Tuesday, February 23, 2010

How can he sleep when the roofs are burning

Who couldn't see this coming?

Peter Garrett, former singer for band Midnight Oil, former member of the far-left Nuclear Disarmament Party, now committed Christian, family man and Australian Labor Party MP for Kingsford Smith, New South Wales and Minister for the Environment, Heritage and the Arts in Australia, has presided over one of the most monumental disasters in recent Australian Federal Government history.

The blame, of course, is not just his. There is a line of bureaurats who should be rendered unemployable as well, but the story is one of how much government can screw up with other people's money.

It started with a package that may sound familiar. A plan to use taxpayers' money to subsidise the insulation of homes of those who couldn't be arsed paying for it themselves. Garrett proudly launched the plan in June 2009 with this press release saying "From today, householders can start shopping around and working out which registered installer and type of insulation is right for them"

In essence, the taxpayer would be forced to pay the value of insulating a home up to A$1,600, and a whole series of government approved installers were appointed to undertake the scheme.

In addition:

"As well as the ceiling insulation offer for homeowners, there is also insulation assistance of up to $1,000 available for renters and landlords. It is expected around 2.9 million households Australia-wide will benefit from these insulation offers.

The Energy Efficient Homes Package also provides a rebate of $1,600 to help eligible home-owners, landlords or tenants replace their electric storage hot water systems with solar or heat pump hot water systems."

The motivation was to "create jobs" (by taking money out of the hands of some and handing it to the insulation industry) and to contribute to Australia's climate change objectives.

The cost was estimated at A$4 billion, so we are talking A$200 per Australian!

The result?

The Australian reports around a million homes have been insulated, of which 160,000 have apparently "shoddy ceiling batts", 80,000 homes have "potentially dangerous insulation", 1,000 roofs have been "electrified", 93 houses have caught fire and 4 deaths have resulted.

Despite extensive questioning, the Australian Federal Government doesn't know which homes are at risk, how it is going to undertake a risk assessment or how it will fix it.

The scheme has been terminated as of last Friday.

The Sydney Morning Herald reports Aussie PM Kevin Rudd has taken ultimate responsibility, indicating Garrett wont be a sacrificial lamb. Interesting given it is election year in Australia.

Why should all this happen?

Well the incentives were all wrong.

For starters, those who take other people's money don't take the same care with it as those whose it was the first place. Those who set up this scheme knew none of them would ever have any financial responsibility for the failure.

Secondly, those who installed the insulation and the hot water systems also knew it was a case of install, then claim. They knew their work wouldn't be inspected, the customer wasn't THAT careful since it was being installed for free and if there was a need to take a short-cut, they would still be paid.

Thirdly, the home owners whose homes are affected, having no financial relationship with the installer, had little leverage after the fact.

The bottom line is that if home owners get a financial advantage from insulation and improving heating/air conditioning systems, they can make the judgment themselves about spending money on it. Why all taxpayers, including those who already spent their money on such improvements, and those who don't own homes, should subsidise those who don't, is astonishing.

It is the sort of collective groupspeak that claims "we will save" a fortune if everyone does it that blinds public policy to what is simply a matter of private benefit. I save nothing if my neighbour saves money on heating or air conditioning, it is of no benefit to me. If I asked my neighbour to help me pay for insulation because it would save my power bills, and might even save costs of health care, the neighbour would rightfully tell me to leave, politely.

The Sydney Morning Herald reports the result is that the insulation industry is in crisis. This, of course, serves them right for trusting government and wanting to benefit off the back of taxpayers rather than customers.

"Several companies have been running their factories 24 hours a day, seven days a week for months, creating a huge glut of batts that are now largely unwanted in the wake of the rebate scheme being axed"

Tough, when you deal with politicians then sometimes you pay the price. Taxpayers had no choice to pay for you being a party to this filthy little arrangement, now you pay. You no longer have nanny state to pay your bills, and you've screwed things up so badly that domestic private consumers don't want to touch it. How sad, but now an opportunity for NZ installers to source some cheap stock?

"Fletcher Insulation makes about 40 per cent of Australia's insulation, and managing director David Isaacs said he expected 8000 jobs to be lost from the industry."

Nice own goal there for both the industry and the government. Nice job creator Labor. Sad for those losing their jobs, but how many of them thought the Labor Party would look after them?

How many will still, like sheeple, tick Labor this year?



Excellent piece there.
Andrew Bolt has a nice column on the subject too.

KG said...

Great post! Socialism, consequences, costs.....
But the sheeple still will not make the connections.