Wednesday, March 3, 2010

Did Peter Garrett try to warn Rudd and the cabinet?

Gavin Atkins warns of yet another possible rort in the $2.45 billion insulation fiasco:
Some established insulation businesses in Australia have scammed thousands of dollars from Australian taxpayers by claiming to have insulated homes as part of the Rudd Government scheme – but the jobs were completed anything up to two or three years ago.

A Sydney builder - who wished to remain anonymous - told Asian Correspondent that he knew of existing insulation businesses that have filled out the paperwork to claim $1,200 for each job under the Rudd Government’s Energy Efficient Homes Package, despite the fact that they performed the work at the houses well before the disastrous scheme was implemented.
Jack the Insider says Peter Garrett tried to warn Rudd:
It is a matter of record that Minister Garrett alerted his cabinet colleagues to the inherent problems of the home insulation scheme on at least one occasion and we can only presume did so to deafening silence by way of response or if any verbal response was made it seems to be of the “don’t tell me your problems” variety.

And really, the operative word here is inherent.

Plus, there's a lot of wailing about what has befallen the insulation industry now, but think it through for a moment. Imagine the scheme was proceeding as planned. After a while, just about every existing home owner who could be arsed would have had free insulation put into their roof.

What then for the industry?

How much work would be left for all of the businesses that had flocked to it? Not much. Sooner or later there would have to be a very nasty correction where most of them would end up going out of business and a lot of people out of work.

A perfect little example of what happens when governments decide to give out subsidies - the price signal gets distorted, (and remember that essentially prices are information, so if prices are artificially inflated or deflated the information gets scrambled), and the market becomes unbalanced.

And the inevitable correction - the chickens coming home to roost - will arrive sooner or later.

Posted via email from Garth's posterous

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