Home Insulation Program
The economic melt-down of many developed countries caused by the Global Financial Crisis (GFC) has seen a world-wide swing to Keynesian economic policies. In an effort to boost the economies and reduce unemployment, many governments have conceived different strategies of direct intervention and increase public spending to stimulate economic activities. There are still intense debates about the main reasons why Australia has weathered the GFC much better than the others. The Home Insulation Program (HIP), also known as the Pink Batts Scheme, was primarily designed to boost the domestic economy in 2009 following the GFC, but it was beset by controversy. The $2.8 billion job-generating scheme, offering free insulation to two million households, was scrapped prematurely in 2010 after it was blamed for the deaths of four insulation workers and more than 100 house fires. This essay will attempt to analyse the impact of the HIP and argue whether governments (Commonwealth or States) or business were responsible for the health and safety of workers involved with the HIP.
In February 2009, the Rudd government (Government) unveiled the HIP as part of its stimulus package in respond to the GFC. This program may have been stemmed from Kevin Rudd’s (2009, pp 28-29) belief that “Labor, in the international tradition of social democracy, consistently argues for a central role for government in the regulation of markets and the provision of public goods”; and it has “acted to help the real economy, to stimulate economic activity by investing in targeted job creation”. The Hawke Review (Review) (2010, pp vi-viii) in its report stated that the HIP has two objectives which were to generate economic stimulus and support jobs and small business; and to improve the energy efficiency of homes. Any objective assessment of the HIP will conclude that, despite the safety, quality and compliance concerns, there were solid achievements against the program objectives. The HIP was originally designed to provide insulation to 2.7 million homes that were without insulation or were inadequately insulated. At the time the program closed on 19 February 2010, over one million homes had been insulated. At its peak (in November 2009), the program had registered over 10,000 installers employing thousands of largely low-skilled workers. A recent Insulation Council of Australia report by Energy Efficient Strategies (EES) claims that insulating Australia’s houses would save at least 38 petajoules of energy (equivalent to lighting all Australian households for one and a half years) and avoid 14 Mt of CO2-egreenhouse gas emissions (Crawford and Stephan).
The HIP was an executive scheme; by way of definition, an executive scheme is a means for an agency to make discretionary compensation payments or provide government grants under their own power rather than that conferred by legislation. Allan Asher (2011, p4) argues “because they are often developed on the run, the implementation of executive schemes is not always fully thought through”. He quoted Noel Pearson (as cited in Asher, 2011, p1) who said, “Politicians and public servants who have never built anything from the ground up in such communities never really get it. Most people in social policy live in a world of programs and plans, bearing scant relation to realities.” This criticism can also apply to targeted industry policy, such as the HIP, in which government measure is directed to a particular sector of the economy. According to the liberal democrat’s theory that government is not in the business of running businesses, this should be left to the private sector which in turn is guided by market forces. On the selective nature of the hand-outs, Professor Ergas (2013) points out that, “the community therefore gets three distortions for the price of one: resources are misallocated between activities; having given in to one group of firms, the pressures to give in to others become ever stronger; and, last but not least, taxes must be raised (or more worthwhile spending cut) so as to pay for the subsidies.”

Primary responsibility for administering the program lay with the Department of the Environment, Water, Heritage and the Arts (DEWHA), under its minister, Peter Garrett and a Project Control Group consisting of various expert consultants however, the Project Control Group reported to the Office of the Coordinator-General, in the Department of the Prime Minister and Cabinet (PM&C), which oversaw all the stimulus initiatives, with a particular view to making sure that spending targets were being met.

Most of the scheme’s problems can be attributed to the tight timeframe for the program’s delivery. For the Government, the major goal was speedy implementation rather than a policy that was supported by all involved players. The Auditor-General points out (2010-11, p 32) “DEWHA preferred a five-year rollout because of weaknesses in IT systems capability, a shortage of accommodation for staff, recruitment/training and challenges and serious backlogs with existing programs. The division responsible for implementing HIP was already seriously stretched in terms of its capacity to deliver existing programs. However, a five-year rollout was not accepted by the Government as it did not meet the stimulus objective of the program”. The Senate Standing Committee’s majority report (as cited in Auditor-General, 2010-11, p24) “found that problems with the program arose from: the Government’s insistence upon rapid roll-out; certain program design elements increased risks; ineffective risk management procedures and administration; and ambiguity about and conflicts inherent in the program’s purpose”. To give some indications of the tight timeframe that the departmental officers was working under, senior environment department staffer Avril Kent has told the Royal Commission into the Home Insulation Program (Commission) “how the ‘rushed’ program placed unrealistic expectations on public servants who, at one point, worked 24/7 to roll it out” (news.ninemsn, 2014). Environment Department Assistant - Secretary Mary Wiley-Smith told the Commission that “she and another environment department official had to cost and consider the risks of two massive government programs” in two days; and she also told them “a five-year roll out would be more appropriate than two” (Elks, 2014). Some point out during the GFC governments did not have the luxury of time, as the crisis waits for no one. Crises necessitate immediate action, most government projects, with best practice, would take years in the planning (Crozier, 2013).
Malcolm Turnbull (2010) argued that “a mediocre policy well executed will trump a brilliant policy poorly executed. Policies, like the private sector's business plans, live or die on how well they are carried out. Process and planning matter. Of course, too much red tape can strangle valuable initiatives but right now that doesn't seem to be the problem. Again and again we are seeing big policy initiatives stumble through lack of proper planning”. Kevin Rudd agreed by saying “let's just call a spade a spade, there are problems with the implementation of this program, we shouldn't run away from that, that's just a fact”. While a slower roll-out of the program may have compromised the HIP’s contribution to stimulating economic activity, Lewis (2010) argues that the government would have learnt more from previous programs such as the Victorian government Insulation Rebate Program and the Warm Front and Warm Up schemes in the UK and NZ, respectively. Nobel Prize winning economist, Joseph Stiglitz (2013) has noted that “during the global recession, Kevin Rudd's government implemented one of the strongest Keynesian stimulus packages in the world. That package was delivered early, with cash grants that could be spent quickly followed by longer-term investments that buoyed confidence and activity over time. In many other countries, stimulus was too small and arrived too late, after jobs and confidence was already lost” (Lane, 2010).

Failures in service delivery are also due to rolling out programs that are too high level and don’t involve enough community consultation. The Auditor-General (2010-11, 33) found “fundamentally, DEWHA underestimated the level of risk involved in installing insulation in ceiling spaces by inexperienced and often untrained installers working in a largely unregulated industry. The department broadly consulted with the insulation industry but did not consult with members of the electrical industry or relevant State and Territory agencies when developing supervisors’ minimum competency requirements”. The safeguards that were introduced proved inadequate, as was predicted by many industry groups. There is considerable evidence that important concerns from a variety of industry players were virtually ignored. Former environment department deputy secretary Malcolm Forbes, who oversaw delivery, told the Commission the potential risks would have been properly considered if time wasn't so tight (Grant, 2014). Public servants were given five months to devise the $2.8 billion scheme. The Review (2010, p 17) claimed that States and territories reported to it that they had minimal input during development and implementation of the HIP, particularly once the decision on the business model was taken. They would have preferred more engagement and a better flow of information to them about the HIP, including information on action taken on complaints or other issues that impacted on state responsibilities. He (2010, p 19) could not establish any ongoing interaction (beyond discussions in the early stages of development) with state and territory OH&S agencies. “It is not clear if there was regular sharing of information about safety incidents (other than in relation to the four fatalities discussed above) during the program. It is also not clear how consistent interaction with emergency services agencies and OH&S agencies across states and territories was, and whether there were some instances where information was not provided in a timely fashion by either party”.

The Queensland Coroner's (Coroner) report into the deaths of three young men working on HIP found that the PM&C did not respond to warnings issued by the Queensland Building Services Authority about the program. "It is reasonable to conclude the dangers should have been foreseen and mitigated before three people died in Queensland and another in New South Wales," the report said. The Queensland Attorney-General issued a statement saying "these tragedies were preventable. In April 2009, Queensland's Building Services Authority warned the PM&C about the risks but it never responded'' (Baskin, 2014). The Review (2010, p xiv) concluded that a stronger management structure, earlier implementation of the audit and compliance program, and better targeting of compliance effort early in the program could have mitigated the risks to more acceptable levels, but never to zero.

“The scheme was rolled out hastily without proper planning around safety or proper consultation with industry,” said Master Electricians Australia Chief Executive Malcolm Richards (Electricalsolutions.net.au, 2013). The Commission heard senior bureaucrats did nothing to have deadly foil insulation banned from the Government's HIP, despite early warnings and foil insulation was never considered a dangerous choice early in the Government's HIP, despite the material being linked to three deaths in New Zealand (Canberra Times, 2014). Industry representatives believed the two year timeframe would mean installers wouldn't have enough time to be properly trained and the demand for insulation would exceed the ability of Australian manufacturers to keep up. Another witness informed the Commission, initially the plan was to train all installers, but bureaucrats decided to restrict training to supervisors at a May 2009 meeting. When training was discussed, Ms Kent said a staffer from Mr Rudd's department made it clear the program was about stimulating the economy and they should be careful not to put too many barriers in its path.
The program was taken as evidence of Canberra’s incompetence rather than the shortcomings of small businesses. For John Roskam (as cited in Tiffen, 2010), director of the Institute of Public Affairs, “this is the problem of Canberra taking control of these big programs without experience.” Tiffen (2010) then use theory of “the contract state”, the increasing number of services and products that are neither wholly in the domain of private enterprise nor performed by a government bureaucracy financed from consolidated revenue, to explain the HIP. They are services undertaken by private contractors at the behest of government, or made possible by government subsidy.
In fact it is meant to be one of the virtues of the contract state that the public outsourcing of activities achieves market disciplines and efficiencies in contrast to government bureaucracies undertaking them.

The Review found (2010, p xiv) the high level of risks around safety and quality mean that the lack of a state regulatory structure for the insulation industry was a significant factor in the way the HIP played out. The insulation industry was a disparate one (in terms of insulation products, business models and industry organisation) and largely self-regulated. The Government did not contemplate any changes to industry settings for the program. State and territory regulatory frameworks varied and, unlike the delivery mechanisms for BER and Social and Defence Housing, there was no established pathway for national HIP delivery. The Commonwealth placed a high reliance on state and territory regulatory authorities to carry out their responsibilities effectively in occupational health and safety (OH&S), product compliance and complaints handling (Hawke, 2010, p vii). The existing frameworks, particularly for state and territory OH&S, were not sufficiently geared up for the 1 July 2009 start date of HIP proper. Tiffin (2010) pointed out that when the program began, home insulation had few special regulations, although it was, of course, subject to normal work and safety provisions and employers’ duty of care. No certification was needed to enter the field, and indeed insulation was frequently installed by householders themselves. The lack of licensing and training in the area allowed sub-standard work to be completed and sub-standard occupational safety procedures to be followed. Although the numbers and proportions of each almost certainly increased as a result of the stimulus, the lack of existing safeguards also meant that an unknown number of instances of both shortcomings probably occurred in the past but had passed beneath the public radar. Regulation of the home installation industry is in the hands of State Governments, not the Commonwealth. The states were and still are responsible for safety. In the recent coroner’s finding on a death in Queensland, he recommended that three managers from two insulation companies be referred to the Queensland Attorney General for breaches of the State Electrical Safety Act.

It is easy to blame Kevin Rudd and his government for the tragedies, what has been missed in much of the reportage is that the circumstances of each death were quite different. Tristan Edis (Edis, 2013) examines the details the background of three of the four deaths, “two of the people, who died, Matthew Fuller and Mitchell Sweeney, were electrocuted as a result of putting a metal staple through an electrical cable, which then made the foil insulation they were working on electrically live. However there were major differences surrounding these two deaths”. Matthew was newly employed, had no training and was not supervised at the time of his death. Considering the inadequate training and supervision, his death was a mistake waiting to happen. On the other hand, Mitchell had completed insulation installation training and had been employed in the industry for some time. And Mitchell had been told not to use metal staples and instructed about switching off power to the house by his employer. It seems these instructions were ignored. The third accident was Rueben Barnes, who was installing insulation batts, not foil. The Coroner finds (as cited in Edis, 2013) “he was killed by a hidden trap created by another tradesman [who had pieced an electrical wire with a metal screw which had electrified a metal batten in the roof] . . before the job in which Rueben was engaged. ” The last was Marcus Wilson of NSW who dies from hyperthermia complications after installing batts in a home in 40 degree heat.

It is obvious that foil insulation should not have been used in the first place and should not have been eligible for the Government rebate. Some firms will cut corners on safety where quick bucks are on offer and regulators have trouble keeping up. State laws involve severe penalties for firms that fail to ensure a safe workplace for their employees. But the case of Matthew Fuller illustrates that some firms don’t take this seriously enough. Also it seems that the responsible state government regulators were not on top of their job. The Coroner (as cited in Edis, 2013) concluded “I am of the view the two Queensland safety agencies did not react with sufficient urgency or decisiveness to information and activity that should have alerted them to the real likelihood that the risk of death or injury in home insulation activity would significantly increase with the commencement and implementation of the HIP.” Under our constitutional arrangements, workplace health and safety is primarily within the domain of State Governments, therefore the states and territories should shoulder some responsibility.
The HIP took the Commonwealth into construction industry operations where it had little expertise. Program delivery mechanisms, which required innovative approaches, were developed and rolled out in very short timeframes. It seems that the program was rorted by unscrupulous operators: inferior insulation was used; insulation was installed improperly or even unsafely; and sometimes, in collusion with householders, no work was done but a subsidy was claimed anyway (Callioni, 2010). The Review (2010, p viii) found there were concerns regarding poor quality workmanship and materials and disturbing claims about the high level of fraud perpetrated by unscrupulous operators. Despite some safeguards against fraud, no one foresaw the possible extent of potential malfeasance which was simply alarming – a classic example of why governments need to regulate markets to ensure their proper functioning.
The Coroner perhaps best summed up the situation by strongly criticised the parties involved in the HIP. The contractors whose negligence led to deaths, the State Government which failed to regulate the industry and the Commonwealth which funded the scheme all bear responsibility for the deaths, fires and lesser shortcomings. These lands squarely in the responsibilities of the contractors that allowed un-skilled and un-trained workers to enter an unsafe environment and utilise practices that are not recommended. Under the HIP the householder engaged the contractor of his/her choice, the contractor was bound by State law and the State, not the Commonwealth, was responsible for seeing that the law was complied with. The fact that the Commonwealth made money available to enable many more homes to be insulated within a given time cannot shift to the Commonwealth any part of the responsibility for the carrying out of the work and the oversight of it by State authorities. While initially it can be shown that Peter Garrett, as responsible minister, should take ministerial responsibility. However, since that time, it has come to light that it was the speed of implementation of the project which prevented due diligence in the expertise of installers who may have lacked adequate WPHS training, that was directly responsible for the deaths of inadequately trainer installers and employers.

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