Mr Fluffy asbestos residents welcome billion-dollar Commonwealth demolition, compensation deal

Canberra residents affected by the Mr Fluffy asbestos crisis have welcomed a Federal Government deal to resolve the situation.

The ACT Government has agreed to accept a concessional loan of $1 billion from the Commonwealth to help pay for the demolition of more than 1,000 properties affected by potentially deadly loose-fill asbestos.

Meanwhile a report by the Asbestos Response Taskforce on the Long Term Management of Loose Fill Asbestos Insulation in Canberra Homes found there to be "no effective, practical and affordable method to render houses containing loose-fill asbestos insulation safe to occupy in the long term".

The taskforce listed three possible options for Mr Fluffy homes but warned demolition was the only "enduring solution to the health risks posed by the presence of loose-fill asbestos ... and their attendant social, financial and practical consequences".

Buy back and demolition scheme to begin in 2015

An estimated 1,021 homeowners across Canberra have been waiting for news of a possible compensation package after a warning was issued in February that their homes could still contain potentially deadly asbestos fibres.

Under the deal, the Territory Government would pay back up to 70 per cent of the loan by selling off some of the cleared blocks of land.

Chief Minister Katy Gallagher said the proposed buy back and demolition scheme would start next year following discussions with homeowners and take approximately five years to complete.

"The Commonwealth will provide a loan facility which allows us to enter in to individual agreements with the home owners, to buy back and clear the blocks," she said.

"We expect there will be a big hit next year in our budget as we acquire 1,000 homes and have to adjust that on our balance sheet."

The ACT Government said it would have liked the original Memorandum of Understanding signed 20 years ago with the Commonwealth on the Mr Fluffy homes to have been adhered to.

However the responsible federal minister, Senator Eric Abetz, said the Commonwealth would be providing a line of credit, but not sharing the overall costs.

"Our legal advice indicated we have no technical or legal responsibility in this area, but we will provide a loan," he said.

Opposition Leader Jeremy Hanson said the Canberra Liberals would now ensure the ACT Government correctly implemented the scheme.

"For the 1,000 or more people in Canberra who own Mr Fluffy homes, who've been living in Mr Fluffy homes, they now know that both the ACT Government and the Federal Government have come to a resolution in principle," he said.

"What we can all look forward to now is action being taken to fix this problem once and for all."

Widespread impact of Mr Fluffy houses on Canberra

A company known as Mr Fluffy pumped asbestos fibres into the roof spaces of more than 1,000 ACT homes as cheap insulation in the 1960s and 1970s.

A Commonwealth funded clean-up program in the 1980s and 1990s failed to remove all trace of the fibres.

About 40 families have been forced to move out of their homes after remnant asbestos fibres were found in the living areas and wardrobes.

Mr Fluffy homeowner Karen Rush said the Cabinet decision was positive news for stressed residents who felt trapped, but it did not acknowledge responsibility.

"For me the news that came through - I felt a sense of relief," she said.

"I am one of the ones that has to go because my house had been made ready to sell so that the money would go into my superannuation.

"But knowing the extent of the liability of the Federal Government in these matters to be offering us a loan and not actually accepting their own liability is I think absolutely appalling."

Mark Haradine and his family moved out of their Yarralumla home earlier this year and has welcomed the Government's help.

But he said not everyone wanted to sell up, demolish and move on.

"There's some people who are quite happy to walk away and don't want anything to do with it," he said.

"But there's other people who say well no, these are our homes, want to settle back in our community, among our neighbours, among our friends. Moving is dislocation and it carries a lot with it."

Brianna Heseltine from the Fluffy Owners and Residents' Action Group said her members were pleased a resolution was in sight, but said the Commonwealth should have done more.

"Tears of joy and gratitude that finally we have a decision," she said.

"[But] if this was a natural disaster the Commonwealth Government would provide relief and recovery arrangements, reimbursing the ACT Government of up to 75 per cent of the costs of this disaster."

'We can't leave a Mr Fluffy house standing', Chief Minister says

Chief Minister Katy Gallagher said every affected house should be demolished.

"We can't leave a Mr Fluffy house standing in Canberra," she said.

"In 20 years time someone will be having to deal with this problem again, we need to get rid of it now."

Her view was backed by a report released today by a response taskforce which found demolition was the only "enduring solution".

Other options suggested by the report include a second attempt at removing asbestos to reduce the associated health risks or sealing and cleaning homes, as a medium-term response to meet an individual's choice to manage the risk.

But the taskforce warned that "any approach short of demolition will likely leave loose-fill asbestos fibres behind, likely contaminating the subfloor and attached to the remaining structure of the houses".

The report also noted that a second attempt at removing all asbestos would equate to a full internal demolition and rebuild, or building an internal lining within the current house to encapsulate the asbestos.

But the taskforce said while it was theoretically possible to build an internal shell, or second skin, "there was unlikely to be sufficient room to practically achieve this in a home".

The report's recommendations mirrored those of the head of the Commonwealth's asbestos safety agency Peter Tinghe who called for the demolition of homes in June.

The Asbestos Safety and Eradication Agency chief executive said demolition was the only way to fully deal with the potential health risks and that proposed asbestos management plans were just "Band-aid solutions".

A number of the original 1,049 houses identified as having Mr Fluffy asbestos installed have already been demolished or were lost in the 2003 Canberra bushfires.

It means 1,021 residential properties in many of Canberra's established suburbs will be part of the purchase and demolition program starting in January 2015.