Keen opportunists may have been disappointed by the abrupt discontinuation of the home insulation program, but they were not without other possibilities, a court has been told.
More than 140 insulation suppliers and businesses are suing the Australian government over the terminated home-insulation program in 2010, claiming that many were left in financial ruin after investing their life savings into a program that was virtually cancelled overnight.
But the commonwealth states that the businesses were not actually left “bereft” as many claim, and say that this allegation is dishonest. “The suggestion they were left bereft of any other options when the program ended, we say is disingenuous, because most of these businesses were doing other things,” Rachel Doyle SC told the court.
Exaggerating the Losses Incurred
“We would say they have benefited from the access to the profits that were available during the home insulation program,” Ms Doyle said. She stated that it’s sheer audacity for businesses to complain about the cancellation of a program like this.
“In a sense they’ve got a lot of front, one might say, coming and complaining about the termination of the scheme in circumstances where … (there was) access to a bonanza which would not otherwise have existed,” Ms Doyle said. The businesses are seeking around $150 million in damages from the commonwealth and say they suffered heavy losses when the program was shut down in 2010 for safety reasons.
Program Introduced as Part of Broader Stimulus Package
The $2.7 billion Home Insulation Program was set up in 2009 by the Rudd government as part of a broader scheme designed to stimulate the economy during the global financial crisis. The program promised to see over 2 million homes being insulated over a period of two years, compared to the 140,000 that were typically being installed in the same period of time. But the program was cut short in 2010 after the deaths of four workers in NSW and Queensland.
“Vulnerability, we say, is overstated by the plaintiffs when they suggest ‘oh, we had to make hay while the sun shone’,” Ms Doyle said. “Of course they wanted to do that. They didn’t have to do that, you can see of course why they would want to do that and financially why it would be beneficial to do that.” The barrister said that escalated demand did in fact stimulate the economy, and that a lot of this money went straight to insulation installers and new insulation businesses.
Some businesses were left with an abundance of Earthwool glasswool, Pink Batts and other stock on their hands, when demand for the material plummeted almost overnight. While the money invested in this stock was essentially frozen (insulation has an exceptionally long shelf life), the government is arguing that most of the companies could revert to other businesses they were already operating before the home insulation scheme was introduced. Eight years later, the market has stabilised and a booming construction sector appears to be having a good effect on the industry.