The Audit Office, ‘Pink Batts’, Venality and Perfidy

Tony Harris’s AFR column from a few weeks ago. (posted by Nicholas G on Tony’s account.)

The Australian National Audit Office last week reported on the government’s abandoned ceiling insulation stimulus program. It found that the environment department should have given earlier attention to mitigating identified risks, especially those concerning installer registration and compliance with quality and safety standards.

The ANAO did not base its conclusion on manslaughter allegations made against the Rudd government by the opposition. Nor did it attribute responsibility for the deaths of four installers to the minister, Peter Garrett, notwithstanding opposition claims that, if Garrett “had heeded the advice he was given, … that there would be fatalities in this program if nothing was done, people would be alive”.

ANAO was right not to blame government for these deaths. One fatality was caused by a pre-existing electrical fault; another electrocuted installer was employed by an electrician; a third death occurred when a contractor elected to work in oppressive heat. And while ANAO alleged that there is a “high level of risk involved in working in domestic roof spaces”, state governments impose few restrictions on workers engaged in the activity.

The Commonwealth was conscious of safety issues and required more of installers than most states. ANAO pointed out that, among other safety-related conditions, installers had to agree to employees holding a nationally recognised occupational health and safety certificate demonstrating that “the holder is competent to work safely in the construction industry”.

Nor did ANAO blame government for fires associated with the program, also a matter of opposition attacks. It noted that prior to the Commonwealth’s program there were “some 80 fire incidents per year being associated with insulation in existing buildings” and that about 65,000 to 70,000 existing dwellings were insulated each year. Fewer than 210 house fires have been linked to the nearly 1.25 million homes insulated under the Commonwealth’s program.

What then was ANAO’s evidence for the conclusion that the department “underestimated the level of risk involved in installing insulation in ceiling spaces by inexperienced and often untrained workers”? The report makes several important assertions – one concerned the high cost of the insulation program – for which no evidence was cited. But ANAO took its lead from the Commonwealth’s own actions: audit findings merely mirrored government actions to tighten the program’s requirements, and eventually abandon it, as problems materialised.

Early government decisions to accelerate the program made risk management difficult. Another cause of problems was a decision to alter arrangements from one where home owners paid installers – and were reimbursed – to one where the government remunerated installers directly. This relieved home owners of the need to ensure that installers met scheme conditions. The change might not have been crucial except for the response of installers: there was serious non-compliance with program requirements and material malfeasance. The government has so far identified around 4000 suspected frauds on the taxpayer.

ANAO also draws support for its findings from government surveys. A study of 13,808 completed jobs found that 29 per cent had minor or serious problems. But this range is imprecise, and as ANAO says, it is weak evidence because the survey was not wholly random. Results of two remediation programs also did not allow an accurate view of problems. As at August 1, there had been 25,540 inspections of foil installations, but ANAO only reported results for 1526. There have been 44,300 other inspections, again not randomly chosen, leading to 3215 rectifications. While ANAO did not have strong evidence for its conclusions, the government’s recent refusals to reveal results of its rectification work suggest it might be right.

The report offers important lessons. The first is that no department should rely on ministers to defend programs: Garrett was bludgeoned into silence by the opposition’s sensational manslaughter charges. The second is that line departments should not succumb to pressures from the Department of the Prime Minister and Cabinet: ANAO holds the environment department responsible for accepting conditions which undermined its capacity to manage risks. And departments should now know never to underestimate the public’s potential for venality and perfidy. Finally, the audit report suggests the only worthwhile risks for departments to take are those which do not eventuate.

4 thoughts on “The Audit Office, ‘Pink Batts’, Venality and Perfidy

  1. Possum’s extensive analysis of fire risk is here:

    [...] Before the program, the industry experienced around 1 fire per every 765 odd installations – or 1.3 fires per every 1000 installs.

    Under the insulation program, even though the number of total fires increased by 2.3 times, the number of installations increased by 18.7 times compared to what happened before the program. As a result, under the program the industry experienced 1 fire per every 6158 odd installs – or 0.16 fires per 1000 installs.

    That makes the insulation program around 8 times safer in terms of fire incidents compared to the state of the industry before the program. Even if we take the best absolute possible estimates of what went on before the program – say, 80 fires per year off 75 thousand installs – the program is still 7 times safer in terms of fire incidents than what occurred before the program. [...]

    The most remarkable thing about the episode was the government’s stunning ineptitude in answering its critics.

  2. Clearly both the claims about fire risk and deaths of contractors were Opposition furphies. Moreover equally clearly Mike M is right. It’s yet another example of the puzzling ineptitude of the Rudd/Gillard government in defending its own programs and policies from unfair or ignorant attack.

    However the level of waste and outright fraud certainly weren’t mere Opposition beatups. They were in significant part outcomes of poorly thought out government processes e.g. homeowners not having any “skin in the game”. Nevertheless, even there the government at least has the partial excuse that rapid implementation was the central imperative given that this was a short-term employment-generating measure designed to combat the GFC. A certain amount of waste and mismanagement was probably unavoidable, although it seems clear that some avoidable errors were also made. Nevertheless a compelling case can be made for the proposition that the amount saved to the budget bottom line (through lower unemployment rates and higher tax collections) from the insulation scheme makes the immediate costs of waste, fraud etc a mere drop in the ocean.

    I’ve never heard a government spokesperson cogently making the above points. Perhaps it would sound very defensive compared with a pseudo-humble mea culpa (or Garrett culpa), but surely that’s better than leaving people with the erroneous impression that Coalition claims about all this are unanswerably correct.

  3. Do you think if a representative of the Government had stood up and said “Y’know the home ceiling insulation scheme was actually okay” that the opposition and the media would have said “Oh well, we take it all back then”.

    It would have given them another round of manslaughter charges. What was needed was the media to do its job. It needed the *media* to look into the charges levelled at the government and hold the opposition to account for their misrepresentation.

    That’s not to say that the Government defended itself well but that that’s not the point. When the newspapers and TV stations let themselves get played so badly by the Australian it’s a bit rich for people to say “You didn’t defend yourself against us properly”.

  4. And while ANAO alleged that there is a “high level of risk involved in working in domestic roof spaces”, state governments impose few restrictions on workers engaged in the activity.

    Wouldn’t a domestic roof space be considered a confined space under the new australian standard?

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