What really went wrong in the insulation saga? Veteran ex-bureaucrat Allan Hawke was commissioned to find out, and the Government released his report yesterday as part of its announcement it was killing off the program’s replacement.

Its contents have either been ignored by the media or, in the case of The Australian, entirely misrepresented.

I’ll get to the wonky systemic stuff in the moment, but the first thing to say is that while the report focuses on the systems put in place to implement the program, it makes some quite clear statements about the role of Peter Garrett in his administration of the HIP program.

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On the deaths associated with the program (associated by the media, that is), “the Minister for the Environment, Heritage and the Arts was briefed on these issues and responses by both Mr Garrett and DEWHA were appropriate and timely.”

On broader risk issues, “when issues arose, DEWHA and the Minister worked quickly to address them. DEWHA engaged with industry, listened to their concerns and briefed the Minister on necessary changes to the program. Warnings were heeded; however, this was largely reactive.”

Hawke also has this to say about the program overall.

Any objective assessment of the HIP will conclude that, despite the safety, quality and compliance concerns, there were solid achievements against the program objectives. At the time the program closed on 19 February 2010, over one million homes had been insulated. Many low income households participated, with the prospect of significant savings on energy bills in years to come.  At its peak (in November 2009), the program had registered over 10,000 installers employing thousands of largely low-skilled workers…

and

It may be a peculiar Australian trait to bank or play down good news while examining the entrails of shortcomings in minute detail. Such is the case here, as the success of measures to deal with the global financial crisis risk having some shine taken off them by the so called HIP bungle. Bungle is actually a furphy because the many positive outcomes (already and potentially) flowing from the HIP serve to address long standing problems besetting the industry.

So what went wrong?

Two issues stand out in Hawke’s report. One is that the ceiling insulation “industry” had a lot of problems prior to the Government pumping hundreds of millions of dollars into it. Only South Australia had a proper regulatory framework governing the sector. There was no training available. And there were extensive safety problems. When the Government ordered a check on foil insulation installations in Queensland, 20% of homes had pre-existing electrical problems. Hawke estimates that there were at least 80 fires a year caused by insulation prior to the program beginning.

The other issue is time. When Garrett’s department began rolling the program out, it tried hard to address these problems, but failed, primarily because it didn’t have the time, and not enough resources were deployed within the Department to do it. DEWHA worked with the Construction and Property Services Industry Skills Council to get a training program ready and available before the full rollout of the program on 1 July.

It held regular workshops and consultations with industry, consumer groups and state government representatives on program issues. It set up a register for accessing the program. The states themselves recognised emerging issues and tried to be proactive on OH&S issues in the sector.

The tenor of Hawke’s report is that DEWHA did a lot of things that good program practice says should have been done — it adopted a risk management framework, it procured a proper auditing and compliance process, it consulted widely, but the imperative of spending the money quickly undermined the quality of the program. A full auditing mechanism wasn’t up and running until several months into the program.

Until then, the Department was reliant on a reactive, complaints-based compliance system. Hawke suggests DEWHA should have taken a short-cut on the procurement process (which notoriously take a long time in the Public Service for probity reasons) and got it up-and-running sooner. He says the registration process at the outset was self-regulating — installers simply had to say they met the appropriate training requirements, with no checking of their bona fides until several months in.

Another important point is that DEWHA failed to anticipate the high levels of demand. This is critical and should be one of the longer-term lessons for any politician who thinks pumping money into renewable energy or energy efficiency programs is going to achieve magical results.

Hawke says there were some issues that could not have been anticipated, but that demand far exceeded what DEWHA estimated, partly as a result of measures put in place to actually encourage demand. One of the risks identified in the risk management process early on was that there would not be enough demand for the program, and that it needed to be communicated effectively to prevent this.

With hindsight, this “risk” looks nonsensical, but the Department didn’t anticipate new industry entrants cold-calling householders, or door-knocking, with the intent of accessing Government funds.

Hawke doesn’t say this but you get the sense that the Department should have considered the strong possibility that the industry contained, or would attract, rogue elements. For example, more than a quarter of installers were still using metal fasteners after they had been banned by Garrett.

Hawke also notes that, given the program was designed to ensure householders weren’t left out-of-pocket, it meant householders didn’t really care what was going on up in their ceilings, because they had no money at stake. The most basic verification mechanism of all — the buyer making sure they got what they were paying for — didn’t work.

Many of these problems could have been addressed if DEWHA was given more time, but it didn’t have it. In fact that was the entire point of the program: to provide immediate economic stimulus, involving unskilled labour. But given the pre-existing poor state of the ceiling insulation industry, the HIP ended up being the only stimulus measure without an existing “delivery pathway”.

Responsibility for this rests with the DEWHA leadership, which Hawke says only belatedly swung more resources, and more executive oversight, onto the program. Hawke also gives a backhander to his former Department of Transport whizkid (now Transport Secretary and Coordinator General) Mike Mrdak, saying “given the reach of the program into so many Australian homes, it demanded much more and continuous attention from the Office of the Coordinator-General than it received.”

Ultimately, though it was the Government, with its insistence that the program be rolled out immediately at all costs, that bears responsibility, but given there would have been no program without that urgent need for stimulus, it begs the question of how, exactly, it might have proceeded differently.

Hawke suggests that some form of compliance toolkit for programs be developed, that would allow Departments without much experience in program implementation, like DEWHA, to rapidly establish compliance systems. One of Terry Moran’s recent APS reform proposals is the development of a whole program implementation toolkit for just such purposes.

This report and Rod Tiffen’s brilliant dissection of the media coverage of the insulation issue have shown how facile the “analysis” provided by journalists, including most of the Press Gallery, has been of this story, and most particularly the role of Peter Garrett, allegedly the “bungler” responsible for four deaths.

Then again, journalists have already moved on to bewailing the fate of the industry affected by the closure of a program the media criticised so heavily.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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