Crikey rewrites history: insulation debacle a success

Crikey blogger Pollytics crunches the insulation scheme house fire numbers and comes up with a startling revelation:

That makes the insulation program around 8 times safer in terms of fire incidents compared to the state of the industry before the program. Even if we take the best absolute possible estimates of what went on before the program – say, 80 fires per year off 75 thousand installs – the program is still 7 times safer in terms of fire incidents than what occurred before the program.

This finding is just somewhat at variance with the Auditor - General's scathing report detailing the scheme's numerous shortcomings:

21. The $2.8 billion Home Insulation Program (HIP) was the major component of the Government’s $3.9 billion Energy Efficient Homes Package (EEHP) announced on 3 February 2009. Proposals for EEHP were developed with a sense of urgency by the Department of the Prime Minister and Cabinet (PM&C) with limited consultation with the Department of the Environment, Water, Heritage and the Arts (DEWHA)16. HIP was designed to generate economic stimulus and jobs for lower skilled workers in the housing and construction industry, which was expected to be adversely affected by an economic downturn flowing from the global financial crisis. A secondary but important objective was to improve the energy efficiency of 2.7 million Australian homes and reduce greenhouse gas emissions.

22. Under HIP, some 1.1 million roofs have been insulated at a cost of $1.45 billion. Due to a range of design and implementation matters associated with the program, as at March 2010, of the 13 808 roof inspections conducted, around 29 per cent17 had identified installations with some level of deficiency, ranging from minor quality issues to serious safety concerns. In addition, there have been cases of potential fraud identified. These deficiencies in the delivery of the program have meant that the Government decided to implement further measures to check and rectify the standard of installations. These new measures include the Foil Insulation Safety Program (FISP) and the Home Insulation Safety Program (HISP), which are expected to cost $424 million. In addition, the Government has committed to industry assistance programs18 expected to total approximately $56 million. The remainder of HIP’s budget will be used for activities undertaken post‐closure of the program, including the remediation and assistance programs, and any surplus funds will be returned to the budget.

23. The program was developed in a very short period of time between 3 February 2009 and 30 June 2009 as a stimulus measure to respond to the global financial crisis. In terms of outcomes, it has been estimated that between 6000 to 10 000 jobs have been created. While, clearly, the creation of these jobs was an important outcome in the face of the downturn in the economy, these jobs were shorter‐lived than intended due to the early closure of the program. There have also been energy efficiency benefits but these are likely to be less than anticipated due to the deficiencies in a significant number of installations.

24. In large measure, the focus by the department on the stimulus objective overrode risk management practices that should have been expected given the inherent program risks. Rather, the department intended to rely heavily on its compliance and audit program to address some of the risks identified, but the significant delay in implementing this element of the program meant that these risks were not adequately addressed. As time passed, the department realised that greater emphasis should have been given to program risk mitigation strategies, particularly those concerning installer registration requirements and compliance with quality and safety standards.
By November 2009, the volume of claims and increasing number of installations identified with quality, safety and potential fraud issues, overwhelmed the department and it was unable to recover the situation. There were insufficient measures to deliver quality installations and, when the volume of issues requiring attention by the department increased, the department had neither the systems nor capacity to deal with this effectively. The lack of experience within DEWHA in project management and in implementing a program of this kind were contributing
factors.

25. Overall HIP has been a costly program for the outcomes achieved, including substantial remediation costs. There still remains a range of safety concerns and coronial inquiries are yet to be completed in relation to the four fatalities associated with installations under the program. The fallout from the program has caused serious inconvenience to many householders, reputational damage to the insulation industry, and financial difficulties for many Australian manufacturers and installers. It has also harmed the reputation of the Australian Public Service for effective service delivery. This experience underlines very starkly just how critical sound program design and implementation practices are to achieving policy outcomes. There are important lessons here for those agencies with policy implementation responsibilities but also those responsible for policy development.

The insulationscheme was an unmitigated disaster and that's that.