Wednesday, February 24, 2010

Subsidising failure

Cartoon89 While Australia’s insulation subsidy stimulunacy has already cost their taxpayers $2.5 billion, killed four people, set fire to more than 90 homes and left 1000 more with lethal faults in their ceilings -- and not incidentally left the career of environment minister Peter “How-Do-You-Sleep-While-the-Roofs-Are-Burning” Garrett dangling by a faulty wire – rumour has it that New Zealand’s own “Green New Deal” insulation-for-everyone lunacy has been or is about to be pulled.

It would be no surprise to discover the rumours are true.

While New Zealand’s failures have been nowhere near as dramatic as Australia’s high-profile disaster, the list of cock-ups created and fire risks caused by shoddy installation here is huge.  Around 26,000 NZ houses have taken advantage of the insulation subsidy scheme (budgeted to cost around one-third of a billion local dollars, plus cock-ups, over four years), but random inspections suggest all is not well. “Of 570 checked in the first round of audits, inspectors found problems with 359 - 17 of which were fire risks.”

Ouch!

But this should surely come as no surprise to anyone, because like everything bureaucratic the whole scheme was really set up to ensure failure.  At at time of rising unemployment installers leapt in to get their chance at the pots of taxpayers’ money being doled out, installers (sometimes) with no other qualification for the job  than being able to fill out a government form.  And instead of paying out half the sum before the job started and the other half once installation was completed (a fairly normal procedure for an installation job of such magnitude; ensuring that payment is only made once the quality of the installation has been established), this scheme required home-owners to pay installers upfront – paying installers they hadn’t yet seen and never before heard of for work they hadn’t yet done.

It was a scheme only a bureaucrat could have devised.

No wonder so many installers took such advantage of so many home-owners – and so many tax-payers – to simply crash, bash and grab that cash.  If the rumours of its demise are true, then the real winners here will be the taxpayers who have been paying to subsidise failure.

NB:  I hasten to add that not all installers should be tarred with this brush.  As one example: I was delighted to discover (when my mother told me she had signed up for the scheme) that despite the perverse incentives in place that encourage shoddiness and incompetence, the team who installed her own new ceiling and underfloor insulation was thorough, professional and courteous at all times–and their work when I inspected it was sound.  In fact, more than sound. And since it’s a pleasure to endorse good work, I can tell you that it was installed by the Auckland Central team from PinkFit, run by a chap called Gus Gilmour.  Thanks Gus.

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