In February of this year when a debate popped up in the media over the insulation program — if one loosely defines “debate” as screeching “OMG!! YOUR HOUSES ARE ALL GOING TO BURN DOWN”  — we thought that it might be worthwhile for someone to take their underpants off their head and have a squiz at what the data actually said.

What we found was that under every possible scenario, the government insulation program — far from increasing the rates of fire occurring from installing insulation — actually reduced the rate of fires and likely reduced the rate in a quite substantial manner.

Ultimately, the data strongly suggested that the insulation program actually made the industry safer in terms of fire risk. Some folks found that surprising since it went against the hysterics — but it’s only really surprising if you weren’t paying attention. The industry before the program was completely unregulated everywhere except in South Australia. As the program rolled out, increasing amounts of regulation aimed specifically at making the industry safer was implemented — purely in an attempt to manage some of the broad risk involved. So the initial result wasn’t particularly surprising at all when you look at the broad picture.

The original analysis was with preliminary information that was incomplete — but we attempted to control for a few issues to make a set of broad estimates that we thought would be relatively robust and accurate. Over the past week or so, the complete data has been released in various places and after crunching the numbers again with the complete data, we find that reality falls pretty much in the middle of our earlier estimates.

One of the problems we had in February was in trying to estimate the timeliness in the relationship between getting insulation installed and when a fire broke out as a result of that negligent  insulation going into your roof. If you had a dodgy installation, is it more likely that any fire would occur sooner rather than later, and if so, by how much?

That was the big question.

It’s also something we can start to answer.

What we need is the number of installations for each month of the program, as well as the number of fire incidents each month linked to the insulation program.

We can get a proxy for the monthly installation numbers from the  report of the Senate Environment, Communications and the Arts References Committee that looked into the Energy Efficient Homes package here on page 19 of the report (on page 13 of the pdf file).

It’s only a proxy because it doesn’t measure when the insulation was actually  installed, but when the money was claimed for the installation by the installer from the government.  There might be a few days or a week or so lag in these numbers — but that difference is ultimately meaningless anyway, as we shall see.

The other piece of data we need is the number of fire incidents reported by month. We can get that from the government’s Home Insulation Safety Plan website.

When we compare the two series, this is what we get — fire incidents on the left-hand axis, installation claims on the right-hand axis and the month on the bottom axis:


As we can see, it took a few months of growth in the installation numbers before we started to see a dramatic increase in the number of fire incidents. Similarly, when the program was stopped in February, it took about six months for the fire incidents to wash out of the system and return to normal.

What’s normal, I hear you ask?

Peter Fray

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