December.