Budget 09: Insulation set to line homes and pockets

A stockpile of home insulation products sit on an Auckland street. Photo / Getty Images

Insulation companies are expecting a flood of business now the Government has announced a $1300 grant that can be paid to anyone who owns a poorly insulated home built before 2000.

From July 1, homeowners will be able to go to the Energy Efficiency and Conservation Authority (EECA) for a grant of up to a third of the cost of installing ceiling and floor insulation, as well as a $500 payment towards low-pollution heating such as wood pellet burners or heat pumps.

Up to 180,500 homes will be upgraded over the next four years - 27,500 in the first year - at a cost of $323.3 million to the Government.

The scheme is likely to continue beyond the next four years until much of the chilliest housing is upgraded.

Electricity companies, city councils and banks are expected to offer customers top-ups to cover the cost of the insulation not covered by the Government grant.

Local government law specialist Dr Grant Hewison said councils could copy a scheme already run by Environment Canterbury, where the council pays for the insulation upfront then recovers the cost over 10 years through specially targeted rates.

That system was less risky than an ordinary loan because it was secured as a statutory charge against the house, he said.

EECA estimates the total cost of fitting floor and ceiling insulation and a clean-burning heating system is between $6300 and $8500 per house.

With Government funding that could be reduced by as much as $1800.

Community services card holders will be eligible for a more generous scheme - as they are at the moment - offering a grant for 60 per cent of the cost of insulation plus $1200 towards clean-burning heating.

Landlords with tenants who have community services cards can also get 60 per cent towards insulation plus $500 for a clean-heating device.

The insulation fund, which was negotiated with the Green Party to replace a package by Labour worth roughly the same amount, is made up of $243.7 million of new funding plus an existing $79.6 million subsidy programme for low- and middle-income earners.

Wendy Robinson of CSR Bradford Insulation said her company had already seen more demand for insulation because of subsidies for low- and middle-income earners.

The new grants, which are not means tested, would open them up to a much wider audience.

Of the companies she dealt with, there had been a fourfold increase in insulation installers seeking EECA accreditation so they could install Government-funded insulation.

It was important to make sure people putting in the products were well trained. "If there's an air gap [in your insulation] it may as well not be there at all," she said.

Rob Croot, general sales manager for Autex Insulation, said the existing scheme of grants had helped the industry through some boom and bust years in the residential housing market.

Sales of insulation had risen by a third in the last month and he expected them to "go through the roof" in July.

His company was looking for three new staff and expected to take on others this year. "Right now there is going to be a lot of pressure on the industry and we'll struggle to cope with consumer demand ... but we will build to meet the market," he said.

A spokesman for Energy and Resource Minister Gerry Brownlee said more details of the scheme would be announced in the next two or three weeks. There will be an 0800 number and website for people who want to take advantage of the offer.

There is no indication yet how applications will be staggered if demand outstrips the allocated funding.

HOW IT WORKS

* Apply for a grant to the Energy Efficiency and Conservation Authority, the organisation set up by the Government to promote energy conservation.
* An auditor will come to your house to check what level of insulation you need.
* Government will pay a third of the cost, up to $1300. A list of power companies, city councils and banks that can loan the rest of the money will be available online.
* Once a home is insulated, owners can apply for $500 towards approved log burners, wood pellet burners, heat pumps or flued gas heaters.