Royal Commission Into Home Insulation Recommends Compensation For Businesses

Former Prime Minister Kevin Rudd in May, after giving evidence at the Royal Commission into the ALP’s home insulation program. Photo David Hardenberg/Getty

Four young men would not have died if the former Labor government’s home insulation program (HIP) had been properly designed an implemented, the royal commission into the program has found.

The final report by commissioner Ian Hanger QC says the $2.7 billion program was deeply flawed on a number of fronts, including failing to properly address initial safety concerns and them the Rudd government was slow to respond when problems began to emerge.

The report has also recommended compensation be paid to more than 200 businesses operating before former prime minister Kevin Rudd launched the program in 2009 in response to the global financial crisis.

The program was stopped by then-minister Peter Garrett following the deaths of four installers and the industry collapsed, leaving hundreds of businesses millions of dollars out of pocket.

Queenslanders Matthew Fuller, Rueben Barnes, and Mitchell Sweeney, and Marcus Wilson from NSW died between 2009 and 2010 while installing home insulation.

Commissioner Hanger is blunt in his 360-page report, saying:

In my view each death would, and should, not have occurred had the HIP been properly designed and implemented. The decision to permit the use of reflective foil sheeting as ceiling insulation was, in my view, fundamentally flawed. It directly contributed to the deaths of Mr Fuller and Mr Sweeney.

The commissioner says one problem was that the federal government expected state governments to oversee the program and workplace safety, without giving them a proper brief or resources.

At no stage did the Australian government ascertain that state and territory regulatory regimes would be adequate to deal with the risks to personal safety and property given the nature and extent of the demands likely to be placed upon those regimes by the program.

Government oversight of the program was totally inadequate, Hanger says:

The audit and inspection regime for the HIP, from at the very least, 1 July 2009 until early October 2009, was seriously deficient in its treatment of the safety of installers and of the quality of installations. The applicable regimes gave inadequate attention to such matters, either through overlooking them entirely (and deliberately), or not conducting anywhere near enough on-site inspections to make any informed view about the adequacy of these important matters.

The report also finds that minister Peter Garrett’s department was slow to act in response to deaths and banning foil insulation when electrocutions began to occur; and that parliamentary secretary Mark Arbib, was warned repeatedly of problems, but would not delay the start of the program.

One of the problems, the commissioner finds, was the “exceedingly ambitious” scale of the program, which planned to install insulation in 2.2 million homes in just 30 months. It was a 15-fold increase. Before it began, the industry had 200 businesses retro-fitting insulation at the rate of 70,000 homes a year.

It attracted the shonks and destroyed a long-standing industry, Hanger finds:

It ought to have been obvious to the Australian Government that, had the HIP been delivered as envisaged, it would inevitably have meant the destruction of the retro-fit
insulation businesses

It ought also to have been obvious to any competent administration that the injection of a large amount of money into an industry that was largely ‘unregulated’ would carry with it the risk of rorting and other unscrupulous behaviour.

Commissioner Hanger heard repeated examples of well-established insulation businesses being destroyed overnight. And while cash flows dried up and minister Peter Garrett’s department refused to pay them for insulation work completed before he cancelled the scheme, the businesses were being hounded by the ATO for tax.

Hanger wants to see compensation.

I recommend that arrangements be put in place for compensating those pre-existing businesses who suffered loss arising from their reliance upon the assurances given by the Australian Government, to the extent such loss is properly to be so attributed, and
not by reason of other contributing factors or influences.

There was some good news, however. The royal commission did not find that there was an increase in home fires from the program.

The data… shows that the rate of fires for the period of the HIP was certainly no greater than before that program started. This shows an apparent improvement in the controls and/or in the practices with respect to laying insulation in proximity to heat-producing elements in the ceiling under HIP.

The occurrence of fires does not appear to have been an issue of particular concern, other than to the media.

Prime Minister Tony Abbott said the reports findings are “grave” and his government would give a preliminary response by the end of September.

“It details a litany of failures arising from a dysfunctional culture, so the Government will carefully consider findings and recommendations of this report, which is a timely reminder of what can happen if government acts with undue haste,” he said.

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