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Lessons to be learnt from the pink batts disaster

Wednesday, May 21, 2014

The royal commission into the pink batts program reveals the need for well-resourced government departments, not gutted shells only able to dish out money to the market, writes Jean Parker.

Tony Abbott's $20 million anti-Labor political advertisement, otherwise known as the Royal Commission into Kevin Rudd's Home Insulation Program (HIP), is all but concluded.

Eight weeks of hearings have revealed the picture of a worthy program turned lethal by a lack of public service capacity, and by the decision to outsource an inherently dangerous program to the market.

In the week that Joe Hockey's budget announced deep cuts to the public service and inducements to privatise yet more state government agencies, the lessons from the HIP should also be a warning to the Abbott Government.

The high point of proceedings, falling neatly two days after the budget, was the appearance of Rudd at his verbose worst.

Four years has added little to Rudd's understanding of what he agreed was a "system failure" that wrecked the HIP. What was revealed for the first time was Rudd's role in hand-picking key personnel for the program - environment secretary Robyn Kruk, stimulus coordinator Mike Mrdak, and Senator Mark Arbib, who Rudd tasked with being a "set of eyes focused on implementation difficulties across the entire Nation Building and Jobs Plan".

Interestingly, the Commission heard Kruk and Mrdak were the people who thought the Environment Department lacked the capacity, experience and skills to deliver the program. The solution was a HIP business model based on delivery by the free market.

Under the eventual market rebate model the Commonwealth was the funder, not the provider of the program.

On days 11 and 12 the Commission heard from then assistant director of the Environment Department, Kevin Keefe, who headed the HIP inside the department. Keefe testified that he was "blindsided" by the new model.

According to Keefe the message was clear:

Don't do things in a government slow way. Let's let the market do its work ... let the market rip.
It was this design that made the program "an accident waiting to happen". The HIP created a $2.8 billion frenzy of unsafe and unsupervised work by young, untrained workers. Just as it was designed to do, virtually overnight the HIP created a surge of market activity. Where prior to the scheme there were roughly 70,000 houses retrofitted with insulation every year, at the height of the HIP the number reached 180,000 in one month.

As his father recounted in the Commission on Friday, the first worker killed in the HIP, 25-year-old Matthew Fuller, was employed by a telemarketing company run by two bankrupts and an Irish guy "in from off the street".

Matthew's employers were one of 10,000 companies that sprang up to take advantage of the HIP. Qualifying as a "registered installer" under the HIP meant you were able to "supervise" an unlimited number of subcontractors and employees.

Registration and claiming rebates was done entirely online and Kevin Fuller told the Commission that the required industry white card could be obtained online in an hour or so, while a training session was meant to be two days but was more commonly "a couple of hours in the morning, couple of hours in the afternoon".

These low barriers to entry meant Matthew's employers were subcontracting the insulation of houses within three days of starting the company. Matthew was electrocuted nine days later working unsupervised in a Brisbane ceiling.

Mr Fuller said despite a brief suspension as a result of Matthew's death, his employers recouped $2.64 million from the HIP at a rate of $40,000 a working day.

It was "make hay while the sun shines" as another registered installer told the Queensland Coroner last year.

This orgy of profiteering was no accident. It was the logical outcome of a policy design relying on the profit motive to deliver the program in an unregulated industry.

Former minister Greg Combet testified that he "lived in constant fear" of more disasters when he realised the sheer extent of dangerous and fraudulent behaviour endemic in the HIP. After four deaths and hundreds of house fires Rudd brought Combet in to terminate the program in the realisation that the HIP was off the rails.

As Combet's evidence shows, the cowboy attitude of Matthew's employers was far from isolated.

There had been patently, it seemed to me at that time, been an extensive amount of noncompliance. There were obviously flaws in the design of it.

The operations of the HIP show the need for a public service with the capacity and skills to deliver and regulate government programs.

This in-house knowledge and experience has been consistently eroded by 30 years of bipartisan support for outsourcing and privatisation. As the HIP reveals, what this results in is government departments that are little more than gutted shells whose only role is to dish out money to the market.

The HIP also shows the need for "red tape" regulations in workplace safety, and government departments with the resources and skills to properly police them. 

Courtesy:  ABC News


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