Today’s Financial Times of London reported a story that I don’t think has gotten a lot of coverage in the United States.  As part of its economic stimulus program, the Australian government offered homeowners up to A$1,600 ($1,460, €1,070, £970) to insulate their homes.  This sounds like a great idea–everybody wins–the homeowner saves energy, they get financial help to do it, and the government creates jobs and ‘goes green.’  Well, not so fast.

More than one million homes have been insulated in a year, as opposed to the usual amount of 70,000.  Unfortunately, when that much work was created all at the same time, much of the work that was done was substandard–metal staples were driven into electrical cables, insulation was put on top of ceiling lights, and four installation workers have been killed.  This is becoming a politcal issue–Tony Abbott, the opposition leader, charges that some 48,000 homes could now have ‘live’ roofs that will electrocute anyone who climbs on them.  The environmental minister, former rock star Peter Garrett has been relieved of his duties. 

The article concludes:

“There is a final lesson. The subsidy meant that Australians could get their insulation free. Regulation is all very well, but it cannot cover every eventuality. The more people pay for their goods and services the more likely they are to inquire into the competence of the providers.”

Please follow the link above and read the entire story.  It is a tale of what happens when the government gives out money without considering the consequences.