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    Rudd Government’s Home Insulation Program (HIP) flawed from the start, damning report says

    Geraldine Chua

    The final report of the Royal Commission into the Australian Government’s Home Insulation Program (HIP) has been released following six months of public hearings.

    Handed down by commissioner Ian Hanger QC and delivered to the Governor-General, the report outlines seven significant failures in the design and implementation of the $2.8 billion program, which was set up in 2009 as part of the Rudd Government’s $42 billion Nation Building and Jobs Plan to stimulate the economy after the global financial crisis.

    The Inquiry was established in December 2013 following the deaths of four young men and hundreds of house fires related to installations funded by the HIP. It sought to investigate whether the way and speed in which the Australian Government established and implemented the program contributed to these incidents.

    At the core of the Inquiry was the conflict between the two aims of the HIP – to insulate 2.2 million homes, but also stimulate the economy with a fifteen-fold increase in the number of installations per year.

    “Whether it was, and is, appropriate for a government to combine a stimulus policy with a policy such as the HIP lies at the heart of this Inquiry,” Hanger writes in the report.

    “The tension between the stimulus objective of the policy, with its concomitant need for expedition, and the energy efficiency objectives of the policy, in my view caused a number of decisions to be made under the HIP which unnecessarily exposed workers, particularly inexperienced ones, to an unacceptably high risk of injury or death.”

    A key issue was the program’s commencement date of July 1, 2009, which was pushed by unionist and Federal Employment Participation Minister and Minister Assisting the Prime Minister on Government Service Delivery at the time, despite concerns to the attainability of the deadline.

    Hanger also notes that the insulation industry was unsuitable for the HIP as a stimulus measure due to the lack of an industry specific regulation beyond the occupational health and safety standards in Australia, with the exception of South Australia.

    “The reality is that the Australian Government conceived of, devised, designed and implemented a program that enabled very large numbers of inexperienced workers – often engaged in unscrupulous and avaricious employers or head contracts, who were themselves inexperienced in insulation installation – to undertake potentially dangerous work,” the report states.

    The commissioner also says that the decision to permit the use of reflective and conductive metallic foil sheeting as ceiling insulation was “fundamentally flawed”. This foil insulation was only suspended from the program in 2010 by former Environment Minister Peter Garrett – a little too late.

    The abrupt suspension of the program on February 19, 2010 furthermore “wreaked havoc on pre-existing insulation installation businesses” as well as companies that manufactured and installed insulation, and were encouraged through the HIP to increase their production.

    Gerard Quazzola, of Insulation Express, with $450,000 of insulation at his Sydney warehouse. Picture: Frank Violi. Source: news.com.au

    Summary of seven significant failings in design & implementation of the HIP:

    • There was an inevitable and predictable conflict or tension between the two aims of the HIP. One aim was to insulate 2.2 million homes and the other was to stimulate the economy. Both were doubtless admirable aims but there was an inherent conflict between them: the first required detailed and careful planning over time, and the other required speed. In the case of the HIP, planning was sacrificed to speed. A practically unachievable commencement date for the Program, if it was to be properly and carefully designed, was unrealistically adhered to;
    • The allocation of the HIP to the Department of the Environment, Water, Heritage and the Arts (DEWHA), which was ill-equipped to deal with a program of its size and complexity. That problem was significantly exacerbated by the decision to change the delivery model from a regional brokerage model, as proposed by DEWHA, to a direct delivery model, in order to expedite delivery of the HIP. Again, proper planning was sacrificed to speed;
    • A failure, until very late in the HIP, on the part of the Australian Government to identify and manage the risk to installers of injury and death (caused, in part, by patently inadequate advice and assistance by external advisors on risk and project management);
    • Permitting a product to be used under the HIP that was manifestly unsuitable and dangerous;
    • A decision to relax training and competency requirements so as to substitute ‘supervision’ for insulation specific training, but without the nature of it ever being specified or clarified;
    • Permitting the HIP to commence in Phase 2 without there being in place a robust audit and compliance regime. Such a regime was not satisfactorily operational until after the first fatality;
    • The Australian Government’s reliance upon others (the States and Territories and employers) to regulate, monitor, police and enforce such occupational health and safety arrangements as might have been appropriate. Despite professing such reliance, the Australian Government never made clear to the States and Territories what its expectations were of them, nor did it enquire whether they had the resources necessary to act as the Australian Government expected

    Findings welcomed

    Prime Minister Tony Abbott has said the report “details a litany of failures arising from a dysfunctional culture in the former administration”. He adds that a preliminary response will be provided by the end of the month, with a final response delivered by the end of the year. 

    The findings of the report have been welcomed by the Insulation Council of Australia and New Zealand (ICANZ), with chief executive officer Dennis D’Arcy agreeing that “the size, speed and scale of the HIP meant that even the most basic safety recommendations from industry were ignored”.

    “Over the past four years, the insulation industry has introduced a number of key initiatives including improving access to comprehensive installation instructions, participating in reviews of insulation installation standards and developing an independent training and accreditation initiative for professional installers.

    “The problems of the HIP, as we’ve seen from various inquiries, stemmed from a combination of weaknesses in the HIP’s design and procedures which ultimately permitted the use of some products that weren’t fit-for-purpose and also allowed easy entry into the industry for opportunistic, inexperienced and shoddy operators only interested in making a quick buck.

    “While these shoddy operators are no longer in the industry, their legacy has had a lasting effect on the insulation industry, especially those businesses that were around before the HIP and have remained in the industry since.”

    D’Arcy calls on the Federal and State Governments to re-engage with the insulation industry to re-affirm the important of insulation in reducing household energy costs. He asks for greater emphasis on ensuring fit-for-purpose products are used, and for the proper training and accreditation of professional installers.

    However, not everyone believes the $20 million Royal Commission is particularly helpful, with shadow attorney-general Mark Dreyfus telling the AAP that although he hopes the families of the four deceased men find some solace in the report, he does not think the report advances the issue much further than past investigations.

    “The inquiry, which has cost $20 million of taxpayers money, does not seem to have added a great deal to the eight previous inquiries,” Dreyfus said.

    View the full Royal Commission report HERE.

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