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The Home Insulation Program: A Classic Case of Policy Failure?

Ahmed Hamdhan Chris Lewis

Adverse public reaction to the ill-fated Home Insulation Program (HIP) in Australia

continues regardless of the discontinuation of the program more than three years ago. In

late 2009, the Commonwealth Government came under immense pressure over safety and

compliance issues that resulted in the termination of the HIP. It was subsequently

estimated in 2010 that around $1 billion would be needed to address safety problems with

the flawed scheme, which included the death of four young installers. A more recent

estimate in October 2012 put the total cost of the programme, in terms of installation and

clean-up costs, at $2.15 billion (Sheenan, 2012).

Unsurprisingly, given the general view that this was a policy disaster, a number of

reviews of the HIP were undertaken: (i) a formal review of the HIP by Dr Allan Hawke,

which was commissioned by the Department of Prime Minister and Cabinet (Hawke,

2010); (ii) an inquiry into the Energy Efficient Homes Package by the Senate

Environment, Communications and the Arts Reference Committee (Senate, 2010); and

(iii) a performance audit conducted by the Commonwealth Auditor-General (2010).

These formal evaluations largely focused on the design, implementation and delivery of

the HIP, aiming to identify the causes, costs and consequences of the failure of the

program.

There have also been some scholarly analyses of HIP, including Dollery and Hovey

(2010), Kortt and Dollery (2012) and Lewis (2010 and 2012). In general, these findings

emphasise the failure in the design and implementation of the HIP. Indeed, in their

analysis of the economic aspect of the program, Dollery and Hovey (2010) argue that the

HIP represents a classic case of ‘government failure’. More specifically, Kortt and

Dollery (2012), building on the work of Dollery and Hovey, conclude that HIP could be

seen as a political, legislative, bureaucratic and enforcement failure. Similarly, in another

 

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evaluation of the program, Lewis (2010 and 2012) argues that the Rudd Government

failed to adhere to key measures and guidelines of policy planning and implementation

laid out in widely used texts on Australian public policy, such as, the Australian Policy

Handbook (Althaus et al., 2007) and Beyond the Policy Cycle: The Policy Process in

Australia (Colebatch, 2006). In sum, HIP is seen as a policy failure in both the formal

reviews and scholarly findings. In this context, it is unsurprising that the general public

perception of, and the media commentary on, the HIP sees the policy as a complete

failure; indeed, as a disaster.

This chapter revisits the case in a more systematic way, using the framework developed

by Marsh and McConnell which frames this collection. As such, we look at the process,

programmatic dimensions of success, to show that the characterisation of this policy as a

total disaster needs some unpacking. To this end, the chapter is divided into four sections:

the first section will provide a brief overview of the HIP. The second section will then

evaluate the HIP using the Marsh and McConnell framework and establish success and/or

failure in regard to the three dimensions. The final section will discuss some weaknesses

in the framework and thus suggest additional indicators to be incorporated into the

framework, as suggested by analysis of the HIP.

1) A Brief Overview of the Home Insulation Program

The HIP was an element of the Energy Efficiency Home Package, which was announced

by the (then) Prime Minister Kevin Rudd on 3 February 2009, as part of the Labor

Government’s $42 billion National Building and Jobs Plan (Hawke, 2010, p.1). The HIP

was launched as a direct response to the global financial crisis (GFC). Under the

guidance of the Department of Environment, Water, Heritage and Arts (DEWHA), the

main body responsible for the formulation and implementation of the program, the initial

budget allocated for the program was $2.7 billion, with a target of insulating 2.2 million

Australian homes. The program was designed to achieve two major objectives. Firstly, it

was an economic stimulus programme, to create jobs and support small businesses.

Secondly, it aimed to improve the energy efficiency of homes. Relatedly, it was meant to

 

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encourage the access of low-income households to the scheme and to support jobs for

low-skilled workers.

The program had three phases. Phase 1 ran from 3 February to 30 June 2009 and included

the early installation of insulation in homes. Phase 2 involved the main program

implementation and the rollout peaked during this period. Phase 2 started from 1 July

2009 and was planned to continue for two and a half years. However, due to safety and

compliance concerns, the program was discontinued on 19 February 2010. The closure of

HIP led to a third phase which involved the implementation of two safety remediation

programs: (i) the Foil Insulation Safety Program; and (ii) the Home Insulation Safety

Program.

During the implementation of phase 2, there was an important change to the program

which led to the installers being paid directly by the government with a rebate. This

contributed to the stimulus objective, because it increased the number of claims and

meant faster payments (Auditor-General, 2010). Regardless of the Programme’s

objectives, the devastating consequences which led to the discontinuation of the program

suggest that the program had no positive outcomes. To explore this, a systematic

evaluation of the HIP is necessary. Moreover, such evaluations will help policy learning

and improvement in future. Before proceeding to evaluate the HIP, it is important to

briefly discuss the elements of Marsh and McConnell’s framework that will be used

throughout this essay.

2) Evaluating the HIP using the Marsh and McConnell framework

i) The Process Dimension

The development of the program can be viewed as, at least partially, a process success

because the policy goals associated with the policy, and the instruments to achieve those

goals, were virtually unchanged as the legislation evolved. In addition, there was a

consultation process, thus conferring considerable legitimacy on the HIP. Finally, the

Programme, initially at least, had widespread support. Nevertheless, as we will see, it is

difficult to conclude that the program fully satisfied the criteria associated with process

 

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success, given the speed with which the legislation was introduced that meant the

consultation process was truncated and limited.

a) Preserving Policy Goal

The Government main policy goal was to use the HIP as a tool of economic stimulus in

response to the GFC. In addition, it saw the Programme as a way of establishing its

green credentials in the context of growing concerns about global warning. This major

policy goal and the HIP as a key policy instrument in achieving it was largely unaffected

by the policymaking process. As the Hawke review (2010) points out, the consultation

process did lead to changes in the Programme, but not in the safety area which proved to

be crucial. The problem was that, in order to forward the Government’s objectives

quickly, the consultation process was truncated, which, as we shall see, caused major

operational problems.

b) Conferring Legitimacy

This is the key aspect of the process dimension in this case. The development of the HIP

was based upon fairly extensive consultations with various stakeholders, which conferred

some legitimacy on the policy. According to the Auditor-General (2010, p.66), the

Department of Sustainability, Environment, Water, Population and Communities (DEWHA) held consultations between 3 February 2009 and 30 June 2009 with various

stakeholders, including manufacturers, construction/housing industry bodies, regulatory

authorities, State and Territory agencies responsible for energy efficiency, training

organisations and non-government welfare organisations. DEWHA also ran consultations

with Fair Trading and Consumer Affairs representatives from the States and Territories.

In particular, industry roundtables were held during the formulation process to discuss

program design and implementation of the HIP (Hawke 2010, p.3). During the

consultation period, both sides raised their concerns and various options were explored.

For instance, during the early roundtable meetings with the industry, DEWHA raised the

issue of industry’s capacity, if the demand for insulation increased. On the other hand,

industry and interest groups raised their concerns regarding the operation and

 

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implementation of HIP. In particular, they were worried about the potential safety issues

involved with the program.

These concerns were, to an extent, addressed during the design of the program guidelines

and of the training regime (Hawke, 2010). Further, DEWHA addressed the main

concerns of industry groups and the Department viewed the consultations as helpful in

shaping the details of the final design of the program (Auditor-General 2010, p.66). As

such, the development of the HIP, involving as it did significant consultation with

stakeholders, could, in Marsh and McConnell’s terms, be viewed, at first sight, as a

process success.

However, the consultation process was brief. It ran for a very short period of time, with

the policy formulated in just five months. The speedy design and implementation of the

HIP reflects important weaknesses in the policy design process, including minimal

consultations with some key stakeholders. The lack of consultation with important

stakeholders diminished DEWHA’s ability to formulate a more effective policy. In

particular, the safety issues that arose during the implementation partly resulted from the

deficiency in the program design, as policymakers were not fully aware of the significant

risks involved in such a program. As one example, Lewis (2010, 88) argues that the Rudd

Government should have taken more heed of concerns of the Construction, Forestry,

Mining and Energy Union who argued before the Programme was introduced that the

way the it was set up would encourage the use by installers of young, vulnerable, workers

with no experience in the construction industry, little if any training, and no knowledge of

safety procedures.

In the same vein, the Hawke Review noted that a lack of consultation with industry, state

and territory regulators and service delivery agencies meant that DEWHA was unaware

of many of the practical implementation risks (Hawke, 2010, p.62). Indeed, the states and

territories reported to the Hawke Review that DEWHA had sought minimal input from

 

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them during the development and implementation of the HIP, particular after the business

model was finalised (Hawke, 2010, p.17).

This failure to ensure sufficient consultations with the electrical industry and the relevant

State and Territory agencies during the program design resulted in DEWHA

underestimating the risks involved in the implementation of such a program (Auditor-

General, 2010, p.33). In fact, some industry players raised concerns as early as February

2009, including the National Electrical and Communications Association which warned

the Government that there was a significant risk of electrical equipment overheating if the

insulation was installed inappropriately (Senate, 2010, p.39). This lack of consultation

was particular significant, because, at the time, prior to the program, the insulation

industry was largely unregulated, which, obviously, increased the safety risks.

The problem of course was that the Government was in a hurry, given that the

Programme was seen as an important element of their economic stimulus package in

response to the GFC. In this context, as Lewis (2012, p.154) argues: “the (then) Rudd

Government’s determination to implement a policy speedily undermined any chance of

formulating a more balanced and effective policy approach”. Although DEWHA ran

consultations with various stakeholders, the consultations were inadequate and lack of

consultation with some key stakeholders, particularly those concerned about potential

safety issues, raises doubts about the legitimacy of the policy. Hence, it is difficult to

conclude that the program was a total process policy success. The policy was pushed

through quickly and the Government was seen as acting decisively, but, in this case more

speed hindered effective policy-making.

c) Building a Sustainable Coalition

The Government did consult and, in general terms, all stakeholders supported the

Programme. However, this support soon broke-up as operational problems emerged,

although it is probably fair to say that no coalition would have held together in the

context of the operational disasters which occurred. The key question of course is

 

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whether a longer consultation process, with more concern taken to respond to criticisms

about safety etc, would have meant both a stronger, more sustainable coalition in support

of the Programme and, relatedly, a better policy.

ii The Programmatic Dimension

Obviously, in many senses the policy was a programmatic failure, some would say a

disaster, but the picture is not so simple. In at least two ways, the HIP could be viewed as

a programmatic success. Firstly, the Programme achieved many of its objectives.

Secondly, the use of Medicare as a way of implementing the Programme proved

successful; hence, it could be seen as an operational success. Nevertheless, there were

significant unintended consequences, largely due to implementation failures, that caused

a great deal of harm to both households and installers. In addition, the implementation of

HIP resulted in a very inefficient use of resources, which can be viewed as an indicator of

programmatic failure.

a) Meeting Objectives and Producing Desired Outcomes

As we outlined earlier, the overall objectives of the HIP were to stimulate the Australian

economy in the context of the GFC and increase the energy efficiency of Australian

homes. In achieving the former, the focus was on supporting jobs and small businesses.

In particular, the Government wanted to ensure that low-income households had access to

the scheme and increase job opportunities for low-skilled workers.

The Programme achieved many of these objectives, producing some of the desired

outcomes. Indeed, the Hawke Review concluded that there were, ‘solid achievements

against the program objectives’, despite some safety, quality and compliance concerns

(Hawke, 2010, p.vii). So, by the time the program was closed on 19 February 2010,

around 1.2 million homes were insulated under the HIP (DCCEE). In addition, with

many lower-income households taking part in the program, household energy reduction

as a result of the HIP was expected to produce significant savings in future household

 

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energy bills (Hawke 2010, p.viii). In terms of employment, by the end of November

2009, over 10,000 installers had registered, employing thousands of largely low-skilled

workers. As noted by Hawke (2010, p.35), the major objective of supporting jobs in the

insulation industry was clearly met. Overall then, the HIP was successful in achieving

some of its intended outcomes in terms of energy savings and increased employment,

thus offering some evidence of programmatic success.

b) Ineffective Implementation: The problem of Unintended Negative Consequences

The implementation of HIP left a great deal to be desired, largely because the policy had

a series of unintended, and often un-anticipated, consequences that overshadowed its

solid achievements. Of course, many of these consequences resulted from the failure to

consider a number of issues in the policymaking process.

Obviously, the first, and most disturbing, unintended consequence of the program was the

tragic deaths of four young Australian installation workers (Dollery and Hovey, 2010,

p.35). Lewis (2010, p.92) points out that there had never previously been a case of

electrocution associated with installing foil before the implementation of HIP; so this

consequence was not easy to anticipate. However, while the use of plastic staples in

installation had been recommended in New Zealand since 2007 (Lewis, 2010, p.88),

metal fasteners were only banned from use in the HIP after November 2009, and plastic

staples made compulsory, after the first death from electrocution involving foil

insulation. In addition, one Queensland company (Titan Insulations) was fined $100,000

for unsafe work practices after another insulation worker (Michael Sweeney) was

electrocuted in February 2010. In this case, the magistrate emphasised that he was

imposing a fine, but no criminal conviction, because, while the company distributed

plastic staples to workers, it had not enforced the use of these staple. As such, Sweeney

and others had ignored the company’s instructions because it was faster to work with

metal ones (Flatley, 2011).

At the same time, while the HIP provided, indeed encouraged, work opportunities for

lower-income workers, the fact that these workers were almost inevitably inexperienced,

 

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and this was not monitored, nor were they trained, made them a significant safety risk.

So, when Marcus Wilson died during November 2009, after collapsing from heat

exhaustion when fitting insulation during the middle of a 40 degree Celsius day, an

inquest found that he had no experience, little training and was being paid just $100 cash

in hand (Bodkin, 2012a; Bodkin, 2012b).

Secondly, by the closure of the program, there were more than 200 fires related to the

HIP (Lewis, 2010, p.153). Indeed, a more recent estimate puts related fires at 224,

despite, Mark Dreyfus, the Parliamentary Secretary for Climate Change arguing that:

‘independent assessments demonstrate that the rate of fire incidents in homes with

(subsidised) insulation is now lower than the rate that existed prior to (the HIP) and

continues to decline (Bita, 2012). However, CSIRO analysis found that homes that were

insulated under the HIP had a fire rate, at least during the first 40 days after insulation,

more than three times the long-term average before the program was implemented

(Dowling, 2012).

Thirdly, the use of relatively unskilled operators/contractors, together with the abrupt end

to the HIP, caused considerable damage to some more reputable companies. While, after

the scheme was axed in 2010, the initial $15million compensation program paid

contractors up to $500,000 each to cover 15% of any stockpiled insulation products (Bita,

2012), by May 2012 39 companies had sought additional compensation under the

Compensation for Detriment Caused by Defective Administration scheme. This included

a $5 million claim from the Sydney-based Demand Group, which noted the impact of

untrained operators who took much of its trade and left the company with large volumes

of excess stock (Knaus, 2012). Similarly, during October 2012, the outgoing Chief

Executive of Australasia's largest building materials company, Fletcher Building,

criticised the Gillard Government for failing to compensate the insulation sector, given

that the HIP left the industry hundreds of millions of dollars out of pocket (Kitney,

2012a).

 

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Overall, the negative outcomes of the program include poor quality workmanship and

materials, bankruptcy of many installation firms and future risk of fires in many insulated

homes. Moreover, the jobs created were short-lived, due to the early closure of the

program (Auditor-General, 2010). With regard to the energy efficiency objective of the

HIP, the Auditor-General (2010, p.38) soon expressed doubts about whether the program

will achieve the energy efficiency targets. This is because insulations in several homes

have to be removed due to the safety risks and the potential fraudulently claimed

installations overestimated the number of insulated homes. The 2010 Intergenerational

Report estimate of 1.9 million households gaining insulation from the HIP was eventually

downgraded to 1.2 million, and projected energy savings from the HIP reduced from

2.5 Mt CO2-e by 2020 to now peak at 2.4 Mt CO2-e in 2011 before declining (DCCEE).

So, although many of the program objectives were achieved, the negative outcomes

resulting from operational/implementation problems that led to the closure of the HIP,

provide ample evidence of a failure in programmatic terms. At the same time, it is

important to note that many of the unintended negative consequences in

programmatic/operational terms resulted from process failures. In this case, the hurried

consultation process meant that some key stakeholders were hardly consulted, with the

result that important safety and compliance elements were not incorporated into the

design of the HIP. This meant that devastating consequences, such as fatalities and fire

accidents, occurred during the implementation of the policy, ensuring key programmatic

failures. In this case then, there are strong links between the process and programmatic

dimensions of the policy; failures in the programme design led to programmatic failures.

This use of Medicare to deliver key aspects of the Programme was widely regarded as an

operational success. So, the Hawke Review acknowledged that contracting out payments

to Medicare had ensured that high volumes of transactions were efficiently handled and

payments to installers were quick (Hawke, 2010, p.27). Moreover, the Hawke Review

regarded the contract with Medicare as an innovative, cross-government, approach to

policy implementation and recommended that a similar approach could be adopted in

future. More specifically, the Review asserted that the: “partnership with Medicare has

 

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proved highly successful and can be a model for the future where government programs

have a similar need for high transaction turnover and speedy and effective delivery”

(Hawke, 2010, p.viii). Within the context of the GFC, the efficient and quick payments to

installers ensured cash flow for businesses and, hence, facilitated the successful

implementation of the stimulus objective of the HIP. In this regard, the program was

implemented as per the objectives and can be viewed as a programmatic, more

specifically an operational, success.

On the other hand, there were significant operational failures associated with the HIP that

prevented the program fully achieving its objectives. The first and most important factor

was the limited capacity and ability of DEWHA, in terms of resources and experience, to

implement such a large-scale program. Indeed, this problem has been recognised in all

the formal reviews of the HIP. For instance, the Hawke Review notes that, before the

commencement of the program, DEWHA had little experience in implementing a

program of this size and nature (see also Dollery and Hovey, 2010, p.350; Macintosh,

Wilkinson and Denniss, 2010, p.210), particularly given its many other responsibilities

(Hawke, 2010, p.33).

Secondly, the limited timeframe for the implementation of the program negatively

impacted the successful operation of the HIP and prevented the program achieving its

aims. The Hawke Review, for instance, acknowledged that several problems occurred

during the implementation process as a result of the short timeframe. One particular

problem was the inadequate program delivery mechanism in place. The Review

recognised that the complexity of the HIP meant that it required innovative approaches to

program delivery mechanisms, which the short timeframe prevented the department

developing (Hawke, 2010, p.8). Overall, poor implementation and significant

implementation failures prevented the program from achieving its intended outcomes,

and in this way it can be viewed as a programmatic failure.

 

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c) An Efficient Use of Resources

In the most obvious sense, resources were wasted in the HIP. Indeed, in financial terms,

the program incurred millions of unwanted costs for the government in at least two

related ways. First, there were high levels of fraud and/or bad quality work carried out by

many operators in the industry. After the program was discontinued in February 2010,

some 4000 potential fraud cases were identified that year, with 100 cases under criminal

investigation (Auditor-General, 2010, p.29). Indeed, in June 2012, the Climate Change

Department called in a mercantile agent to collect debts of $21.8 million from falsely

claimed rebates, having recovered just $920,000 to that date (McGregor, 2012). At the

same time, by May 2012 the Environment Department sent 2035 “letters of demand”

asking contractors to repay the taxpayer subsidies they received for work found to be sub-

standard, overpriced or non-existent, with 57 of the poor, or criminal, contractors having

received taxpayer-funded industry assistance grants worth up to $500,000 (Bita, 2012).

The HIP even initially allowed some convicted criminals to benefit as installers, given

that there were minimal checks on those receiving public money. Examples included a

person who served seven years in prison for eight violent crimes after being convicted in

2000 and an arsonist who had torched a kebab shop for insurance money in 2002 (Lewis,

2010, 90).

Second, substantial public resources had to be spent addressing the shortcomings of the

HIP in terms of remediation costs, including safety and quality inspections, although the

amount was much less than the original estimate of around $1 billion (Lewis, 2010,

p.153). The Gillard Government committed to inspecting a minimum of 150,000 homes

in which batt insulation had been installed, and all homes installed with foil insulation

(Vasek, 2012), and, in May 2012, acknowledged that $273 million had been spent to

inspect, remove or repair dangerous insulation from one in every 17 Australian homes

fitted with free ceiling batts or foil lining under the HIP. While no non-foil insulation was

removed or replaced under the safety program, around 20% of 196,455 homes with non-

foil insulation (such as ceiling batts or foam) had ‘some form of rectification work carried

out’, while more than 30,000 homes with foil insulation had it removed or had electrical

safety switches installed (Bita, 2012). Indeed, an earlier report noted that more than $350

 

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million was spent fixing mistakes from the HIP, involving 73,669 households (Dowling,

2012).

The formal reviews of the program drew similar conclusions about the use of resources.

For instance, the Auditor-General (2010, p.27) concluded that, given the outcomes

achieved from the program, the HIP overall was costly, if we include the remedial costs.

Furthermore, the Senate (2010, p.87) inquiry report emphasised that the committee saw

the program outcome as a: “disastrous waste of more than a billion dollars of tax-payer's

money”.

One other point made by Dollery and Hovey (2010) is worth emphasising here. They

argue, as others do, that the HIP represented a case of wasteful delivery of a public

expenditure program, but, more interestingly, they suggest that alternative programs, such

as investment in local infrastructure projects, would have been more successful in

achieving the objective of fiscal stimulus.

So, the general picture is of operational failure and an inefficient use of resources.

However, there was one sense in which operation of the HIP was marked by an efficient

use of resources, and indeed may serve as a model for future programme delivery. As

part of the implementation of phase 2 of the program, DEWHA entered into a service

level agreement with Medicare Australia on June 2009 with the aim of supporting the

large-scale rollout in less than five months. Under this contract, Medicare was

responsible for the registration of installers and the financial management system of the

program, including processing payments for the installers (Auditor-General, 2010, p.23).

In fact, an earlier risk assessment by Minter Ellison had suggested that the DEWHA

systems might not be able to support the high volume of transactions anticipated for the

program and ensure rapid payments necessary if businesses were to have sufficient cash

flow to continue operating (Minter Ellison, 2009).

 

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iii) The Political Dimension

The HIP was political success in two limited ways. The government could claim a

political success because it passed the legislation with limited opposition, and, at the

same time, in doing so, it was seen as exercising effective political leadership. However,

the Programme was a political failure in two, more important, respects. It led to a

significant decline in government popularity in the opinion polls and, relatedly, to

widespread negative publicity for the Government, which severely damaged its image of

governing competence.

a) An Initial Political Success

Prasser (2010, p.276) argues that : “the more a government sets the tone and direction of

the policy debate and defines the underlying policy problem from its preferred set of

values and ideology, the greater its political success”. Certainly, as we saw, the

Government had full control over the HIP policy formulation process and the program

design reflected its views/preferences. Indeed, the HIP was initiated at the highest level

of the Government, with the (then) Prime Minister Mr Rudd, Deputy Prime Minister Ms

Gillard, Treasurer Mr Swan and Minister for Finance Mr Tanner all involved (Senate,

2010, p.87). At the same time, the Government faced no strong political opposition

during the formulation stage of the HIP, except for some safety concerns raised by the

electrical industry and the unions.

Prasser (2010, p.273) also argues that public and private endorsement of new policy

proposals is an indicator of political success. As is evident from the formal reviews of the

program, the policy received surprising level of acceptance from both households and the

installers. The demand for installation quickly surpassed expectations, following the full

program launch in July 2009, with a record level of household participation, peaking at

178,000 installations per month in November 2009 (Hawke, 2010, p.24). The popularity

of the program was so high that the scheme became the victim of its own popularity

(Trenwith, 2010). The success during the formulation process and the popularity of the

program to some degree contributed to the political success.

 

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Another indicator of political success, though one not recognised in Marsh and

McConnell’s (2010) framework, is the ability of the political leaders to craft the right

policy at the right time. As Prasser (2010, p.278) argues, a government needs to introduce

their policies at the right time, when the ‘events reinforces the policy’s appeal and its

need’. So, according to Prasser (2010, p.278), the leaders ability to identify the right

policy for the right time can be an indicator of political success.

In fact, the HIP was announced as a response to the GFC; so, it could be seen as the right

policy at the right time. The HIP, together with other stimulus packages, proved to be

successful in creating jobs and boosting the economy. Consequently, the Rudd

Government was praised and received positive public and media commentary for its

effective policy responses to the GFC. For example, an OECD report in September 2009

stated that the overall stimulus package of the Rudd Government was one of the best

policies in the developed world for creating jobs during the GFC (cited in Colebatch,

2009). Furthermore, The Australian, not a supporter of the Rudd Government, quoted the

US economist and the Nobel laureate Joseph Stiglitz as saying: “Labor did a fantastic job

of saving Australia from the global economic crisis” (The Australian, 2010). Overall

then, many observers suugest that Government’s policies, including the HIP, ensured that

Australia was less affected by the GFC than other countries (Wettenhall, 2010); so, in this

context, the HIP could be viewed as demonstrating effective political leadership.

b) A Political Disaster

Nevertheless, the political costs of the HIP very significantly outweighed the positive

benefits the program had for the Rudd Government. According to Macintosh et al. (2010,

p.210), the “HIP (was) the most disastrous and politically damaging” policy introduced

by the Rudd Government. The HIP was a political failure in a number of ways. Firstly,

the disastrous programmatic consequences of the program discussed above attracted

extensive media attention and consequently generated damaging publicity for the

Government. Moreover, it was the media headlines that brought public attention to the

 

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problems of the HIP and public outrage led to the closure of the program in February

2010.

Extensive media attention began to be paid to the HIP in August 2009. The initial issues

that the coverage highlighted were the low quality of imported insulation materials and

allegations of installer rorting. However, later reports caused even more controversy, with

attention turned particularly to the tragic deaths of four young Australians during the

installation; although there were also concerns about the safety of installers and

householders and the lack of training for the installers (Auditor-General, 2010, p.39).

Furthermore, as Macintosh et al. (2010, p.211) emphasise, the political disaster of HIP

was compounded because the Opposition used the media coverage to argue that the

problems with the HIP reflected a broader incompetence in the Rudd Government.

As a consequence of immense public dissatisfaction and Opposition criticism, Peter

Garret, the then Environment Minister, was demoted and a new Department was created

with the responsibility for energy efficiency (Macintosh et al., 2010). The political fallout

from the program failures also reverberated more broadly within the Labor Party and this

was apparent when Gillard, soon after she replaced Rudd as Prime Minister, referred to

the insulation program as ‘an absolute mess’ (Karvelas and Franklin, 2010).

The significant drop in government popularity following the bungled home insulation

program was another indicator of political failure in this case. For instance, a Sun

Herald/Taverner poll taken in New South Wales a day before Garrett was demoted in

February 2010 showed the Coalition level-pegging with the Labour on a two-party-

preferred basis. The poll indicated that support for Labor had dropped almost three

percentage points to 50 per cent from their electing-winning 52.7 per cent in 2007 (The

West Australian, 2010, Peatling, 2010). Moreover, in his response to the poll results,

Rudd conceded that his Government deserved ‘whacking’ in the polls due to the recent

events, referring particularly to the implementation mess of the HIP (The Sydney

Morning Herald, 2010).

 

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Nationwide polls during the same period showed similar results. The Newspoll data

indicates that the approval ratings of the Prime Minister (Rudd) fell from 61% in August

2009, to 50% in February 2010; a drop of more than 10 percentage points in just six

months. Likewise, the approval ratings for the Labor fell from 58% in August 2009, to

53% in February 2010, a decline of 5 percentage points (Aulich, 2010, p.4). As such,

some observers argue that the implementation failures of programs such as the HIP

significantly contributed to the downfall of Rudd as the Prime Minister in June 2010

(Wettenhall, 2011, p.83).

Overall, the negative consequences from the HIP caused immense political damage to the

Rudd Government.

Revisiting the Marsh and McConnell framework

One of the purposes of this edited volume is to review the utility of Marsh and

McConnell’s (2010a) heuristic. This case study suggests a number of weaknesses, both in

this framework and McConnell’s development of it, which need to be addressed. Firstly,

the framework does sufficiently recognise that policies can change during the

implementation stage. For instance, the HIP underwent considerable changes during its

implementation designed to address various safety and quality concerns. In addition, the

Auditor-General (2010, p.22) identified changes: “to installer competencies and training

requirements, a reduction in the rebate amount, and the implementation of a compliance

and audit framework”. These changes to the program, particularly the increased emphasis

on the safety and compliance issues were important, and indeed might, in all likelihood

would, have to greater programmatic success. As such, we need to recognise that changes

to a program can play an important role in the success, or otherwise, of the final policy.

However, in this case, of course, the damage had already been done. The four deaths cast

the Programme in a negative light from which there was no way back.

Secondly, the Marsh and McConnell (2010a) framework pays insufficient detailed

attention to the policy instruments associated with particular policies, although previous

 

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studies have shown that successful policies require good policy instruments which are

both coherent and consistent with the program objectives (see for example, Howlett,

2009). At the same time, a number of scholars have argued that more effective, evidence-

based policymaking could minimise ‘unintended consequences’, so resulting in more

successful policies (Chalmers, 2005, Banks, 2009). Most of problems the HIP

encountered were due to incidental and unpredictable ‘unintended consequences’, which

would have been preventable if policymakers had conducted more research into the

question of what policy instruments would be most appropriate before pushing ahead

with the policy.

In this vein, the Auditor-General’s Report (2010, p.32) emphasised that limited research,

and consequently insufficient information, led DEWHA to an inadequate risk assessment,

that resulted in safety problems and quality concerns. This Report also suggests that the

design of the Program had: ‘implicit tension between the stimulus and energy efficiency

objectives’ (Auditor-General, 2010, p.102). Certainly, the ineffective implementation of

the Programme, which resulted in large part from the inadequacy of the policy

instruments used, significantly contributed to the failure of the HIP. This is an area in

which the Marsh and McConnell framework could be enhanced.

Thirdly, the case shows the difficulties of locating particular policies on McConnell’s

success/failure continuum (see above page xx). The HIP meets many of the

characteristics of what McConnell terms ‘conflicted success’. There were mixed results,

with some successes, but these were accompanied by unexpected and controversial

problems. As such, the policy achieved some of intended outcomes, but this was more

than counterbalanced by unwanted results, generating substantial controversy. In

addition, the goals that were achieved were offset by high profile examples of wastage

and in efficiency. However, it is difficult to conclude that the policy overall was anything

other than a failure, close to a disaster. No matter what was achieved, such achieves were

overwhelmed by the operational and political failures. Deaths from Government policy

failures don’t play well.

 

  19  

Conclusion

The Rudd government’s HIP is usually seen as a complete failure. However, that is an

oversimplification. By utilising Marsh and McConnell’s framework, we have identified a

number of ways in which the policy was successful in process, programmatic and

political terms. The HIP was successful in process dimension to the extent that it

followed a legitimate process, consulting major stakeholders and discussing possible

concerns. However, the consultation was inadequate and, in particular, concerns from the

electricity industry about the safety of the program were not addressed during its

formulation. In essence, the case reveals a tension between the Government’s need to

show it was responding to the GFC in a strong and decisive manner and the fact that

effective policy usually involves extensive consultation to improve both the policy and

associated policy instruments. This raises a temporal dimension which Marsh and

McConnell discuss as a ‘complexity factor.’ Governments often work with a much

shorter time-frame than is required for good policymaking.

Most observers suggest that the HIP was a programmatic disaster. However, again this is

an oversimplification. There were solid achievements in terms of the program objectives.

The stimulus component of the HIP was successful in creating jobs and supporting

businesses during the economic crisis. In addition, the contract with Medicare was a great

success in facilitating the implementation of the program; indeed, it has been seen as a

model which could be utilised in future. Nevertheless, there were many unintended

consequences of the program that had devastating impact on many people, indeed 4

installers died, and the government, who lost significant political capital. As such, it was

clearly, overall, a programmatic failure.

One other point is worth re-emphasising here. The Programme was significantly modified

in response to initial problems and these modifications would have significantly

improved its delivery. In other circumstances, these changes might have been seen as

marking the natural evolution of a policy. Certainly, many would argue that the

continuation of the Programme, or one like it, would have had clear benefits. Indeed, in

 

  20  

January 2012, a report by the Insulation Council of Australia and New Zealand argued

that households could save an extra $1.5 billion in heating and cooling costs, and carbon

emissions could be cut by 3.4 million tonnes by 2020, if the retrofitting of ceiling

insulation were again included in new clean energy programs (Kitney, 2012b). However,

the programmatic failures, particularly the 4 deaths, were so extreme that there was no

chance that the policy would be allowed to evolve in a more normal way.

The policy was a success politically in the short-term, because the Government was seen

as responding decisively to a problem, the need to stimulate the economy in the face of

the GFC, in a way which benefitted many in the community. However, once the

installation problems began to emerge it soon became a political millstone, which led to

the demotion of one Minister and a significant loss of political capital for the Prime

Minister and the Government.

As we saw in the introduction to this volume, Rutter, Marshall and Sims (2012) offer a

number of factors which they argue make ‘policy success’ more likely. In essence, the

key theme of their argument is that good policy takes time; you need time to consult

widely, to undertake a rigorous analysis which is evidence-based and to develop new

policy instruments, where that is appropriate. In producing their list of factors that

enhance the chance of success, they focus on six cases, most of which involve substantial

policies which were developed over a significant period (for example, Devolution to

Scotland and Privatisation), and thus involved extensive consultation and a more

thorough analysis of evidence. Of course, this was not true in the case of the HIP. The

Programme was a ‘quick fix’ to an urgent problem; the Government need a Programme

which would stimulate the economy and could be rolled out quickly. The problem of

course is that many, too many, policies are of this type in contemporary policymaking.

In our view, utilising the Marsh and McConnell framework allow for a more

sophisticated assessment of the ‘success’ or ‘failure of the House Insulation Progress,

because it clearly indicates that to see it just as a policy disaster or ‘fiasco’ is an

oversimplification. Our analysis identifies both success and failure in relation to the three

 

  21  

dimensions identified in the Marsh and McConnell heuristic. In essence, what this case

indicates, and this is a point which Marsh and McConnell emphasise, is that often

policymakers develop policy within a timescale which is too truncated for the collection

of the research evidence, and the undertaking of consultation, conducive for effective

policymaking. The promotion of home insulation for more Australian houses did have

greater economic and environmental potential, but any effective program was unlikely to

be achieved in the 2.5 year time-frame set by the Rudd Labor Government which

overrode widespread and legitimate concerns expressed by both government and relevant

non-governmental players.

 

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