Government launches raids on dodgy insulation installers but industry threatens political backlash

The Federal Government has begun raids on dodgy insulation operators, obtaining search warrants and raiding several businesses across the country in an attempt to catch what climate change minster Greg Combet says are “unscrupulous operators”.

But the industry isn’t convinced – the Australian Cellulose Insulation Manufacturers’ Association says it will begin lobbying the Government and will work to unseat Labor if it doesn’t agree to pay legitimate companies compensation.

“The whole industry supports the detection of fraud,” secretary Kevin Herbert says. “But we’ve founded a group called the Insulation Compensation Alliance, and if the Government doesn’t agree to compensation, we’re going to start lobbying.”

Herbert says the Government has still not given legitimate companies compensation for the program, and says some of his members are missing out on hundreds of thousands of dollars.

“These businesses have been without cashflow for 12 months. Some of these companies are missing out on hundreds of thousands of dollars, and they’ve been around for years.”

Herbert says Labor needs to come to an agreement soon, or the Alliance will start campaigning to take the Government out of office.

“If the Government won’t agree to compensation within a reasonable timeframe, we’re going to go to the marginal seats and start lobbying to unseat these politicians.”

The raid comes nearly a year after the Government abandoned the $2.45 billion insulation scheme after several dodgy installers started using cheaply made materials imported from China, eventually resulting in fire damage to customers’ homes and four deaths.

At the time, SmartCompany revealed that dodgy installation caused one house fire in the eastern suburbs of Melbourne – insurers said the insulation was directly responsible for the home’s destruction.

Combet told the ABC yesterday that raids were carried out earlier in this week. In total there were 22 in New South Wales, 10 in Victoria and three in Queensland.

“During the execution of the search warrants a large amount of data was seized in the form of documents, but also computers.”

“What will happen from here is that forensic analysis will take place in relation to all of the data that has been seized and we expect and anticipate that that is going to take some months. There is a lot of material yet to be worked through.”

Combet has previously promised to go after dodgy installers, saying last year that an investigation would be underway to catch them.

As part of these raids, the Government has also started a debt recovery program – letters will be sent to 2,000 individuals and businesses which now owe money to the Government. It is understood they will have 30 days to pay.

The raids come after the Australian National Audit Office found last year that there were 4,000 cases of fraudulent installations – about 100 of those have been shown to the Government for further investigation.

A separate Government inquiry heard that over 400,000 homes were installed improperly. Experts said that while the intention of the program was good, there was no oversight and unqualified installers were simply allowed to do as they pleased.

Herbert says while the raids do show the Government is working on a solution, more needs to be done.

“We support this, but this has also dealt a serious blow to legitimate companies, and that’s the issue.”

The Federal Opposition has said the Govenrment’s actions don’t go far enough – opposition spokesman Greg Hunt told the ABC that more information is needed on these dodgy installers.

“We want to know how much money has been misappropriated fraudulently. We want to know how much money is expected to be repaid and how much money they have actually received. “

“And that is because this has been a two-and-a-half billion dollar failure and waste of the money of mothers and fathers and pensioners and people who have worked hard to raise those funds. In the end, their money has been wasted through gross negligence.”