The rebate, introduced last year as part of the Government's efforts to stimulate the economy, ultimately ended in failure. Unskilled operators took advantage of the rebate and incorrectly installed the insulation, taking the money and leaving customers with homes left open to extensive damage.
Over one hundred homes have suffered extensive fire damage, while three installers were killed handling unsafe material. The Government suspended the rebate in February, saying a new program would take its place in June.
However, yesterday energy efficiency minister Greg Combet, who took over the scheme from environment minister Peter Garrett during the height of the controversy, confirmed the rebate would be scrapped altogether.
Businesses are extremely disappointed in the Government's decision. Peter Gerster, owner of Gerster Insulation, says he was under the impression the Government would introduce a new scheme and has now been left high and dry.
"Some of the older companies in the industry didn't think it would happen, because of the problems in the industry, but it's still disappointing because these younger companies have lots of stock that need to be sold."
"I think it's good the Federal Government will be inspecting the homes with insulation already installed, and hopefully that will provide some work, but we still haven't been paid for projects we did in January and we hope to get that money."
Gerster says he is "highly disappointed" and hopes a resolution to the problems within the industry can be resolved. Additionally, a spokesperson for Enact Energy said the abandonment of the scheme will negatively impact its revenues.
"We are extremely disappointed. An agreement went out to our customers in February, and we confidently told them that the suspension in February was part of clearing out the bad apples and a new scheme would start in June. Now, we have to go back and cancel orders."
"The situation isn't dire, but it's pretty bad. I think it's disappointing if businesses are encouraging people to become more green and use green technology only to have these schemes pulled prematurely."
The decision was based on an independent report from former public servant Allen Hawke, which stated the failures in the scheme were due to a rushed timeline and a poor regulatory framework.
"Internal management structures, particularly early in the program, did not provide the necessary senior management oversight or allow for considered review at appropriate times," the report stated.
"A program of the profile and significance of the HIP (Home Insulation Program) involving an industry that had minimal regulation warranted very close attention."
Subsequently, Combet announced the scheme would not resume in June. "It is the behaviour of a number of unscrupulous operators that has had a very deleterious effect on the reputable players of the installation industry," he said in a statement. "We are doing all that we can to endeavour to deal with the issues."
Currently, Combet is focusing on clearing up the damage from the scheme. Unskilled operators often installed foil insulation, which is extremely dangerous when not installed properly due its conductive nature, and many homes are at risk.
It is estimated there are about 200,000 homes with insulation which need to be checked. The Government has confirmed it will inspect them to ensure they comply with safety standards, but Combet warned this could come close to using up the scheme's budget, of which only $1 billion remains.
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