Govt Insulation Scheme - Compensation issues

Members and their clients may have seen recent press reports which underline the plight of many Forwarders and others in the supply chain arising from the sudden termination by the Federal Government of its insulation scheme. Many have been left holding containers and insulation as their importer clients refuse (or are unable) to take delivery and are primarily liable for the costs of freight, customs duty, GST, container hire and storage costs.

The cancellation of the scheme means that there is little market for the insulation which makes the usual recourse of exercising liens and selling the insulation unlikely to cover liabilities. Also, exercising the liens could be fraught with danger as the Forwarder or broker is unlikely to be able to certify that the insulation complies with Australian standards (as not in the insulation business). Similarly it seems unlikely that legal actions against the importers will deliver any benefits as the importers' businesses have been decimated by the cancellation of the scheme.

It should also be remembered that the whole additional demand for the insulation was driven by the Government scheme and the sudden and unilateral termination of the scheme has hurt everyone involved. Government appears to have recognised this by providing for compensation for the installers. It is our position that such compensation should also be extended to service providers who have been caught in the middle. There are ample means available to Government to pay such compensation without the parties having recourse to litigation.

To this effect we would recommend that those affected band together to put the most pressure possible on Government to provide compensation. The relevant Government Minister has already asked for parties affected to record their interests. It is our view that those interests are best delivered in one organised and coordinated approach headed by parties who have experience in such collective action. Among those who could assist is Andrew Hudson of Hunt & Hunt who has previously assisted industry in other compensation claims, including those associated with the introduction of the ICS where an organised and high profile campaign led to the payment of compensation without recourse to litigation. Whilst such compensation will never be perfect it does provide members with viable options to writing off debts or having to run expensive litigation.

We would be pleased to assist in coordinating an approach for those members who may find themselves affected and ask that, in the first instance, you send a brief email to: afif@afif.asn.au to register your interest if you may need to claim compensation.

Thanks and regards