“The ACT government’s Asbestos Response Taskforce designed a cynical, deeply unfair and flawed scheme.” JON STANHOPE & KHALID AHMED reveal how the painful Mr Fluffy program was disturbing and deeply hurtful for many people.

“As I approach my 81st birthday, living on the streets in Canberra’s cold and damp winter with my wife, who is living on borrowed time, is not exactly appealing for a fiercely independent couple who have taken no handouts from either the federal or ACT governments.”

This is the lament of Leo Carvalho and his wife Lorraine.

They do have a home, and yet they are “homeless”. They are victims of challenging the ACT government’s asbestos eradication program valuation.

The Carvalhos bought their Lyons home not knowing that it was what is generally known as a “Mr Fluffy” house. 

The ACT government knew, but at the time did not publicly identify the properties affected by loose fill asbestos. Nor did it require, at that time, that that information be disclosed in contracts for sale.

It is moot whether such information would have made the Carvalhos and many others in a similar situation any more responsible for the circumstances in which they found themselves in 2014.

History of Mr Fluffy and the original removal program

A full description of the decades-long Mr Fluffy history is not within the scope of this article. However, some key facts are relevant and we have drawn the following from researched and referenced publications.

Loose fill asbestos was marketed as Asbestosfluf and installed in homes in Canberra and surrounding NSW between 1968 and 1979. This material, typically sprayed into the roof cavity, is much more dangerous than the compressed sheets used in buildings, as it is obviously much more likely to become airborne.

Concerns had been raised by a government expert about the health effects of asbestos on installers as well as the general community as early as 1968 with a recommendation that asbestos installation be banned. 

However, in 1972, the product was rebranded as ‘Amoswool’ and marketed as being both safe and as adding market value to a home.

While the ACT and Commonwealth governments undertook a joint program to remove loose-fill asbestos from 1060 Canberra dwellings between 1989 and 1993, there is clear evidence that it was recognised by relevant officials that the program would not and did not result in the complete removal of loose-fill asbestos in all the houses.

Each affected homeowner received a Completion of Asbestos Removal Work notice that advised that some residual asbestos may be present in their home. This information was placed on all the relevant building files; however, it was not required to be disclosed in contracts for sale of those dwellings until 2004.

The Carvalhos bought their home in 2003. They spent $600,000, through three DAs, on renovations to the house and received a final certificate of occupancy in 2013.

Government officials and housing industry representatives were of the view that the program initiated in 1989 would not completely remove asbestos, and that a full demolition was the only option for complete remediation. This was confirmed by some private removals of asbestos at that time in houses in which asbestos was detected post its apparent removal.

The 1989-1993 program was, therefore, unsuccessful in some measure in that not only were there cases where not all of the asbestos was removed but there were also some houses that were overlooked altogether.

In 2013 evidence became available that loose asbestos particles had migrated to the wall cavities and structure of a house overlooked or missed in the original removal program. Until then, the “missed” houses in the original program were remediated to that standard. 

In light of this, a further program was initiated in 2014 based on a decision that the full demolition and cleanup of an affected house was required in order to guarantee the complete removal of asbestos from a property. 

From the householders’ perspective, they had done nothing wrong and could not therefore be deemed to be responsible for the circumstances in which they found themselves.

The 2014 asbestos remediation program

If the first program was “flawed”, the second program (from 2014 to 2022) was deeply flawed.

The objectives of the second program were reasonable and appropriate, notably:

• the government was to acquire the properties from the homeowners at market value; 

• the government was to demolish the dwellings and remediate the sites; and

• the homeowner was to be given a choice to purchase the remediated block.

The Commonwealth declined to accept any responsibility for costs, but agreed to provide a loan to the ACT government to manage its cash flows.

The question of which government should have funded the program is, in principle, irrelevant. While it is an important matter in intergovernmental financial relations and negotiations, as far as the affected homeowners were concerned, they should most certainly not be responsible for the massive clean-up costs irrespective of who funded the program.

Government acquisition can, of course, be justified on public policy grounds, specifically, for a public purpose.

Similarly for homeowners who wished to retain ownership of their home through the clean-up phase, a pathway could surely have been incorporated in the program under which the demolition and clean-up works were done to established standards by accredited firms.

There may also have been an opportunity to consolidate some blocks, or subdivide others to achieve better planning outcomes, subject to consultation with local communities. 

In a similar vein, affected homeowners might have been approached to assess if they wished to remain in their current community. It would also, of course, in the interests of prudent financial management, be reasonable for the government to seek to minimise the costs of the program.

It is in light of this that is how the overall program would likely have initially appeared to Canberrans – as reasonable.

The government sought an appropriation of $762.031 million for buyback and remediation. The proposed Bill was amended to incorporate guiding principles for the appropriation. Section 4 of the Act passed by the Legislative Assembly [Appropriation (Loose-fill Asbestos Insulation Eradication) Act 2014-2015] provided the following guiding principles:

1. Eliminate, by demolishing all known affected houses, the ongoing risk of exposure to loose-fill asbestos insulation for home owners, tenants, tradespeople and the wider community; and
2.  provide, so far as is possible and reasonable, a fair outcome for owners of affected homes, including the ability for affected home owners to retain ownership of their land; and
3.  provide, so far as is possible and reasonable, flexibility and options for informed choices to be made by owners of affected homes; and
4.  minimise overall net costs to the Canberra community and the ACT government (thereby minimising the flow-on impact to other government policy and program delivery areas).

The principles of a fair outcome for owners of affected homes, flexibility, and options for informed choices including the ability for affected home owners to retain ownership of their land being written into law would have been of comfort and assurance, at that time, to the affected homeowners, had they known about them.

The Standing Committee on Public Accounts in its Inquiry Report of December 2014 on the proposed Bill recommended, among other things, that:

• The ACT government establish mechanisms to monitor and support the wellbeing – physical, mental and emotional – of affected Mr Fluffy families and households in the short and long term (Recommendation 3); and

• the ACT government ensure that the implementation of any long-term support services for Mr Fluffy affected families and households should not be withdrawn whilst still required (Recommendation 5).

An Asbestos Response Taskforce (ART) with representation from key and relevant government agencies was established. In addition, an Eradication Scheme Steering Committee (ESSC), interestingly chaired by the Head of the ART, was established.

The organisational structure also included a Community and Expert Reference Group (CERG) with representatives, inter alia, from the community of people with an affected property, regional community service providers, health officials, recovery experts, unions, industry and government.

The governing structure, along with the Legislative Assembly’s input on principles and the Standing Committee’s interest and recommendations on the care and support for those affected, gave a sense of comfort that the affected households would be well treated.

Those with a background in government, and cognisant of a bureaucracy’s limitations as well as creativity, would likely have preferred to have a more specific and operational definition of “fair”. But then, who in Australia, the land of a “fair go”, does not know what fairness means and instinctively knows when something is unfair.

The Taskforce adopted “provide a fair outcome for owners of affected homes” as a strategic objective.

The performance measures adopted by the Taskforce for this objective referred to the number of properties purchased, interactions between the Taskforce’s personal support team and clients, and the number and value of stamp duty concessions – surely a derisory way of measuring fairness in any circumstance, but particularly in this case.

Having effectively “defined” fairness out of its approach, the Taskforce designed, in our opinion, a cynical, deeply unfair and flawed scheme. 

The Carvalhos are not an outlier or an anomaly of the scheme; there were many more households and individuals similarly affected, some of whom have passed away.

That they are at a “dead end” – and so is the government – is the pathway built into the scheme for people – like the Carvalhos – who had the temerity to challenge the valuations of their property undertaken by valuers engaged and paid by the Taskforce.

While the detailed workings of the scheme will be discussed in a subsequent article, here we note that the actual outcomes – not those measured by the Taskforce – of the overall scheme were, for many, disturbing and deeply hurtful.

Jon Stanhope is a former chief minister of the ACT and Dr Khalid Ahmed a former senior ACT Treasury official.

How the Mr Fluffy owners were shortchanged