The new Department will be headed by existing Minister for Climate Change and Water Senator Penny Wong, with Greg Combet becoming Minister Assisting the Minister for Climate Change and Energy Efficiency.

Mr Combet will be responsible for winding up the household insulation program, as well as the rollout of the new Renewable Energy Bonus scheme. Ms Wong will become Minister for Climate Change, Energy Efficiency and Water.

The newly created Department’s additional responsibilities will include the Green Loans, Green Start, Solar Schools and Housing, and Commercial Building and Appliance Energy Efficiency Standard programs.

The Government has also announced an assistance package for workers affected by the closure of the Home Insulation Program.

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The package includes the introduction of the Insulation Workers Adjustment Fund, which will help workers and firms through the transition period; as well as the deployment of 25 dedicated Insulation Employment Coordinators, funded by a Jobs Fund.

Peter Garrett will retain his role as Minister for Environment, however the portfolio will now simply focus on direct environmental protection responsibilities.

Prime Minister Kevin Rudd, who held a press conference to announce the ministerial changes, described the changes as a “reduced range of responsibilities” for Mr Garrett.

“There have been some serious problems in the implementation of this program,” Mr Rudd said.

In a media statement, Mr Garrett admitted that the rollout of the Home Insulation Scheme had not been without its problems, and said that he welcomed the opportunity to continue his work in the Environment Protection, Heritage and the Arts portfolio.

Mr Garrett ordered safety inspections of all foil insulations that had been installed under the Home Insulation Program before the scheme was abruptly discontinued.