There are two issues in the insulation saga and the media — which has no excuse — and the Opposition, which can at least claim it’s playing politics, is conflating the two in the hope Peter Garrett can be finished off.

The central problem of the insulation program was that it had two separate and often contradictory goals: improving household energy efficiency and propping up employment among low-skilled workers in the face of a looming and massive economic slowdown.  Worse, it involved an industry that lacked the capacity to roll out a program of that size.

Garrett’s department was aware of that problem, if not before consultants Minter Ellison mentioned it as one of several possible risks in its quick-and-dirty risk assessment analysis, then after.  “Industry’s capacity to produce and deliver sufficient quality materials and installations may be inadequate,” the risk analysis called it.

Keep the concept of industry capacity in mind, because this is not a problem that will disappear once the stimulus package programs end, or  Garrett resigns, or even if Tony Abbott becomes Prime Minister.  Even without the extraordinary — and justified — rush to get the program out and keep people employed, this is a problem that will recur every time governments intervene in Australian industry to artificially encourage energy efficiency, renewable technology or carbon sequestration technology.

Because of years of doing nothing, we’re suddenly trying to make big cuts in carbon emissions with industries that aren’t much above boutique level.  They have to do the heavy lifting that we’ve refused to do for a decade — and quickly.

So while huge cash handouts don’t appear to have the problems of the command-and-control approach of direct regulation, and they can’t be portrayed in a scare campaign as a “great big tax” like an emission trading scheme can, they come with their own problems.  In particular, the cash lures shonks and spivs by the truckload.

And as we’re seeing now, even the ardent deregulationists of the Coalition want the heavy hand of Government controlling the insulation industry.

It’s a particularly vivid demonstration of exactly why a market-based mechanism for reducing carbon emissions is more efficient than other mechanisms.

That’s a policy problem, one the Department of the Environment has been grappling unsuccessfully with for a year.  And even if they had delayed the roll-out of the program by three months — which would have contributed directly to higher unemployment — the intrinsic problem of lack of capacity in industry would have remained, with its attendant consequences.

The problem was reinforced by the department’s own lack of expertise in service delivery.  The Commonwealth does deliver services on a large scale, but the expertise is in selected areas, and primarily in agencies rather than departments (think Customs, Medicare, Centrelink, federal courts, the AFP).  Senior Government figures have been concerned for a time that the Government’s heavy investment in new service delivery programs would be tripped up through lack of expertise and corporate memory at the bureaucratic level.

But somehow these problems has been conflated with four deaths of insulation installers, in  a cause-effect link that simply doesn’t bear scrutiny.  As the head of the Environment department Robyn Kruk (who should have offered her resignation well before now) pointed out yesterday, there have been deaths among insulation installers previous to the Government’s programs.  At least there’s now a regulatory framework for the installation industry that wasn’t there before the program.

Somehow the workplace deaths of four men have nothing to do with their employers who had a legal obligation to provide a safe workplace, and everything to do with a Labor Government program.  Apparently it’s not the shonks’ fault that the Government made money available and they rushed to take advantage, possibly putting at risk their employees along the way.

The issues have been conflated by a media that doesn’t understand the mechanics by which ministers are briefed and asked to make decisions — maybe I should offer a primer on it — and can only see the issue through terms of politics — where’s the smoking gun, where’s the cover-up, what did the Minister know and when did he know it.  There persists a view among gallery journalists that somehow Garrett is hiding the fact that he was briefed about the Minter Ellison report — which looks a lot like a SWOT analysis rather than a detailed warning of what was to come that we’ve been led to believe — before receiving a full copy of it.

Given he received briefings about program risks and what measures had been adopted to address them, he undoubtedly would have received a brief mentioning — perhaps even briefly summarising — the Minter Ellison report, along with discussion of industry advice, outcomes of meetings and maybe issues that have occurred in comparable programs elsewhere. They would have all been factors contributing to the recommendation Garrett would have been asked to approve.

That’s how departments brief ministers.  Ministers and their advisers don’t read every report, every meeting note, every external study.  That’s what bureaucrats get paid to do.

The pursuit from the Coalition can be justified on a political basis, of course — as pretty much anything can — but their hypocrisy is extraordinary.  Four years ago John Howard, Mark Vaile and Alexander Downer all refused to resign over AWB’s bribes to Saddam Hussein because they insisted they had not been told, however improbable that seemed for a company with such strong connections to the Howard Government and the National Party.  Conservative commentators still feign outrage that Kevin Rudd called John Howard a liar over it, despite Howard becoming a by-word among voters for the most extraordinary casuistry.  Howard elevated to a high art the use of ministerial advisers as shields between ministers and inconvenient facts.

The only really safe program, of course, is a non-existent one.  But if we refuse to adopt a price signal for carbon, and shy away at the terrible effects of regulation, we need to spend far more, not less, on these sorts of programs.  And the insulation saga has demonstrated that neither the bureaucracy not industry yet have the capacity to deliver them properly.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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