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Vinnie Breidenthal

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Jul 13, 2024, 8:33:42 PM7/13/24

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1.1 Overview 1.1.1 On 3 February 2009, the then Prime Minister, the Honourable Kevin Rudd,1 announced the Nation Building and Jobs Plan, a $42 billion initiative of the Australian Government, released as part of its response to the Global Financial Crisis.2

1.1.2 A proportionately small part of the Nation Building and Jobs Plan was the Energy Efficient Homes Package, which was initially allocated less than 10% of the total amount to be spent under the Plan. Although proportionately small in dollar terms, the Energy Efficient Homes Package (EEHP), and particularly that component of it concerned with ceiling insulation, then named the Homeowners Insulation Program (HIP), generated a disproportionate amount of negative comment and publicity, both during the currency of the HIP, which ran for only a little over twelve months, and subsequently.3 This Royal Commission is the fourth Australian Government investigation into the Program.4

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1.1.3 Whilst my Report should be read in full to understand the context in which findings and observations are made, it is probably useful to set out a summary of the structure of the Report. I will then deal with some administrative matters concerning the Commission, before dealing with a number of discrete matters that have been raised, and can be conveniently dealt with at the outset of this Report.

1.1.6 The stated aim for the HIP was to install insulation into the ceilings of some 2.2 million Australian houses in a period of two and a half years. The process of installing insulation into an existing property (as contrasted with installing insulation at the time of construction) is referred to as retrofitting.

1.1.7 To put that exceedingly ambitious aim into context, the evidence available to me is to the effect that, prior to the announcement on 3 February 2009, there were in the order of 200 businesses retro-fitting insulation into a total of up to approximately 70,000 houses per annum.

1.1.8 The HIP thus aimed to achieve an approximately fifteen-fold increase in the number of installations per year, which equated to more than the pre-HIP annual number of installations being carried out each and every month under the HIP.

1.1.9 It ought to have been obvious, to any competent administration, that such an exponential increase in work to be undertaken would require a similarly huge increase in the workforce to do it. Indeed, as is discussed in Chapter 2 of this Report, one of the policy objectives for the HIP was to provide work for those thought to be at risk of losing their jobs during the aftermath of the Global Financial Crisis, particularly in the construction and allied industries. This objective was achieved, with the number of insulation installation businesses increasing from approximately 200 prior to the HIP to 8,359 registered businesses with an estimated total workforce of over 12,000 in October 2009.

1.1.11 Whether it was, and is, appropriate for a government to combine a stimulus policy with a policy such as the HIP lies at the heart of this Inquiry. The tension between the stimulus objective of the policy, with its concomitant need for expedition, and the energy efficiency objectives of the policy, in my view caused a number of decisions to be made under the HIP which unnecessarily exposed workers, particularly inexperienced ones, to an unacceptably high risk of injury or death.

1.1.12 It ought to have been obvious, to any competent administration, that if a very large number of people were being encouraged to participate in the HIP, both as employers and employees, they would have a diverse range of pre-existing qualifications and experience. The issue of training and the competencies required of people installing insulation, and the approach taken by the Australian Government to those issues is discussed at length in Chapter 8 of this Report.

1.1.13 The issues of training and of installer competencies cannot, of course, be divorced from the regulatory environment in which the insulation installation industry operated. That regulatory environment is discussed in Chapter 3 of this Report.

1.1.15 The background to the need for stimulus is discussed in Chapter 2 of this Report. The onset of the Global Financial Crisis was thought to provide a pressing urgency for intervention by the Australian Government. It is no function of mine to question whether, in a general sense, such urgency for economic stimulus was justified. The stimulus function

of the HIP was said to require its substantive commencement on 1 July 2009, with an interim rebate scheme (known as HIP Phase1) to apply with immediate effect from the date of announcement until the full scheme (HIP Phase 2) commenced. I consider that there was no compelling reason to commence the main phase of the HIP on 1 July 2009, other than the generally-perceived need to commence it as soon as reasonably possible, and because the Prime Minister had publicly announced that as the starting date. That is an important finding because the evidence from very many of the witnesses was that they understood this date to be non-negotiable and fixed, and that the need to achieve roll-out of the HIP by that date was the reason that most of the crucial and material compromises to the proper design and implementation of the HIP were made. It has emerged that this date was not perhaps so fixed as was assumed.

1.1.17 There was much debate about whether workplace health and safety issues were a matter that was of any concern to the Australian Government, or whether it was more properly the concern of the States and Territories. It was said, by a number of federal public servants, that the Australian Government had no regulatory power in the field of workplace health and safety, and therefore that it was not a risk that the Australian Government could control. In my view, this attitude was deplorable. I discuss, in Chapter 11 of this Report, the purported reliance of the Australian Government on the States and Territories and conclude that such reliance was both unjustified and unreasonable.

1.1.20 The families of these young men were each granted leave to appear before the Commission and were represented on each day of the public sittings. The families understandably seek to comprehend why their son, sibling or nephew died, and whether their death could reasonably have been prevented. I discuss the circumstances of each death, briefly, in Chapter 12 of this Report. I also discuss the serious injuries suffered by other participants in the program, and injuries suffered by some householders who came forward to share their experiences with the Commission.

1.1.21 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. I discuss the various types of insulation materials permitted to be used under the HIP in Chapter 4 of this Report. In Chapter 9 I specifically discuss the appropriateness of the decision to permit the use of reflective foil insulation in the HIP.

1.1.23 I discuss electrical safety and other technical issues in Chapter 5 of this Report. I discuss the audit and compliance program put in place by the Australian Government, and its deficiencies, in Chapter 10.

1.1.24 The two most critical decisions taken in the design and implementation of the HIP, against the background of a perceived inflexible start date of 1 July 2009, were the change to the way in which the HIP was to be delivered (the delivery model issue) and the removal of the requirement that all installers have insulation-specific training (the competencies issue).

1.1.26 My Terms of Reference specifically require me to inquire into warnings that were given to the Australian Government before, and during, the HIP. That topic is dealt with in Chapter 9 of my Report.

1.1.27 The HIP had an effect not only on the families of the young men tragically killed whilst working under that program. It also wreaked havoc on pre-existing insulation installation businesses, particularly when the HIP was suspended on 19 February 2010, essentially without warning.

1.1.29 A proper understanding of the existing insulation industry, in both its manufacturing and installation capacities, was vital to the proper and careful design and implementation of a successful HIP. I discuss the industry and its internal fractiousness in Chapter 4 of this Report.

1.1.30 The decision to effectively terminate the HIP had a profound effect on businesses which manufactured insulation and which were engaged in the installation of it. In particular, businesses that had operated quite profitably and stably before the announcement of the HIP were encouraged by the Australian Government, through the HIP, to engage workers, increase production of insulation by investing in manufacturing facilities and equipment and to conduct a very large number of installations in a short space of time. When the HIP was suspended in mid-February 2010, it was without warning to these and other businesses, with the effect that their quite well-founded expectations were upset, their investment decisions disturbed and considerable loss incurred. Had the HIP been better designed and administered, such loss would have been avoidable.

1.1.32 The closure of the HIP caused great hardship for businesses that had, before the HIP, carried out the installation of insulation. They had, among other things, invested in plant and equipment and purchased insulation stock, much of which was wasted and worthless when the HIP was terminated. The remediation packages introduced with a view to mitigating the effects of the termination were insufficient to achieve that aim to any satisfactory degree. I discuss the termination of the HIP and the remediation programs in Chapter 13 of this Report.

1.1.33 Finally, in Chapter 14, I discuss lessons that have been learned from the HIP and its consequences for other government programs. In accordance with my Terms of Reference I make recommendations for the future.