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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
18
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.
22
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