Institutions, interactions and insulation: The Home Insulation Program Australia 2009-2010
Garth Britton Paper submitted to the panel “Balancing entrepreneurship and risk management in decision making on policy initiatives: dealing with uncertainties” at 16th Annual Conference of the International Research Society for Public Management IRSPM XVI, 11-13 April 2012 Rome, Italy Please address correspondence to: Dr. Garth Britton P.O. Box 3495 Manuka, ACT, 2603 Australia Phone: +61 2 6161 0556 E‐mail:
[email protected]
Introduction This paper is the third in a series looking at how large public programs fail, particularly where, in retrospect, it seems obvious that failure could have been avoided. The first paper in the series (Britton, 2010) suggested that risks that should have been clearly visible to all the major actors had been ‘externalised’ and gone unmanaged because of the way the various institutions related, or failed to relate, and allocated roles between themselves. The second paper (Britton, 2011) suggested that one of the mechanisms by which public service organisations might mitigate risk could be to engage in their own right in activity that is in some respects creative or entrepreneurial, rather than acting solely or reactively at the bidding of their elected political masters. This paper aims to extend and refine the ideas presented in the two previous papers by comparing and contrasting the earlier work with another case of what is perceived as a major failure in government policy. The Home Insulation Program (HIP) was announced on 3 February 2009, as a major element of the AUD 3.9 billion Energy Efficient Homes Package (EEHP), which itself formed part of the AUD 42 billion Nation Building and Jobs Plan, a sweeping array of initiatives designed to stimulate the economy in the aftermath of the financial crisis of late 2008 (Auditor‐General, 2010, pp. 19‐20). Originally budgeted at AUD 2.87 billion, later reduced to AUD 2.45 billion (p. 93), the program was to insulate 2.2 million homes1 (Hawke, 2010, p. vii). over 2 ½ years (Auditor‐General, 2010, p. 20). As well as creating jobs and encouraging small business activity, the HIP was intended to improve the energy efficiency of homes, so reducing greenhouse gas emissions and the need for energy investment. Only a few weeks after the main phase of its implementation began in July 2009, significant concerns began to emerge about fraud and then safety in the delivery of the program. By the time the HIP was closed down on 19 February 20102, it had been linked with 4 fatalities and 87 house fires (Australian Financial Review 23/2/10), a number which was to continue to grow in following months. At the date of termination, AUD 1.55 billion3 had been spent to insulate 1.2 million homes (Auditor‐General, 2010, pp. 45‐46); however, the costs of remediation programs and industry support for companies affected by the closure of the program, estimated at AUD 784 million (p. 93) were expected to consume almost all available remaining funds, even though no more insulation was to be installed under the program. The failure of the program led directly to the demotion of the responsible Minister and contributed to a disastrous decline in credibility and popularity of the then Prime Minister in the first half of an election year (Macintosh, Wilkinson, & Denniss, 2010, p. 211). It may be, in this context, that, along with several other policy reversals and perceived mishandled responses, that it also contributed to the Prime Minister Rudd’s spectacular sacking by his own party just prior to the election and his replacement by the current Prime Minister, Julia Gillard.
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There was also a companion program, the Low Emissions Plan for Renters, intended to encourage the installation of insulation in 500,000 rental homes. This plan was dropped in August 2009, due to low uptake. 2 The HIP was terminated on 19 February 2010, but was to have been replaced from 1 July 2010 by the Renewable Energy Bonus Scheme (REBS). Following the Review of the Administration of the Home Insulation Program by Dr Allan Hawke, received in April 2010, the government decided not to proceed with REBS. 3 AUD 103 million in the first Phase, which ran to 30 June 2009, and AUD 1.45 billion in Phase 2, which ran until termination.
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The data on which this paper is based encompasses all press articles retrieved from the Factiva database mentioning the program4 that were published between the announcement of HIP in February 2009 and June 2010, 4 ½ months after its closure (some 3000 pages of articles5), as well as the Review of the Administration of the Home Insulation Program commissioned by the government from Dr. Allan Hawke and delivered on 2 April 2010 (Hawke, 2010) and the Audit Report No 12 2010‐ 11 on the program submitted to Parliament by the Australian National Audit Office (ANAO) on 15 October (Auditor‐General, 2010)6. It does not cover the progress of the remediation programs which followed the HIP. Data was analysed using a grounded theory methodology with the assistance of the qualitative data analysis package Atlas.ti 6.2.
The Home Insulation Program The HIP was launched with high ambition and a measure of confidence in difficult times. In the words of the responsible Minister, rock‐star turned politician Peter Garrett in February 2009, ‘This is the most exciting, ambitious energy efficiency program that we will ever see and it’s open for business (Lateline 23/3/11).’ Australia had hitherto had one of the lowest rates of household insulation in the developed world ‐ 40% of households either did not have or didn’t know if they had insulation (Hawke, 2010, p. 23). With immediate effect, the HIP offered rebates of up to AUD 1600 per home to homeowner‐occupiers who installed insulation in homes built prior to 2003 and which did not have insulation above negligible effectiveness (Auditor‐General, 2010, p. 45)7. The level of the rebate had been set to completely cover the cost of ceiling insulation in most homes (Hawke, 2010, p. xi). Hence, the HIP effectively offered insulation ‘free’ for homeowners. Such a possibility had been mooted for some time. On the one hand, there were significant environmental attractions to increasing household energy efficiency, at a time when concerns about the effects of greenhouse gas emissions on climate were at their peak. Although then Prime Minister Kevin Rudd’s rather florid description of climate change as ‘the greatest moral challenge of our time’ had been the subject of some ridicule, very few on either side of politics were willing to deny its importance either as a political issue as a policy challenge. There were also economic attractions – rising energy consumption and a pressing need for investment in energy production and distribution was putting pressure on energy prices and affecting both household and government budgets. The concept of a subsidy on insulation had been discussed in the last year of the government of previous Prime Minister John Howard, at the instigation of the then Environment Minister, Malcolm Turnbull (Sydney Morning Herald 23/5/09). Although it had not been pursued, reportedly having been rather contemptuously dismissed as too expensive by then Treasurer Peter Costello, the ascension of 4
As represented by the results of a search using the term “‘home insulation’ OR ‘energy efficient home*’” It is to be noted that not all these articles were specifically about the HIP – particularly towards the end they were chiefly references to the program in other contexts, always as an example of failure or incompetence. The coverage of the program continued for some months along these lines, as well as reporting on the progress of the remediation programs, but added little new information. 6 There was also a Senate Inquiry held into the EEHP tabled on 15 July 2010. However, this has not been used since it was widely reported in the press and appears to contain mainly repetitions of points which were already being made by others. Furthermore, its recommendations were more to do with remediation activities rather than addressing the aim of this paper, to develop a deeper understanding of what occurred in the program itself. 7 Homes built after this date were not eligible, since building code modifications in 2003 meant that they no longer met the negligible effectiveness requirement (Canberra Times 14/2/10). 5
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Turnbull to leadership of the Liberal Party after the defeat of the Howard government, and his staunch support for action on climate change, meant that the principle of an insulation subsidy was not politically much contested. In fact, in a speech on 24 January 2009, only a few days before the HIP was announced, Turnbull had described insulation as ‘probably the single biggest opportunity for straightforward, easy gains in energy efficiency (Sydney Morning Herald, 23/5/09).’ The concept of subsidising the installation of insulation in the existing housing stock had been examined by the Department of the Environment, Water, Heritage and the Arts (DEWHA) in the months following the election of the Rudd government in late 2007 and proposed for budget consideration in 2008, but rejected as being too expensive (Sydney Morning Herald, 23/5/2009). Nevertheless, the idea suddenly gained in attractiveness when two powerful central agencies, the Department of Prime Minister and Cabinet (PM&C) and Treasury8 were searching for ways to quickly stimulate the economy following the financial crisis in late 2008. It was especially attractive as a stimulus measure because there was significant latent demand for insulation, particularly in lower income households that were most likely to be hit by the economic downturn, and also because low‐ skilled workers were particularly at risk from the crisis and could quickly be employed at installing insulation (Hawke, 2010, pp. vi‐vii). What, when DEWHA proposed it, had probably been seen as a good little idea for a slow budget year, suddenly became part of a major effort to save the nation from economic disaster. DEWHA was a relatively small department, mainly involved in policy development and with little experience of large‐scale service delivery (Hawke, 2010, p. 33). The EEHP, including the HIP, as well as a large Green Loans program and other energy efficiency programs, were initially managed by a single branch of the Renewables and Energy Efficiency Division (REED) within DEWHA (p. 12). REED reported to a Deputy Secretary who also had responsibility for the Antarctic Division, the Marine Division, Australian Government Land and Coasts Division and Parks Australia, and was involved in three major strategic policy reviews related to a proposed carbon pollution reduction scheme (p. 59). In the words of the ANAO, ‘The demands placed on those at the branch and division head levels to deal with a wide range of issues under tight timeframes were unreasonable (Auditor‐General, 2010, p. 97).’ There are a number of indications that DEWHA had expressed concerns about their capacity to deliver the HIP (and the EEHP more broadly). Prior to the announcement of the program, they had favoured a roll out over 5 years rather than 2 ½ (p. 32). However, this was found to be inconsistent with the priority stimulus objectives and DEWHA were over‐ridden9. There were also well‐established concerns ‘related to IT system capability, accommodation, recruitment/training and challenges and serious backlogs with existing programs. …the picture was one of a division already seriously stretched in terms of its capacity to deliver (p. 69).’
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PM&C and Treasury are two of the three ‘central agencies’ of the Commonwealth government (the other being the Department of Finance and Deregulation). Both are senior agencies with cross‐government responsibilities, with the Secretary of PM&C having important leadership roles across the Australian Public Service. PM&C’s role in particular has been evolving over recent years ‘…assuming a stronger role in driving policy development and ensuring delivery of high‐priority government initiatives (Auditor‐General, p. 86). ’ 9 It is not possible to identify from the public data used for this paper precisely where the decision not to accept a five‐year rollout was taken. However, it seems quite clear that, in addition to the omnipresent statements of the Prime Minister at the time about the urgency and importance of the stimulus programs, a specific mechanism for enforcing the stimulus goals had been established, in the form of the Office of the Coordinator General (OCG ‐ see below) . Whether it explicitly took this decision cannot be known.
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In the first phase of the HIP, which began when the program was announced, homeowners arranged the installation of insulation with an installer of their choice, after obtaining two quotes, then claimed the rebate back from DEWHA. It is not known how much warning DEWHA received of the announcement of the EEHP, but they do not appear to have had time to develop any specific systems to handle rebate claims that began to arrive under the HIP from 1 March, 2009. It was not until 26 February, 2009 (Auditor‐General, 2010, p. 198) that they published the first program guidelines and they did not begin processing rebates for payment under the scheme until late March 2009, using a hastily established manual process based on spread sheets. By this stage, there was already a backlog of 2000 claims. By the end of May, the backlog had ballooned to 16000 claims and Departmental staff engaged in this task had grown from 22 to 45 (pp. 59‐60). The insulation industry was largely unregulated at the time the HIP was being developed (Auditor‐ General, 2010, p. 33). What regulation did exist was the responsibility of State and Territory governments. In only one state (South Australia) was it necessary to have a license to install insulation, and no specific training was required (Hawke, 2010, p. 35). The insulation manufacturing industry was also highly fragmented with ‘at least four rival insulation manufacturing associations – with a history of mutual distrust ‐ … each pushing competing product (Australian Financial Review 26/3/10)’. The main form of insulation used in Australia was the fibreglass batt, which was locally produced by two companies (New Zealand company Fletcher and CSR‐owned Bradford Insulation). These two companies held a market share of some 75% nationally, and had established the Insulation Council of Australia and New Zealand (ICANZ), which had been strongly involved in lobbying for the establishment of subsidised insulation schemes (Australian, 11/3/10). Other forms of insulation did, however, exist, each with their own industry association; aluminium foil insulation was particularly strong in Queensland. Disputes, which had occurred between the different manufacturing groups in the past, had chiefly been around relative safety claims and what were seen as attempts by ICANZ to skew government standards and programs in favour of fibreglass batts (Australian Financial Review 26/3/10). Prior to the inception of the HIP, an estimated 65 to 75,000 installations of insulation were being performed each year by about 200 businesses around Australia. Demand was expected to increase to 90,000 installations a month under the HIP (Auditor‐General, 2010, pp. 65‐66), a level which all parties recognised would cause major changes in the industry (p. 28). DEWHA, being largely unfamiliar with the industry, had commenced consultations with insulation industry bodies and training organisations soon after the HIP was announced. State and Territory agencies were also consulted. DEWHA had been informed that the manufacturing industry could expand by some 40 per cent but this was still well short of the level required and it was already clear to senior ministers in early 2009 that imports would be used to address the increased requirements (p. 66). It was also specifically pointed out by State and Territory authorities that the increased demand would increase the risk of poor installation by unskilled labour (p. 88)and that this might lead to electrical and fire safety issues. As one of the responses to these concerns, DEWHA initiated the development of an insulation specific unit of competency within the national training framework(p. 110). This was in place by the launch of Phase 2 on 1 July 2009. Unfortunately, however, involvement of the electrical industry in this process was limited. Neither had the electrical trades bodies been engaged in stakeholder consultations (Auditor‐General, 2010, p. 111), because they were not considered part of the insulation industry (p. 108). Some unsolicited 4
warnings had nevertheless been made by these bodies – in particular, the National Electrical and Communications Association had written to the Minister in March 2009 warning that laying insulation over existing electrical installations, posed significant risks (Australian Financial Review 11/2/10). In parallel to the challenges of implementing Phase 1 of the HIP, DEWHA had the task of designing the much more demanding second phase of the programme, due to start 4 months after its announcement. DEWHA’s own assessment at the time was that it would take 6 months to be ready (Auditor‐General, 2010, p. 68). In Phase 2, payments were to go directly to the installer, a change which, it was hoped, would increase uptake of the program and ensure quicker transfer of stimulus funds into the market. Initially, it had been intended that DEWHA contract with large national and regional insulation suppliers around the country, who would deal direct with householders and invoice DEWHA on completion of installations (p. 69). However, there were fears that DEWHA might not be able to arrange the necessary procurement in the time available and that this model might engage the legal responsibility of the Commonwealth for any accidents (pp. 73‐74). Because of these concerns, the decision was taken in April 2009 to design the program around householders contracting direct with installers, who would claim the rebate direct from the government. It was also felt that this approach would maximise the job creation effect of the programme, since it was expected that many new installation businesses would be established to take advantage of the program (Hawke, 2010, p. xiv). Under the new business model, installers would simply have to register with the government to start to offer work under the scheme, then be able to claim their rebates direct from DEWHA on completion. Medicare Australia, the service deliverer for the national health insurance system, was retained to provide the necessary high volume transaction systems and controls and enable both registration and claims to be done on‐line (Auditor‐General, 2010, p. 28). In order to manage the project a Project Control Group (PCG) was set up in April (Hawke, 2010, p. 3). It was chaired by a Deputy Secretary from DEWHA, with members from DEWHA; the Office of the Coordinator General (OCG – part of PM&C); Medicare Australia and other agencies as appropriate from time to time (Auditor‐General, 2010, p. 81). Membership of the OCG was significant, since it had been given the role of ensuring the timely delivery and overall coordination of the full range of stimulus initiatives across government. The OCG also centralised communication to the Prime Minister and Cabinet for this and other stimulus programs; all formal correspondence, even from the responsible Minister, was to be passed through the OCG (p. 87). Although the biggest concern during the design phase appeared to be that the program would not generate sufficient interest (Auditor‐General, 2010, p. 91), early in its development DEWHA commissioned a risk assessment by an external consultant. The resulting advice was that proposed management plans ‘would appropriately mitigate all but six risks to medium or low (Hawke, 2010, p. 32)’. The six unmitigated risks were that: • • • •
procurement would not be completed by 1 July 2009; the program could not be developed or delivered in a controlled way; inadequate controls would allow fraudulent or inappropriate behaviours the internal capacity did not exist to develop, staff, control and deliver the program on time;
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• •
there was potential political fallout from failures in process, system and project deliverables; and that the regulatory framework would not adequately support the programs goals.
It is also particularly important to note that this external risk assessment was based on the superseded regional outsourced delivery model, not the final ‘direct to installer’ business model (Auditor‐General, 2010, p. 71). Although the change of business model addressed the first two of the remaining unmanaged risks, it arguably exacerbated several of the others (Hawke, 2010, p. 32). Nevertheless, DEWHA advised the Minister on 9 April 2009 that ‘…Development and selection of the business model is being informed by a comprehensive risk assessment, to identify and manage the full range of risks. The emerging preferred model will adequately address these; however residual risk around: fraud, complaints and installer and household safety will remain. Our strategies for managing these will be built into the business model wherever possible, or dealt with on an ongoing basis after the business model is put in place (Auditor‐General, 2010, p. 73).’ This advice was described by the Auditor General as ‘overly optimistic’. Moreover, despite the risk register being ‘regularly updated to reflect the changes in risk profile’ and risk management being reported on and discussed at each PCG meeting (Hawke, 2010, p. 31), ‘A full risk assessment, explaining the breadth and scale of the risks and the reliance on successful implementation of a range of mitigation strategies was never provided to Ministers, either from DEWHA to its then Minister or through the OCG to the then Prime Minister (Auditor‐General, 2010, p. 73).’ The level of activity in preparing Phase 2 must have been intense. The first project plan, still based on the contracted service delivery model, became available only in April 2009 (Auditor‐General, 2010, p. 70). Over the next months, it was adjusted several times and it was only in the 5th and final version of the plan, completed after launch of program in July, that Medicare involvement was recognised. The plan was never finalised. In July 2009, a DEWHA review of Phase 1 also identified that there had been significant issues in getting sufficient numbers of staff with the right skills, particularly in the areas of compliance and audit and IT support. However, ‘These lessons were not transferred into Phase 2 (p. 98).’ By the end of June 2009, 68,496 claims had been received under Phase 1 (p. 59). Phase 1 claims were still being processed in February 2010 (p. 63) when Phase 2 was terminated. In order to facilitate registration and access for new entrants to the industry, the on‐line registration process that had been introduced for installer did not require verification of any documents (Auditor‐General, 2010, pp. 104‐105). Furthermore, in order to speed up payments, the system allowed claims for rebates to be made without any proof that the work had been carried out (p. 115). Householders merely had to get one quote (rather than two as in the first phase) and countersign an installer work order to enable a claim to be made. Hence, when Phase 2 was launched on 1 July 2009, it became both easier to get involved in the scheme and easier to claim rebates. What’s more, significant elements of the program were still not in place, perhaps most importantly given the relaxation of checks, the compliance and audit system (p. 130).
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Media references to the HIP prior to the roll out of Phase 2 had mainly been in the context of criticism of the scale and lack of targeting of the overall stimulus program. Sub‐editors and commentators could effortlessly generate catchy headlines by playing word‐games with the main brand of insulation, Pink Batts, but despite sneering references to the ‘Pink‐Batt led recovery’ and endless puns on ‘Battman’, the press by and large did not pay much attention the program until August 2009, when stories started to appear about ‘dodgy practices’ related to the scheme. These included reports of suppliers always quoting the maximum amount of the rebate, regardless of the size of the installation; of rebates being paid without any installation actually occurring; and of quotes being based on Google Earth surveys rather than any physical attendance at the home concerned. Imports of insulation also increased, as expected and despite heavy investment in new local production capacity, leading to stories that stimulus money was being used to support overseas (particularly Chinese and American) jobs rather than Australian workers. The government appeared confident that these issues could be managed by pointing to the success of the HIP in generating jobs, as had been its primary intention. However, they did take action on some of the developing issues with regard to potential fraud and abuse. On September 1, new program guidelines were released, which specified that new installers had to provide proof of insurance and minimum competency standards prior to registration; that written quotes had to be based on physical inspections; and that prices quoted could not exceed a new Pricing Table without explanation (Auditor‐General, 2010, p. 198). Despite these measures, stories of rorting of the program and increasingly extreme claims of waste, continued to grow. On 21 September 2009, the NSW Fire Brigade issued a warning concerning the dangers of locating insulation too close to down lights and on 29 September, DEWHA reminded installers of existing building standards concerning down light clearances (Hawke, 2010, p. 6). However, when a young installer was electrocuted in mid‐October, attention turned to the risks of electrocution, particularly when using foil insulation. The electrical trades groups who had been left out of earlier consultations were quick to note that they had warned the government of just this risk; and the industry associations for non‐foil insulation were also keen to establish that foil was particularly dangerous. On 26 October, DEWHA reminded all registered installers of their responsibilities under Occupational Health and Safety legislation, and convened a meeting of training organisations on the following day to review the training packages with specific regard to potential fire hazards and foil insulation. Nevertheless, despite deficiencies in the training packages, unprecedented numbers of people (more than 3700) were being trained in insulation installation (Auditor‐General, 2010, p. 109). Also in early October, the first de‐registrations of installers occurred under the scheme. Although this was generally presented in the press as a belated response to unscrupulous practices, in fact all the first batch of deregistrations were for failing to provide insurance documents required under the 1 September guidelines, and most of those affected would be readmitted to the register when they did produce evidence (Hawke, 2010, p. 51). Nevertheless, the press and opposition made great capital over the government’s unwillingness to reveal the names of the deregistered installers and pressure grew for a so‐called ‘name and shame’ register to be established. The issue of deregistration would continue to dog the program. It was the key sanction DEWHA had against installers who did not comply with program guidelines, but the fact that it was an administrative sanction, which was not supported by any specific legislative power, meant that the Department had to provide for natural justice and precede any action by asking the wayward installer to show cause 7
why they should not be struck off (Hawke, 2010, p. 50). Initially, the length of these show cause periods was set at 56 days: it was only very late in the program, when safety issues became a real concern and stories started to appear that installers who had already been found in breach of the guidelines were still operating, that the show cause periods were reduced to 24 hours for safety breaches (p. 52). On 1 November, without warning, the rebate was cut from AUD 1600 to AUD 1200. Although the media tried to link this reduction to the stories of fraud, the real concern was the much higher than expected uptake of the programme (Hawke, 2010, p. 28). Instead of the forecast demand of 90,000 claims per month, by end October more than 40,000 claims were being received each week, and the trend was steadily upward (Auditor‐General, 2010, p. 117). AUD 696 million had to be brought forward from future budget allocations in November and further funds were to be brought forward early in 2010 (p. 91). This was presented by the opposition as cost blowout, which was not the case, since the overall program was capped. It was also presented as ‘evidence’ that the previous level of subsidy was too high and had been absorbed into wasteful overpricing. The sudden change caused distress in the industry, since many manufacturers and distributors had invested heavily to handle the higher demand. Moreover, there was a relatively complex exception to the reduced rebate level, allowing homeowners who had already received quotes and who completed installation before 16 November 2009 to still apply at the higher level, with the difference being processed as a top up payment through a manual system. This placed extra strain on the DEWHA manual processing system, which was still processing Phase 1 payments. The program guideline revisions of 1 November 2009 also introduced new safety measures; a ban on the use of metal fasteners; making mandatory the installation down light covers; and the start of a targeted electrical inspection program in Queensland, where foil insulation was mainly used and where the first fatality had occurred (Auditor‐General, 2010, p. 198). Despite these measures, stories of safety issues continued to increase. In early November, papers started to keep records of the numbers of house fires attributed to insulation issues (43 in the year to 10 November). Despite the frequent vagueness as to whether these fires were related to the HIP or earlier installations, the relatively large numbers made it appear that safety problems were indeed very widespread. To add to the impression of major problems, 2 further fatalities occurred on 18 and 21 November, one from electrocution while installing foil insulation and the other from heat exhaustion. On 30 November, new training materials were released, but calls had already commenced for massive inspection programs to be put in place to ensure safety. Speculation was rising that the cost of such a program would actually exceed the amount of money available for the HIP itself. Meanwhile, bit by bit behind the scenes, resources were being martialled within DEWHA to deal with what had become a very troubled program. Most importantly, during November, an Energy Efficiency Taskforce was formed to take responsibility for all energy efficiency programs, and a separate compliance branch was established (Hawke, 2010, p. 60). December saw the fifth version of program outlines issued (Auditor‐General, 2010, p. 198). This re‐ established the requirement for homeowners to get two independent quotes; introduced a requirement that workers (not just supervisors as had been the case up until now) had to prove training in installation or demonstrate previous experience; required installers to complete a risk assessment prior to every installation; and banned the use of metal or conductive tools. Installers 8
were also required to accept terms that would see them placed on a public list if they were deregistered. Later in the month, a new requirement was introduced that installers had to provide evidence of minimum training by 12 February and lastly, on 23 December, a list of approved insulation products was issued. Over January the press continued to report on the growing numbers of house fires, examples of sham installations and abuse of the rebate system. By this stage, the words ‘bungle’, ‘fiasco’, ‘debacle’ or ‘scandal’ were seldom absent when the program was mentioned. Pressure on the Minister to resign, or for the Prime Minister to sack him, was growing, and both newspapers and the opposition were attempting to establish that both Ministers knew of the risks well in advance and had failed to act on them. On 4 February 2010, a fourth fatality occurred, when another young installer in Queensland fired a banned metal staple through foil insulation. Foil insulation was al, 2010, prom the program on 9 February, and on 10 February the government announced a program to inspect and either remove foil installation from or install electrical safety switches in 50,000 homes where it had been installed. On 19 February, HIP was terminated. Not much more than half the funding originally allocated to the program had been expended at this stage, but it was expected that all remaining funds after claims in the pipeline were met would be used on remediation measures, including the inspection of 150,000 homes with non‐foil insulation later announced in addition to the foil insulation program, as well as the implementation of assistance programs for businesses that were forced to fire workers or close due to the program cancellation. Ironically, recruitment at DEWHA was finally catching up with demand for staff, which meant that more staff would be allocated to the program after its closure than during its period peak of demand (Auditor‐General, 2010, p. 35).
Understanding the case The story of the HIP can be understood at several levels. Some commentators attempted to use it (or parts of it) as a morality tale about the inappropriateness of governments intervening in markets. The focus of the economic press, on the other hand, was chiefly on whether the program was likely to succeed in its stated objective of stimulating the economy or as part of a broader discussion about the appropriateness or level of stimulus being applied. The economic press was also much pre‐occupied with the level of waste in this (and other) programs, a key theme for the broader media, political commentators and the opposition. However, the latter groups were interested mainly in what this waste said about the competence and credibility of the government and what its implications were for individual political careers and, ultimately, re‐election prospects. The general media also gave relatively much more emphasis to the spectacular safety issues arising from the program, which allowed the opposition to claim that the government could be charged with industrial manslaughter if it were a private company and to suggest that the government had been ‘the greatest threat to the safety of many Australian families over the last 12 months’ (Sydney Morning Herald 24/2/10). This was followed later in the period under review by an almost forensic interest in ‘who‐knew‐what‐when’, something which was to continue for some months. Little, if anything, can be productively added to any of these stories, with the possible exception of a small footnote in an examination of the economic benefits, or otherwise, of the stimulus, which will no doubt take some years to write. Likewise, the purpose of this paper is not to attempt any form of 9
assessment of blame or responsibility, but rather to try to understand the mechanisms by which the failure of this program came about and, using comparisons with the other cases examined in earlier papers, to suggest some learnings that might assist in avoiding similar situations. Such questions were left largely untouched in crushing weight of media coverage and commentary, virtually all of which seemed to imply that any reasonable person with a bit of sense could have done a better job than the combined minds of the Cabinet and the APS. This might be a tenable position if ‘bad’ decisions could be traced to a few people. However, an examination of the case suggests that the construction of this mess involved many people, most of whom were almost certainly operating to high standards and with great commitment. How is it that such a system can still fail catastrophically and how could it be avoided in future? A useful first step in coming to terms with what can be learnt from the HIP might be to examine in what ways it can be seen as a failure. This series of papers has paid attention not only to ‘objective’ standards of success or failure, but also to the construction of success or failure within the broader discourse of Australian society. From this point of view, it could probably be said the Strategic Indigenous Housing and Infrastructure Program (SIHIP) was characterised by the way that all the actors involved, at both Commonwealth and Territory levels and from either political or public service sides of government, failed to engage with expectations of the program, particularly in terms of timing, even though all the parameters which were eventually used to portray it as bungled were known well in advance. The Australian Technical Colleges (ATC) program, on the other hand, can be seen as a demonstration of how a government department can help to reconcile political objectives with external realities in a very fluid environment, in a way that potentially avoids the worst consequences of the conflict between the two. In this latter case, the discursive construction of success and failure continued in some ways externally to the program and departmental actions, and with different purposes. In the case of the HIP, it is hard not to consider the program as a failure at almost any level. In terms of its original objectives, the 1.1 million homes insulated represent only half what was intended; the 10,000 jobs that were probably created at the height of the program were no doubt significant (there was no clear a priori statement of an employment objective), but against that has to be placed the fact that many of these jobs were lost when the program was cancelled. Furthermore, the cost of the insulation actually delivered and the jobs created, particularly when the cost of remediation and industry adjustment programs is taken into account, was without question much higher than intended, or than it need to have been, if the program had been better managed. Even the argument that the waste was justified because of the overriding importance of the immediate economic effect seems hard to sustain. Apart from the fact that there doesn’t appear to be any way to assess the contribution of the HIP to the economic rescue and even allowing for the possibility that the stimulus may have been timely when the program was running, the fact that almost half the cost of the program was incurred after it ceased, in a context where government was increasingly attempting to reduce the fiscal stimulus on the economy, suggests that it involved a great deal of waste even as a macroeconomic measure. If the HIP made good economic sense during the second half of 2009, it was bad during at least the latter half of 2010 and 2011, a period during which it consumed almost as many resources as when it was still operational. Moreover, looking beyond the achievement or otherwise of the program’s objectives, it must also be seen as having fallen seriously short by any standards of good practice in policy design or delivery. 10
Observing the media frenzy might suggest that the biggest failings of the program were those around worker safety and household security. However, even given that there were alternatives available that might have made it possible to better manage these events and that there may be broader issues to be addressed with regard to construction industry training and regulation, it is far from certain that the level of worker fatalities or insulation‐related house fires was higher than might have been expected for the same number of installations prior to the program (Australian Financial Review 27/2/10). For the purposes of this paper, it is also important not to underestimate the very apparent failures of the program to control the disbursement of funds or to ensure that the funds were spent as intended. Whereas the ATC program can be seen as having spent more than was necessary for what had been delivered, many of these costs related to the achievement of political goals that, whether one considers them worthwhile or not, were at least legitimate and lawful. In the case of the HIP, these funds can only be considered to have flowed uncontrolled into the pockets of private companies or individuals, in many cases in some measure through their dishonesty. This cannot be considered an acceptable standard for the delivery of a major government program. Hence, the HIP differs from the other two cases examined in this series chiefly because of its substantive failure. Although media coverage played a key role in bringing about its collapse, it achieved this mainly by bringing to light the fact that fraud and safety breaches were occurring, and reporting on the apparent ineffectiveness of the measures taken by the government to address these issues. While there can be little doubt that some of the coverage was pursuing a partisan political agenda, it seems unlikely that less ‘biased’ or more ‘balanced’ coverage would have brought about a significantly different result. This is so even taking into account the fact that the intense press coverage of the SIHIP, subject of the first paper in this series, which clearly did consist of contestable assessments and struggles for meaning, was contemporaneous with Phase 2 of the HIP. The only point that might be made is that the juxtaposition of these two media storms may have significantly increased the effectiveness of the attack on the Rudd government as being fundamentally incapable. Was the program, in fact, so flawed in its conception that it should not have been considered under any circumstances? This is the implication of those who wanted to present the HIP as typifying what goes wrong when governments interfere in markets. If such were the case, however, it might be expected that similar programs elsewhere in the world had had similar issues, which is not the case. The Warm Front scheme ran in the UK from 2000, providing assistance for energy efficiency measures, including insulation, with the overall goal of ensuring that people did not spend more than 10% of their annual income on energy costs. Although audits identified that it was not reaching the low socio‐economic households it targeted (Auditor‐General, 2010, p. 52), the issues identified were neither of the type nor the severity of those that plagued the HIP. Warm Front continues to operate. Although the Warm Front scheme was a demand‐driven energy program, it was not a stimulus measure. However, at the same time as the HIP was entering its second phase, the New Zealand government implemented the Warm Up program, which had job creation objectives in addition to health and energy efficiency aims. This program, instead of offering insulation effectively for free, required significant co‐payment by householders, although it also offered access to subsidised finance to disadvantaged homes for the co‐payment component. The Warm Front program 11
experienced no significant difficulties, in spite of the fact that demand was much higher than predicted, with the first year target for installations being surpassed in the first 6 months.10 Other important differences did exist, however, between both these programs and the HIP. In particular, both required extensive checks on installers prior to registration and applied outsourced delivery models using established companies. Both were also carried out over longer timeframes and were on a much smaller scale. Whether an insulation subsidy program was the best stimulus option available to the Australian government under the circumstances is hard to evaluate. Clearly, the government wished to take advantage of the widespread consensus that prevailed at the end of 2008 that something needed to be done to reduce carbon emissions; it was perhaps unfortunate for them that this sentiment appeared to erode during 2009. With the failure of the Copenhagen talks at the end of 2009, even those who still supported action on climate change were probably more cynical about some of the programs that drew on ‘green’ sentiment to justify themselves. It is perhaps ironic that the failure of the HIP may have contributed to this increasing cynicism. If it cannot be said that there was anything inherently wrong with selecting an insulation program as part of the stimulus package, it does seem plausible to say that it was an error to attempt to make it fill a role that it may have been inherently too small to fill. Treasury had a declared intention of trying to channel stimulus through the construction industry, and had determined that the industry as a whole had the capacity to bear such stimulus (Australian Financial Review, 6/2/09). However, no specific evaluation of the capacity of insulation industry to fulfil this role in its own right appears to have been done. To make this small sub‐segment of the overall construction industry the delivery pipeline for a significant proportion of the stimulus plan seems with hindsight to have been inherently risky. The mismatch of industry size with the scale of the ambition goes well beyond program selection. Although the desire to reap political gain is clearly evident in the extravagant language used to launch the program (recalling the quote from the Minister responsible noted above), more importantly, critical features of the design seem to have been deliberately selected to exacerbate any mismatch between industry capacity and economic goals. The fact that no co‐payment was to be required demonstrates the level of priority that was being given to maximising the attractiveness of the scheme and ensuring the greatest possible accessibility to it. The decision to adopt a decentralised business model was also, if only in part, driven by the desire to maximise the formation of new businesses and employment creation effects of the program. Aspects of the implementation of the HIP were also modified for the same reason, in particular the removal of controls through on‐line registration and claiming of rebates in Phase 2. Moreover, there seems to have been no consideration given to the possibility that the program might be too successful. Little attempt seems to have been made to understand how demand would be generated or how large it might become, and it appears to have been decided that if it all came at once that would only assist in the achievement of that primary goal. Everything points to the conclusion that the intention was to push as much money out as fast as possible through the HIP. Another indication of this ‘après moi
10
It is interesting to note that an earlier New Zealand program, which subsidised ‘do‐it‐yourself’ insulation was stopped after 3 deaths occurred due to electrocution involving the use of foil insulation. Foil was not on the list of approved products in the Warm Up program of 2009.
12
le deluge’ attitude is that at no stage does any exit plan appear to have been developed. Even had all gone well, it would seem to have been sensible to foresee some adjustment mechanisms when the subsidy ceased, either because there were no more roofs to insulate or because homeowners suddenly had to pay full cost. The crucial decision to adopt a decentralised business model is also linked to what appears to have been an unshakeable determination to get the program out ‘on time’, as was the decision that it must be rolled out over 2 ½ years rather than the five requested by DEWHA. In the light of this, the consistent theme running through both the Hawke review and the ANAO report, that the extremely limited time available for design, planning and development of capacity was either the direct cause of or exacerbated other shortcomings, is particularly significant. It was this ‘urgency’ that meant the risk assessments were constantly failing to reflect the current state of the business model; that meant that no project plan was ever finalised; that meant that recruitment was running well‐behind requirements throughout the life of the program (indeed it seems only to have caught up after its closure!); and that led to the program being launched without an operating compliance and audit system. Over‐ambition, then, both in terms of the program objectives and in terms of the time allowed for its design and planning, seems to underpin virtually all of the other failures that occurred. In conjunction with the lack of capacity of DEWHA and its lack of experience in delivering large‐scale programs, both of which were well‐known at the time of the program’s announcement, and what appears to have been a governance system that was either incapable of or unwilling to admit the problems that emerged, it seems fair to say that the die was cast for disaster well before the launch of Phase 2, and that no crisis‐management after that stage, short of an even earlier termination, was likely to have significantly improved outcomes.
Underlying issues There are, no doubt, many factors that contributed to the establishment of such a fundamentally flawed program. Even if it is likely that some of these can be laid at the door of executive decisions, the way those executive decisions were enabled and could be seen as legitimate is of interest when looking for lessons to draw from the case. The data suggests that some of these factors can be seen as systemic and therefore prone to allow similar failure in the future. Perhaps most striking in this respect is the way that the stimulus objectives of the program became the unquestioned (and possibly unquestionable) dominant purpose of the program, to which all other considerations were subject. It was the perceived need to release money into the market in the shortest possible time that drove the timeline; it was the perceived scale of the economic challenge and therefore the need to maximise the scale of the intervention that drove the design of the program rebate levels and allowed the program to go ahead with only minimal controls on either registration or rebate; and both of these considerations justified the choice of a business model which magnified both control and safety risks. Against this background, the fact that the HIP was largely conceived by two central agencies, the Department of Prime Minister and Cabinet and Treasury, with little input from DEWHA (Auditor‐ General, 2010, p. 64) seems particularly significant. There seems to be little doubt that it was these two powerful departments, focussing on their core concern to save the economy from recession, 13
which drove both the design and the delivery timeframe of the HIP. While DEWHA may have been happy to go along with this in order to get an energy efficiency program up and running, those objectives seem never to have been allowed to interfere with the main purpose of the program. It is far from certain (indeed with the benefit of hindsight it might be said to have been convincingly refuted) that the model adopted represented the most efficient or effective way of ensuring that Australian homes were insulated, but that seems not to have been a relevant consideration. Not only were the two central agencies firmly behind the establishment of the key design parameters of the program, at least one of them, PM&C, through the OCG, seems to have continued to reinforce the timeline throughout the development of the program and specifically to have contributed to the decision on the business model (Auditor‐General, 2010, p. 69). They also played a key role in facilitating the connection with Medicare, which enabled the Phase 2 business model. There can be no doubt where the priorities of the OCG lay: ‘The design of Phase 2 was strongly influenced by the clear riding instruction from the Commonwealth Coordinator‐General to reduce red tape and commence work on projects as soon as possible, in keeping with the stimulus objective of the program (Auditor‐General, 2010, p. 78).’ This focus on the stimulus component of the program is also visible in the fact that data was kept on the number of installations, based on claims and payments made, which allowed DEWHA to report to the OCG on progress against the stimulus objectives, but none was kept on jobs or greenhouse benefits (Auditor‐General, 2010, p. 99). Moreover, ‘Although the economic stimulus component was supposed to be equally important as the energy efficiency objective, the imperative of responding to the global financial crisis subordinated the energy efficiency requirement such that the usual processes associated with putting a scheme such as the HIP in place were constrained. (Hawke, 2010, p. xiii)’ It seems to be quite clear then, that the influence of the central agencies, exerted through the OCG, was sufficiently powerful to ensure that any consideration other than adhering to timelines and expenditure objectives was likely to be given little consideration. A purported whistle‐blower interview with current affairs program 4 Corners illustrates the way things may have been: ‘Job creation was the most important thing. That was mentioned on many occasions, we were told many times by senior management that the technical and safety issues were of less importance than getting this programme up and running and creating jobs (Four Corners, 26/4/10).’ Under the circumstances, one could be forgiven for wondering whether, rather than following Hawke’s recommendation to ensure more senior management oversight (Hawke, 2010, p. x), the opposite might not have been more productive. In addition to the insight that this quote gives to the way hierarchical and bureaucratic force was exerted to ensure the predominance of one program objective, it suggests that there was a distinction being drawn between issues related to delivery and those which were considered ‘higher 14
level’. Several Ministerial and Prime Ministerial statements at the time assert that the policy departments involved in developing this program could not be held responsible for its outcomes because implementation was the responsibility of DEWHA. This distinction was explicitly expressed when the then Commonwealth Coordinator General ‘…told a Senate committee that federal government line agencies had primary oversight of individual stimulus programs. Her responsibility was to ensure the money got out the door according to the agreed milestones. "It was very clear in the budget papers that the program delivery and compliance responsibilities rested with the line agencies. (Australian Financial Review 2/6/10).”’ That the problems which arose were considered to be ‘lower level’ implementation points, which could have been dealt with if only more controls had been in place, is also evident in the way the Prime Minister, when he finally decided to try to take political responsibility for the program (whilst at the same time using that as an argument against taking action against himself or his Minister) laid the failure at the doorstep of his ‘failure to ask more questions.’ This seems to significantly misrepresent the drivers for what occurred, which cannot be characterised as lower level staff working without sufficient supervision. There can be no doubt that, in addition to their engagement in making decisions on design features that exacerbated the fraud and safety outcomes of the program, the timeline and scale of the HIP were directly inherited from and strongly enforced by the central departments concerned. Although the auditor is no doubt formally correct when he finds that DEWHA failed to inform their Minister that there were resource and capacity restraints that put the delivery of the program at risk (Auditor‐General, 2010, p. 73), it is hard to believe that these concerns were not raised, at least at PCG meetings. If they were not, it provides dramatic demonstration of how limited the scope of the governance body was seen to be; if they were, remembering the role of the OCG in centralising communication with the Prime Minister and Cabinet, it seems the same conclusion must be reached, as a decision must have been taken either not to refer the concerns to the Prime Minister, or that they were taken back to the Prime Minister and ignored. In short, the alignment of hierarchical power with an overriding objective, coupled with a belief that the origination of a policy and control of its key components can be quarantined from its implementation and responsibility for its outcomes, appears to have left all the risk inherent in this very ambitious project effectively unmanaged – transferred from the strategic level at which it was developed to a delivery department known to have little experience in delivery, known to be under resourced and concerned about its ability to deliver, but without a voice at levels at which resources and authority might exist to mitigate the risks. Mention has been made of the fact that a narrow definition of the insulation industry led DEWHA to exclude electrical trade groups from its consultations. Whether their inclusion would have made much of a difference to the program design is not clear, given that some of the groups involved did give unsolicited warnings of safety risks to the government anyway. However, the fact that they had apparently not been listened to became a problem for the government later on, when they began to make critical statements to the press. Another key problem for the government in managing the media were the competing statements of the various manufacturing industry groups, which provided a steady stream of ‘information’ to the papers about ‘problems’ with different types of insulation, in particular foil. Lastly, although the States and Territories were consulted to some extent, 15
‘(t)he final business model did not directly involve state or territory authorities. Their role was limited to secondary contact through householder complaints to consumer affairs or fair trading authorities, occupational health and safety authorities and emergency services authorities. The Commonwealth placed a high reliance on state and territory regulatory authorities to carry out their responsibilities in these areas effectively. But, there was always a risk that the existing regulatory framework might not adequately support the HIP’s goals – and this was indeed the case (Hawke, 2010, p. 15).’ Precisely why this connection was not better made is a matter for speculation, but it seems likely that if it had been, the government would have benefited from the States’ much greater familiarity with the industry and with key players, and also potentially been able to mobilise significant pre‐ existing resources to better enable delivery. Was it again due to the imperative of the timeline? A belief that in order to maintain control, particularly given the schedule, the number of players had to be restricted? Was it due to confusion as to the role of the OCG, who was holding its own weekly meetings with counterpart bodies in the States and Territories to oversee the stimulus rollout? Or perhaps a desire that the Commonwealth should get most of the credit for the program (a pyrrhic victory if ever there was one)? Whatever the reasons, it is interesting to compare the HIP case to the ATC program. In the latter case, one of the key means by which DEST seems to have been able to negotiate acceptable outcomes for both the roll‐out and eventual close‐down of the program appears to have been pre‐ existing connections with their State and Territory counterparts. Even in the case of the SIHIP, the eventual resolution of the immediate problem created by the program involved FaHCSIA ‘shadowing’ key posts in the Territory public service. Both of these Departments are significantly larger and much more experienced with delivery than DEWHA was – and perhaps much more familiar with how to deal with the States. It seems likely, then, that the failure to recognise or act upon the known limitations of the delivery Department for the HIP in turn led to a failure to engage resources that might have assisted in mitigating some of the issues that arose.
Implications A significant proportion of the press coverage of the HIP related to the attribution of blame for its failure. By far the dominant position was that the government had to take primary responsibility for the deaths, fires, fraud and waste. However, the debate on this point was far from one‐sided – a significant stream maintained that at least some proportion of the blame for both safety failures and fraudulent behaviour should be laid at the door of the installers concerned (a view that seems incontestable, but does not negate the possibility that the government also had a responsibility to develop and deliver well‐designed policies). However, the program was not established as failure as a result of this negotiation of meaning – indeed, there can be no doubt that, had the program been successful, the government would have happily accepted credit for it. This case, at least, is susceptible to understanding mainly in terms of the interactions, relative power and the capabilities of the political and bureaucratic institutions of government and the ways these elements combined once again to allow well‐identified risks to go unmanaged. At the heart of this phenomenon, looking across the three cases in this series, it seems possible to discern a central issue: the relationship between control and initiative, particularly between institutions and relative to their accepted powers. 16
In the HIP, a technology of control was established, consisting of an institutional structure particularly represented by the OCG, and a set of processes involving schedules, milestones and reports. Because of the power imbalance between the OCG and central departments on the one hand and DEWHA on the other, the program goals enforced on the HIP were those related to the stimulus, to the exclusion of the ‘green’ goals that were also purportedly attached to the program. Furthermore, the power of the control system was such that, intentionally or unintentionally, it may have quashed any dissenting voices or evidence that stood in the way of the imposed goal– including those that were actually vitally important for the good of the government from which that power was drawn. This is not completely dissimilar to what occurred in the attempt to adjust the SIHIP after massive criticism, so that it conformed more closely to the public models of what a successful housing program might look like. Again, almost all latitude for local adaptation was removed from the system and a bureaucratic mechanism of shadowing and reporting put in place that allowed the government to demonstrate that it was achieving a particular set of outcomes in a predictable fashion, despite the fact that these were arguably sub‐optimal in terms of either value for money or benefit to the intended communities. More importantly, the SIHIP case also raised the possibility that the rigidity of the roles of the various institutional actors in the early stages of the development of the program were at the heart of their apparent inability anticipate a predictable disaster or take any initiative in mitigation. Both cases contrast in some sense with the ATC program, where, although a political battle to declare the program successful or failed raged on in parallel, the actual results were to at least some sense optimised because the bureaucratic players were able to negotiate solutions that were not mandated but which were at least acceptable to most stakeholders. Although the same technologies of control existed, through either good luck or good management between the political and bureaucratic actors concerned, they were not used to close down options but rather to establish parameters within which sufficient freedom was preserved to construct a solution that was far from pre‐determined. Further implications of this point can be elaborated across three different domains: the relationship between political leadership and civil service; the unreconciled tension with regard to the roles and relationships between and among Australian federal and state governments; and, the way in which policy and delivery agencies are typically seen to relate. Firstly, the suggestion is that some attention should be paid to the assumptions we hold with regard to the relationship between political leadership and civil service. The past two decades have seen significant changes in the way this relationship is understood and enacted. It has been claimed that one of the most crucial changes to the definition of the role of the bureaucracy was the insertion, in 1984, of the phrase ‘under the minister’ into the definition of the responsibilities of Departmental Secretaries under the Public Service Act, so clarifying their subservience to the Minister (Australian Financial Review, 30/4/10). The arrival of New Public Management can also be seen as presupposing that a public service organisation is the same as a private sector one, with the Minister in the role of CEO (or perhaps Chairman). Of particular note in this respect is the prominence given to the notion of ‘responsiveness to the elected government’ in an introduction by the Secretary of PM&C to PM&C and its role (Moran, 2011). The work undertaken in this series of papers, however, indicates that 17
further consideration might be given to the bureaucracy having some set of obligations that are longer lasting than the specific direction of a Minister and, at least in the short term, are not easily over‐ridden by political actors. This would be intended not so much to protect against incompetent or corrupt political actors, but to embody some form of reconciliation between short and long‐term horizons in the creation of public good. The second domain where the balance of control and initiative may be susceptible to reconsideration is the unreconciled tension visible in all three of the cases examined in this series with regard to the roles and relationships of Australian federal and state governments. It is quite possible to read the SIHIP case as demonstrating assumptions about the ‘seniority’ of federal bureaucracy over the Territory public service – and federal government over Territory government ‐ in a relatively simplistic hierarchical relationship. In the HIP case, the same tension is visible in the mismatch between the policy setting at federal level and the location of regulatory powers at state level. This is not just a question of constitutional issues around the domains of sovereignty of the various jurisdictions. It also seems that achieving positive results in program design or delivery across the jurisdictions might depend to at least some extent on preserving a measure of initiative for the ‘junior’ partners to act as true collaborators. Such a relationship is reflected in the relatively ‘open’ way in which the jurisdictions seem to have negotiated a resolution for the ATC program. Finally, these three cases draw into question the way in which policy and delivery agencies are seen to relate. Obviously the distinction has significant value in its own right – the activities of developing policy are quite different from those involved in delivering programs. However, to see the policy agency as in some way ‘higher’ than the agency responsible for implementation, particularly if it is able to alienate responsibility for issues that might arise in delivery, seems to magnify the risk of the policy agency imposing an unworkable policy on a delivery agency because it has greater access to power. This work suggests that delivery agencies should have a well‐established voice in the design of policy, and that policy agencies should be intimately aware of the conditions that apply in the delivery field in which their policy will be implemented. Although all these suggestions must still be treated as highly provisional and in need of much greater specification, nevertheless a number of practical implications seem to emerge. In the HIP case, the concept of better balancing control and initiative might have played out in a more balanced consideration of the competing implications of the program’s goals and by recognising some overriding requirement that public sector managers take into account basic standards with regard to the handling of risks, whatever the declared political priorities. This probably needs more than exhortations to higher standards of individual integrity or courage; some form of protection or recognised standard upon which the managers could stand would be the only secure base to enable such behaviour. In addition to potentially re‐evaluating the use of instruments such as public service codes, this might also lead to a careful consideration of how central agencies in general, and coordination units in particular, are established. The suggestion would be that, rather than focussing on their ‘disciplinary’ or control role (though this does not mean such roles should not exist), it may be fruitful to enhance their role as facilitators and enablers, who also ensure the maintenance of key standards in both policy design and development. Some of this role is already visible in the declared approach of the Cabinet Implementation Unit within the Department of Prime Minister and Cabinet (CIU, 2006), which should have been in force 18
during the lifetime of both the SIHIP and the HIP. The question of how, and with what purpose, this Unit played so little visible part in either programme is a question for further investigation, together with an investigation into the risks and best practices relating to the establishment of special purpose ad‐hoc task forces and their interaction with existing entities of government with broader and longer‐lasting roles. A second set of implications arises with regard to the reform priorities for the Australian Public Service, which were enunciated by the ‘Ahead of the Game’ report (2010). One of the key objectives outlined in this report was to enhance the APS’s ‘strategic policy capability’. This objective is not at all disconnected from the events which frame the HIP case, since then Prime Minister Rudd, when launching the reform process, used the way the APS developed its response to the 2008 financial crisis to exemplify what he meant by such a capability. ‘Strategic policy capability’ is also clearly linked to responsiveness: ‘…responsiveness… is not only a matter of providing timely advice, ensuring implementation of key programs and policies, or drawing together input across portfolios. …there is also a clear expectation that the Australian Public Service will increasingly focus its efforts on providing a greater level of strategic advice. …(t)o help us better perform this role and deliver on the government’s priorities, a structure which bolsters our strategic policy capability has been put in place (Moran, 2011).’ This work suggests that the concept of strategic policy capability needs to be carefully nuanced – that the strategic level needs always to be well‐connected to the implementation reality; and that the power of the various actors needs always to be well‐balanced so that voices (and risks) are not stifled. In particular, there should be well‐established mechanisms that make it much harder to ignore countervailing considerations or inconvenient realities and ensure that there is some recognition of a need to respond to them rather than merely letting them become someone else’s problem. Finally, some investigation is indicated into the relationship between budgeting and planning procedures and the definition and handling of risks. The establishment of a large‐scale or long‐term program implies setting boundaries that determine how risks are defined and managed, and which attach resources and administrative or legislative powers to actions and policies. However, many programmes (the SIHIP and the HIP are no exception) are implemented in conditions where the outcomes are not certain and where contextual change is almost certain to occur during the life of the program. Some of the rigidities and inflexibilities which lead to externalised risk might be avoided by either adopting more limited policy time horizons, or by building in phased‐in implementation processes with appropriate review points that enable learning and adjustment to changing circumstances. This analysis has added to and in some respects confirmed the conclusions of the previous two studies. It proposes that there is some value in looking beyond the competence or otherwise of specific individuals or governments in policy failure. It also goes beyond the suggestion of Lewis (2010) that applying well‐understood policy design practices could have avoided this sort of failure, in the sense that it asks the question as to what actions might be taken at an organisational and policy level to enable these practices. In this sense, it is hoped that the work offers a perspective which is at some level practical and useful. 19
2010. Ahead of the Game: Blueprint for the reform of Australian Government Administration. Canberra. Auditor‐General. 2010. Audit Report No. 12 2010‐11 Performance Audit. In A. N. A. Office (Ed.). Canberra: Commonwealth of Australia. Britton, G. 2011. What falls between the cracks: boundary‐spanning and risk in a complex public programme, 15th Annual Conference of the International Research Society for Public Management IRSPM XV. Dublin, Ireland. Britton, G. M. 2010. Infrastructure Risk as a clash of voices: the expression of a crisis in an Australian Indigenous housing programme, 14th Annual Conference of the International Research Society for Public Management IRSPM XIV. Bern, Switzerland. CIU. 2006. About the CIU, Vol. 2012. Hawke, D. A. 2010. Review of the Administration of the Home Insulation Program. Lewis, C. 2010. The Home Insulation Program Policy Debacle: Haste Makes Waste. Public Policy, 5(2): 83‐100. Macintosh, A., Wilkinson, D., & Denniss, R. 2010. Climate Change. In C. Aulich, & M. Evans (Eds.), The Rudd Government: Australian Commonwealth Administration 2007‐2010: 199‐220. Canberra: ANU ePress. Moran, T. 2011. All about PM&C: What we do and how we do it. In D. o. P. M. a. Cabinet (Ed.).
