Insulation subsidy cutback predicted

Extending programme past September could mean making it more targeted at low- income households

by Simon Collins

simon. collins@ nzherald. co. nz A subsidy that has helped to insulate about one in every six low- income homes looks likely to be cut back in next month’s Budget to a more targeted scheme.

The Green Party, which won the subsidy in a post- election deal with the incoming National Government in 2008, is pushing for it to continue at the current level of about $ 70 million, reaching about 50,000 homes, a year.

But party co- leader Metiria Turei told industry leaders at Fletchers’ Batts factory in Auckland yesterday that there ‘‘ may well be a reduction in the money that is allocated to it’’.

‘‘ The Government i s looking at whether, and how, to target, and we are talking to them about what those options might be,’’ she said.

Energy Minister Simon Bridges said the Government was considering, as part of its Budget process, ‘‘ whether or how the programme might be extended’’ beyond its scheduled expiry in September.

‘‘ Were it to continue — and I emphasise no decision has been made — consideration may be given to transitioning it to a more targeted programme towards households in need,’’ he said.

He said the scheme had been ‘‘ a huge success’’, with 204,000 homes insulated at a cost of $ 347 million.

A cost- benefit analysis led by Reserve Bank chairman Dr Arthur Grimes found the country gained almost $ 5, largely in reduced health costs, for every $ 1 spent on the subsidy — a net benefit of almost $ 1 billion.

But the study also found that the health benefits averaged $ 854 a year for households with community services cards, but only $ 336 a year for other households, and recommended that the scheme should be aimed at low income earners.

It already provides a higher subsidy of 60 per cent of insulation costs for households with community cards, against 33 per cent of costs up to a maximum of $ 1300 for other homes.

The differential has attracted relatively more low- income households — 91,348 of the 204,185 grants have gone to homes with community cards.

At last count, 977,000 people — about 29.4 per cent of all adults — had the cards. If the proportion of homes with the cards is also about 29.4 per cent, then the subsidies have been used to insulate about 17.7 per cent of all homes with the cards — one in six — compared with 9.1 per cent of homes without cards.

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