Committee comments
The following material draws together selected comments made
by the committee throughout the body of the main report.
2.68 The Home Insulation Program markedly failed to
deliver the potential benefits that the government promised would flow from the
program and, as a result of design and implementation failures, appears to have
left the insulation industry worse off than before the development of the HIP.
2.69 Concerns about the Home Insulation Program relate
mostly to:
- whether the program was adequately designed and managed to
mitigate risks identified during the program development phase; and
- whether the responses to the hazards and improprieties that
unfolded were appropriate and effective.
3.10 The haste in rolling out the full program by 1 July
2009 was a major cause of problems that subsequently arose. The government had
clear and unambiguous warnings of this in Minter Ellison's suggestion that the
interim (reimbursement) program should be extended by three months, in order to
allow more time to properly address the identified program risks.
3.11 It is clear that the Office of the Co-ordinator
General, operating within the Department of the Prime Minister and Cabinet with
direct and regular reporting to the then Prime Minister, Minister Arbib and the
relevant sub-committee of Cabinet applied pressure to roll out the program
quickly, in spite of the forecast risks.
3.12 By and large, federal bureaucrats do their
professional best to implement the will of the government of the day.
3.13 Due to a failure to comply with requests for the
release of all briefings and relevant information, coupled with understandable
hesitancy of lower ranking public servants to speak 'on the record', the
committee could not sufficiently test allegations that junior to middle-ranking
departmental officers issued early, repeated warnings to senior departmental ranks.
Nor could the committee satisfactorily test allegations such as those aired on
the Four Corners program that such warnings went unheeded by senior
departmental officers, swept aside by government-dictated exigencies of haste
to get taxpayer dollars out the door.
3.14 In the absence of such 'testing', and in any event,
responsibility for any bureaucratic shortcomings properly falls at the feet of
respective Ministers and Prime Ministers.
3.15 In the committee's view, then Prime Minister, the
Hon Kevin Rudd, then Deputy Prime Minister Gillard who was responsible for
workplace training, and the Minister Assisting the Prime Minister for
Government Service Delivery, Senator Arbib (who had oversight of fiscal
stimulus spending), bear significant responsibility for the consequences of the
HIP, particularly due to their apparent role in placing speed of delivery
before the safety of implementation.
3.16 This is in addition to the responsibility borne by
Minister Garrett, and the responsibilities Minister Combet now has to
neutralise the negative consequences of the HIP. Regrettably in rejecting
invitations to appear before the committee, these Ministers failed to avail
themselves of opportunities to provide evidence to the contrary.
3.27 The government’s move to commission an independent
review of the HIP (the Hawke Review) was too little, too late and should have
been undertaken earlier so that the findings could be used to improve the HIP. Such
a comprehensive, independent assessment of the program structure and the
capacity to deliver it should have been undertaken at the beginning and used to
inform the development of such a large and untested program.
3.36 It appears that the management structures needed
within DEWHA to handle such a large and complex program were not instituted
until far too late. The committee endorses Dr Hawke's comments which it
reiterates:
The opportunity to step back from the day to day management
of the program, ask hard questions and test assumptions was not taken until
late in proceedings. Resources were tied up with crisis management. DEWHA is
not unique in this regard, but it is a lesson that is not easily learned by
busy departments under pressure to deliver large programs.
3.37 In relation to briefs from the DEWHA to Minister
Garrett, which the committee requested, the committee records its strong
dissatisfaction that DEWHA has not provided these without giving adequate
reasons. On 9 June 2010, pursuant to a Senate Procedural Order, the committee
sought the referral of these and other related matters to relevant ministers.
3.38 In the absence of evidence to the contrary, the
committee can only conclude a level of negligence on the part of ministers or
senior officials that detailed information on risks (including Minter Ellison's
recommendation to defer the starting date) were either never communicated to or
never acted on by the highest levels of the government.
3.55 For a program of the HIP's nature, Minister Garrett
should have requested the conduct of a risk assessment, a copy of it once done,
and an action plan identifying how each risk was being addressed, when and by
whom. The Risk Register should have been provided to Minister Garrett earlier
than February 2010 for his consideration and government action. The extent to
which important information was allegedly not shown to the minister appears to
be reflective of a 'don't show–don't tell' culture.
3.56 In the committee's view the government's risk
management activities through DEWHA fell breathtakingly short. It failed to
anticipate or respond with sufficient urgency to the extremely high risks
created by the haste, scale, demand-driven and national roll-out of an
ambitious program involving an industry with standards and rules, simply
inadequate for a program for which the government's overriding goal was to
drive demand and rapidly rollout such a large program.
3.57 These risks were sufficiently flagged in Minter
Ellison's April 2009 Risk Register and had been raised with the government by
various industry stakeholders as early as February 2009.
3.58 The committee comments particularly on the
electrical and fire risks which have since become a critical concern. Industry
associations had raised these risks as early as February 2009. For example
concerns were raised:
- by the National Electrical and Communications Association (NECA),
February 2009: 'There is a significant risk of electrical equipment overheating
especially in the event of downlights in ceilings being covered if insulation
is installed inappropriately';
- at stakeholder meeting, 18 February 2009: '...in New Zealand...a
similar program had to be suspended because three people electrocuted
themselves';
- by NECA to Minister Garrett, March 2009: 'Whilst not the only
safety issue by far the most dangerous is the risk of fire associated with
installing thermal insulation over or in close proximity to recess luminaires';
- by Master Electricians Australia in May 2009: '...incorrectly
installed insulation created a very serious fire risk, especially in older
homes'.
3.59 From the evidence presented to the committee it is
clear that DEWHA and government ministers received various written and oral
warnings of the serious risks posed by the program prior to its large-scale
deployment in July 2009. It is also clear that these warnings were either
ignored or not taken sufficiently seriously at the Cabinet or departmental
level, in the rush to commence this flawed and ill-conceived stimulus measure.
3.71 The committee acknowledges DEWHA's efforts to
establish some training standards in an industry which had not had them
previously but finds these efforts to be grossly inadequate given the scale of
inexperienced start-up operations that were anticipated under the HIP.
3.72 Shortcomings in the detail of formal training and
competency requirements were exacerbated by a systematic failure to adequately
implement, enforce and communicate to the industry and workforce.
3.73 In the committee's view DEWHA did not adequately
respond to the high risk created by the huge influx of inexperienced workers.
As submissions commented:
Master Electricians Australia knew from its more than 70
years representing the electrical contracting industry that if you combined
unskilled labour with electrical cabling then tragedy would not be far away.
The competency based training that was implemented should
have been satisfactory, however the inconsistent delivery of this training, and
the large amount of exemptions, meant that the training was not enough.
3.74 Arguably the key mistake was failing to ensure from
the outset that all personnel involved in installation (not only supervisors)
were properly trained. It was not adequate to allow a trained/qualified
registered installer to oversee what could be an unlimited number of untrained
workers. In this situation it was unreasonable and irresponsible to assume that
written warnings about fire and electrical safety would effectively reach the
actual workers in the roof.
3.75 It was counter-intuitive to exempt from training
requirements a number of building trades which had little direct experience
with insulation yet were now likely to interface with it.
3.76 Stakeholders gave both DEWHA and the government
strong warnings of these risks from as early as February 2009. Similar warnings
were expressed in a stakeholder consultation meeting on 18 February 2009.
Neither DEWHA nor the government paid enough attention to these warnings.
Making the standards more stringent in the last few months of the program was
too little, too late.
3.77 The fact that the authorities felt the need to amend
the installers' pocket book extensively after the first program-related
fatality in October 2009, to upgrade the warnings on electrical and fire risks,
does not inspire confidence in the adequacy of the earlier edition.
3.78 The committee expresses its deep concern and
disappointment about DEWHA's and the government's failure to adequately
minimise risks or respond effectively to the first tragic fatality in October
2009. It was not until February 2010 that the training requirement for all
installers took effect. It appears that the option of mandating safety
switches as a condition of participation was never considered. Similarly,
despite the best endeavours of the Fuller family, the simple step of requiring
the household's power to be switched off during installation was never
mandated. Steps along these lines may have helped avoid at least one of the
subsequent fatalities. The committee finds this both tragic and deplorable.
3.79 The committee is not expert in insulation or
electricity. However, it considers it incumbent upon the government to counter
criticism that the government should have mandated:
(a) turning off the power before entering the roof;
(b) the use of plastic staples with foil, as had been recommended in New
Zealand since 2007; and
(c) a condition of HIP insulation that a house had a safety switch (residual
current detector).
3.80 In the committee's view, by October 2009, DEWHA and
the government had received sufficient written and oral warnings of the serious
risks posed by the program that it should have been suspended immediately
following the first fatality. However disturbingly, these warnings were either
ignored or not taken sufficiently seriously. Again, the desired speed of
spending appears to have superseded safety considerations.
3.89 Arguably many of the problems of the program
resulted from the government's role, in and quest for, driving demand,
culminating in an overwhelming deluge in the second half of 2009. In terms of
market-place drivers, it seems to have been driven more by marketing by
installers, taking advantage of the fact that installations were free for most
dwellings, than by the initiative of householders.
3.90 As householders had no motivation (and almost
certainly no expertise) to check the quality of the work, it left the way open
to program abuses by unscrupulous newcomers to the industry who encouraged a
large influx of inexperienced installers. This in turn was a contributor to the
deaths, safety risks and other poor program outcomes described in more detail
in chapter 4.
3.91 The committee considers it incumbent on government
to explain why it did not spread the program over a considerably longer time
frame and promote 'buy in' by householders by:
- reducing the level of the subsidy offered;
- requiring a co-payment, that is the householder pays some part of
the price; and/or
- requiring the householder to pay the price of installation
upfront and then be reimbursed a portion of the price.
3.92 The committee finds that the excessive value of the
initial $1600 rebate (above the industry average at the time) was always going
to promote profiteering and, with it, bring about the low standards, short cuts
and shonks that inevitably come from those solely attracted by a 'quick buck'.
3.93 The committee further finds that effectively making
insulation 'free' for a period of time was never likely to provide lasting
benefits to the industry as it was structured to create a boom-bust cycle,
without leaving consumers with any understanding or appreciation of the real
'value equation' that underlies the installation of insulation.
3.94 A reimbursement or co-payment scheme might have
moderated demand, and may have helped to deliver some longer term
sustainability. However, it is unlikely of itself to have seen improved long
term environmental effects or to have reduced risks to installers and
householders without commensurate higher standards.
4.30 The committee acknowledges that, as in many areas of
the building and construction sector, there are inherent risks associated with
installing insulation. There are risks to both installers working in hot and
confined spaces containing electrical wiring; and to householders if the
insulation is not properly installed.
4.31 The consequences of these inherent risks are very
high and in the extreme can result in the loss of both lives and property.
4.32 However, the committee is of the view that with
adequate and appropriate risk management—for example, fully informed and
properly trained and competent installers, and the use of safety equipment such
as downlight covers—these risks can be significantly mitigated.
4.33 Roof/ceiling insulation is safe provided it is of
appropriate standard, properly installed with full knowledge of the possible
hazards and with effective safety arrangements in place. This applies to both
bulk materials and foil. The fire and electrocution problems which have
occurred resulted from inadequate training and unsafe work practices.
4.34 The committee acknowledges DEWHA's attempts to
ensure suitable training standards and work practices. However, too many of
these attempts were a case of playing catch-up to problems in both the formal
requirements and with their inadequate and flawed implementation.
4.35 In the committee's view DEWHA did not adequately
anticipate the high risk created by the huge influx of inexperienced and
unqualified workers. When issues did emerge, DEWHA's responses were both slow
and often inadequate. DEEWR, meanwhile, appears to have been missing in action,
despite being members of the Project Control Group and, logically, having a key
responsibility for workplace safety and training issues.
4.36 Arguably the key mistake was failing to ensure from
the outset that all personnel involved in installation (not only supervisors)
were properly trained and fully understood the risks associated with installing
insulation.
4.37 Making the requirements more stringent in the last
few months of the program was too little, too late. For example, DEWHA's
reaction to the unfolding safety issues after the first death on 14 October
2009 was tardy. The ban on metal staples for foil insulation took effect on 2
November 2009. The requirement for a mandatory risk assessment of each job took
effect only on 1 December 2009. The requirement for all installers, not only
supervisors, to have training took effect only on 12 February 2010. At no stage
was there a firm requirement to turn off the power during installation, a
simple step which arguably would have greatly reduced electrical risk to the
installer (though not to the householder afterwards).
4.38 The committee notes the government's statements that
there have always been fires associated with poorly installed ceiling
insulation. The intended inference seems to be that some increase in the number
of fires is to be expected because of the huge increase in the number of
installations.
4.39 On the available figures it is impossible to say
whether the rate of defective-installation-causing-fire is higher or lower in
HIP jobs than in earlier jobs. However, the committee notes that a targeted
inspection of 15 000 installations has found that 7.6 per cent of them have
fire safety hazards. The committee notes the government's contention that
these figures may not be representative of all installations, as inspections to
some degree have been targeting installations by firms with a poor compliance
record. However, even if this figure is discounted by half, given the one
million-plus houses that have had insulation installed under the HIP, this
would mean that in the order of 38 000 homes face the risk of a house fire. The
committee considers this to be an unacceptably high figure, and creates a
massive time-bomb for tens of thousands of Australian households.
4.40 In any case, the government cannot somehow excuse
the incidence of HIP‑related fires by pointing to precedents prior to the
program. If anything, the incidence of insulation related fires prior to the
HIP should have served as another warning to the government and should have provided
further cause for care and caution in the development of the new program. The
government's aim should have been to have no fires resulting from work which
the government had encouraged and which taxpayers have funded.
4.41 DEWHA was, and the government should have been,
aware of the risks before the commencement of the program, both through the
Minter Ellison Risk Register, which DEWHA expressly commissioned, and through
the various approaches to government by concerned stakeholders. Despite being
told of such risks, they appear to have been brushed aside in pursuit of other
priorities.
4.42 While acknowledging that DEWHA may not have known
the precise scope and magnitude of the risks, the committee is nevertheless of
the view that its response in addressing the risks before the program's
commencement was wholly insufficient. It did nothing to address certain risks.
The committee is also of the view that as the identified risks manifested as
serious problems, both DEWHA and the government's responses were overwhelmingly
and perhaps tragically deficient.
4.60 The rate of fraud and abuse in the HIP is unclear.
However, it is uncontested that it occurred, and at an unacceptable level. The
results of the survey and targeted inspections mentioned at paragraphs 4.50ff
paint a picture far more concerning than DEWHA's statement that only '0.65' per
cent of installations have resulted in a complaint.
4.61 While the government had and still has auditing and
compliance activities, it is unclear how well they are informed, targeted or
resourced in proportion to the need. The committee notes evidence that more
resources have been put into auditing and compliance recently.
4.62 In the committee's view the incidence of fraud and
abuse was a predictable outcome of a program which encouraged an influx of new
businesses into a small and largely unregulated industry, and was designed in a
manner open to profiteering around the premise that the householder should not
be out of pocket (the subsidy amount was expected to cover the whole price in
most cases). Ignorant of the risks, householders were lured into thinking they
needn't have a stake in ensuring that the job was well done (quite apart from
the fact that most would not have the knowledge to do so).
4.77 The committee agrees with submissions that the high
level of imports was regrettable, and is potentially detrimental to the
Australian insulation manufacturing industry in the medium term.
4.78 The committee notes the evidence that thermally
non-compliant Chinese imports are likely to be about three per cent of total
HIP materials. However, the overall level of non-compliant imported materials
is uncertain (since there is no evidence on the extent of non-compliance in
imports other than the Chinese). Nevertheless, the committee finds it wholly
inadequate for DEWHA or the government to dismiss this issue by saying that
householders with non-compliant materials should complain to state/territory
fair trading offices. Householders are not likely to know whether their
insulation materials are compliant or not. The government, having encouraged
householders to take up the subsidy, has a duty to ensure that materials
installed are compliant. This should be part of the inspection of every
insulated home.
4.79 The use of these non-compliant imports failed the
test of good public policy at almost every level. It failed as an economic
stimulus by sending dollars overseas; it failed as an environmental measure as
the standard of insulation provided was unsatisfactory and will not deliver the
intended energy efficiency dividend; and it failed to deliver for many
unfortunate homeowners, who will be left with little energy savings but will
face the cost of removing these inferior products if they are to install
quality insulation at a later stage.
4.98 The extent of any inappropriate use of bulk
materials is unclear. However the committee is concerned that householders may
not have had adequate advice on this matter.
4.99 Nothing in the program guidelines justify DCCEE's
statement at paragraph 4.97 that 'the installer was required to assess what
type of insulation would best suit the householder'. The guidelines quoted at
paragraph 4.96 clearly put the onus for this on the householder. The
installer's only obligation in this regard was to follow the table of minimum
R-values. The whole point of concern about this issue is that the table of
R-values (like the Building Code of Australia) ignores the problem of bulk
materials in hot climates keeping naturally ventilated houses hot at night.
4.100 The referenced Your Home Technical Manual, which (it
was implied) householders should have consulted, is a large document which
contains this solitary relevant comment on page 103:
The most important thing to remember is that in high humid
[tropical] climates where houses are naturally ventilated, high down values and
lower up values are appropriate for roofs and ceilings.
4.101 The reason for this advice (to help the house cool
naturally at night) is not given. Nor is any advice given about the relative
effectiveness of bulk insulation in different climates.
4.102 In the context of a program—an attempt by government
to roll out insulation to people who have never before thought about the
different varieties and their respective performance—it is unrealistic to
expect that householders would notice this advice—particularly as the Your Home
Technical Manual was not mentioned in the HIP guidelines. If they did notice
it, given the brief and incomplete nature of the advice, it is unrealistic to
expect they would realise its importance.
4.103 The committee considers that householders should have
been given better and more accessible consumer advice about appropriate
insulation for their situation. The committee does not think it is adequate to
rely on asking householders to refer to a large technical manual accessed by
weblink.
4.104 The committee is not qualified to opine on these technical
issues, but considers it unacceptable that the government failed to settle them
before embarking on the HIP. The consequences were, once again, a less than
optimal outcome for taxpayers, homeowners and the environmental objectives
allegedly behind the program. Regulatory changes should be pursued to address
these issues following extensive industry and scientific consultation leading
to amendment to the relevant Australian Standards and the Building Code of
Australia where appropriate.
4.105 The committee comments on the obvious disagreement
between foil interests and bulk insulation interests on this issue: it is
regrettable that there continues to be dispute among the various industry
groups over issues theoretically capable of settled scientific conclusion.
4.112 Submissions on this matter focussed on landlords and
tenants; however the problems of access to the program by low income homeowners
should not be forgotten. Once again, these issues highlight the ill-designed
nature of the incentives offered under the HIP.
5.19 Considering the importance of insulation to the
energy efficiency of Australian homes, it is most regrettable that there is no
independent scientific facility in Australia able to research the properties of
the various systems and advise on insulation policy in context of overall
energy efficient housing goals. It is unfortunate that the dispute the
different forms of insulation, about basic science to do with the suitability
of the different systems, has endured for so long without resolution. It
appears that the lack of a suitable research vehicle has been one of the
reasons for this.
5.20 CSIRO's new test facility, since it will only test
in accordance with AS/NZS 4859.1, will not resolve the wider arguments about
the appropriateness of the standard or desirable policy on ceiling insulation.
5.21 The committee agrees that there should be a
dedicated and independent research facility able to research insulation systems
and advise on insulation policy. Where it should be housed would a matter for
further consideration.
5.22 This should be regarded as an essential part of any
future government initiative to improve home insulation, in order to ensure
that the investment is directed most efficiently.
5.48 Determining concerns about increased insulation
requirements in the Building Code of Australia and inadequate treatment of
'heat box' and condensation issues in the Building Code of Australia is beyond
the expertise of the committee. The Australian Building Codes Board should be
asked to respond.
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