Plan de gestión de calidad

4.5.1 At the beginning of 2009, the Department of the Environment, Water, Heritage and the Arts (DEWHA) estimated that there were about 70,000 retrofitted insulation installations taking place on average per year.23 _{This accords with the ABS data referred to above.}

The home insulation industry consisted of around 200-250 businesses, ranging from very large businesses such as Fletcher Insulation and CSR Bradford to very small businesses, the proprietors of some of which gave evidence before me.24

4.5.2 It is difficult to ascertain with any precision the number of people employed in installing insulation prior to the HIP, partly because data was not collected and also because 84% of businesses that installed ceiling insulation prior to the HIP also offered other services such as construction, maintenance and handyman services.25

4.5.3 The largest number of insulated homes were insulated with bulk insulation, and a minority were insulated with reflective foil insulation. At this time, there were some 33 manufacturing businesses that were members of identified insulation industry organisations. The number of people employed by manufacturers varied significantly. 4.5.4 At the beginning of 2009, the following industry bodies existed:

4.5.4.1 Insulation Council of Australia and New Zealand (ICANZ); 4.5.4.2 Australian Foil Insulation Manufacturers’ Association (AFIMA); 4.5.4.3 Insulation Manufacturers’ Association of Australia (IMAA);

4.5.4.4 Australian Cellulose Insulation Manufacturers’ Association (ACIMA); 4.5.4.5 Polyester Insulation Manufacturers’ Association Australia (PIMAA); 4.5.4.6 Australian Foil Insulation Association (AFIA).

4.5.5 Australian insulation industry organisations were in large part organised around product types. There was a division between large manufacturers and smaller ones:

4.5.5.1 ICANZ represented the interests of its member manufacturers of glass wool and rock wool insulation. Before the HIP, ICANZ had two members, CSR Bradford and Fletcher Insulation Australia and New Zealand, which were together responsible for around 60% of insulation manufacture in Australia at that time.26 _{Although ICANZ members also manufactured reflective}

insulation, ICANZ did not represent the members’ interests in relation to those products;27

21 AGS.002.101.2881, 1.

22 MIN.002.001.7288, 1. See also, FLE.002.001.0132, 20. 23 Transcript (1 April 2014) 1523 (K Keeffe).

24 Transcript (19 May 2014) 5022 (M Bowles). 25 AGS.002.030.1693, 1.

26 AGS.002.010.0776, 3.

4.5.5.2 AFIMA represented the interests its members—CSR Bradford and Fletcher Insulation—in respect of their manufacture of foil insulation. AFIMA members produced more than 70% of all foil insulation made in Australia;28

4.5.5.3 IMAA was a peak body, and had two members—ICANZ and AFIMA. At that time, ICANZ and AFIMA both shared the same membership organisations— CSR Bradford and Fletcher Insulation. ACIMA and PIMAA had previously been affiliated with IMAA, but had left that organisation prior to the HIP;29

4.5.5.4 ACIMA represented approximately 10% of the insulation industry, 30 _through

its member organisations, which accounted for 80% of Australia’s cellulose insulation manufacturers.31 _{All of the members of the association manufacture}

and install insulation. At its peak, ACIMA had approximately 14 members;32

4.5.5.5 PIMAA was the principal body representing Australian polyester insulation manufacturers and operates under the auspices of the Council of Textile and Fashion Industries of Australia (TFIA). PIMAA had five member organisations— United Bonded Fabrics; Autex; Martini Industries; Polyester Solutions and Higgins Insulation.33 _{Estimates of the portion of the insulation market met by}

PIMAA members vary from 6%34 _{to 10%;}35

4.5.5.6 AFIA represented its member organisations, who were independent insulation manufacturers and merchants within Australia and New Zealand for reflective aluminium foil insulation products.36 _{In 2006, AFIA had 12 members.}37 _{Mr Herbert}

estimated that AFIA represented about 5-6% of the total insulation market.38

4.5.6 These were the main groups, but not the only insulation industry organisations. For example, AFIA was also an affiliated member of the Independent Insulation Manufacturers and Merchants Association of Australia (IIMMAA), which it describes as representing the collective interest of cellulose, wool and polyester insulation manufacturers and merchants.39 _{CSR Bradford was also affiliated with other groups, such as the}

Thermal Insulation Contractors Association (TICA).40

4.5.7 The industry was very competitive and fragmented, containing players who spoke up for their own products and against all others. Mr Ruz made the following observation on that topic which seems to me to be accurate:

The insulation industry is renowned for the tension (even animosity) felt between the different product groups—in particular the traditional Glasswool manufacturers (CSR Bradford and Fletcher Insulation—represented by ICANZ), the shredded paper cellulose fibre manufacturers (mainly small, localised players), the polyester manufacturers (Autex, Tontine, Martini and a number of others) and the reflective foil laminates (RFL) and thermo reflective marketers represented by AFIA (Air Cell, Melbourne Home Insulation, Silversark).41 28 AGS.002.010.0776, 3.

29 Statement of Ray Thompson at [5], STA.001.068.0001, 12 May 2014. 30 Statement of Herbert at [4], STA.001.004.0001, 13 February 2014. 31 MBA.003.001.0318, 1.

32 Statement Arblaster at [5], STA.001.028.0001, 14 March 2014. 33 Statement of Liaskos at [7], STA.001.001.0356, 14 March 2014. 34 Statement of Herbert at [4], STA.001.004.0001, 13 February 2014. 35 Statement of Liaskos at [10], STA.001.001.0356, 14 March 2014. 36 REN.002.003.0008, 10.

37 Statement of Herbert at [4], STA.001.004.0001, 13 February 2014. 38 Statement of Herbert at [4], STA.001.004.0001, 13 February 2014. 39 REN.002.003.0008, 14.

40 Statement of Ray Thompson at [5], STA.001.068.0001, 12 May 2014. 41 Statement of Ruz at [15], STA.001.001.0193, 3 March 2014.

4.5.8 Industry players considered that although insulation generally made financial sense, a number of market imperfections, such as split incentives between landlords who own property and tenants who pay energy bills, acted as barriers to installing insulation.42

4.5.9 In the case of split incentives, there was little financial incentive for landlords to invest in insulation when they did not accrue the benefits of this investment. This, and other market failures described by industry, provided government with a rationale for market intervention to improve social and environmental outcomes.

4.5.10 The period immediately following the 2007 federal election was ideal for seeking political support for the insulation industry’s policy agenda, as a Labor Government would be able to refer to the energy efficiency benefits of installing insulation to support its commitment to the Kyoto Protocol.