Appendix A: Analysis of Issues and Options for Programme Design

• Optimising policy interventions is more difficult with multiple objectives.

• Accept that the mix is real.
• Pursue a single policy objective at a time (eg, cleaner air) and do everything to maximise the policy outcomes desired while mitigating unacceptable impacts.
• Reduce the number of policy objectives being pursued simultaneously and accept a degree of complexity.
• Distinguish main from subsidiary objectives.

• Monitoring outputs provides little scope for learning as the programme evolves.
• Output orientation does not necessarily achieve the desired outcomes.

• Institute an 'outcomes' framework as the core basis for programme design.
• Institute more systematic and timely evaluation of outcomes.

Lack of a standard:

• disadvantages the achievement of the Warm Homes objective
• makes Warm Homes outcomes somewhat arbitrary and potentially inconsistent from home to home.

• The Ministry for the Environment should work with health agencies to develop a pragmatic minimum standard for warm homes.

The current emphasis:

• misses large numbers of polluters
• misses some households with a need for Warm Homes retrofits
• has the potential to undermine the credibility and public acceptability of existing incentive programmes
• does not engage the commercial sector as much as it could (ie, creates something of an artificial market).

• Increase efforts to educate all households about the benefits of changes in home heating, emphasising health and comfort (private gains) rather than just air quality (public gain).
• Increase efforts to promote partial assistance programmes, using more proactive social marketing and working through community networks.
• Incorporate additional financing measures (eg, loans), which broaden the appeal of the programme.

• Clean heat and warm homes are both primarily health issues; a failure to work through health agencies risks 'pressing the wrong buttons' and therefore being less successful in promoting participation.
• Local health professionals (district nurses, Plunket nurses, GPs, etc.) have important existing relationships with many households and are trusted, so failure to incorporate them effectively reduces programme accessibility to many households.
• Failure to work through local health agencies makes it difficult to reach households that do not 'volunteer' to participate, for whatever reason.

• Create a local community 'steering group' which includes health agencies and associated NGOs.

• Failure to incorporate social service, community groups and local NGOs effectively reduces programme accessibility to many households, and misses out on local leadership and champions for promoting the programme, particularly for communities that are 'starting cold'.

• Create a local community 'steering group' which includes health agencies and associated NGOs.

• Cost is a persistent barrier to participation in publicly funded programmes.

• Introduce loans into the mix of financial assistance available.
• Emphasise the private benefits of change.
• Broaden the scope of higher incentives to include the group just above the Community Services Card threshold and others in need.
• Complement the Community Services Card eligibility criterion with different/ more flexible ways of achieving participation (eg, referrals from particular community agencies).

• Electricity tariffs seem to be influential for both longer-term strategic thinking by households as well as short-term decisions, but the messages are mixed and influence clean heat and insulation decisions differently.

• Revisit the public policy debate on electricity tariffs and tariff structures.

• The high heating capability of some old log burners is real - householders expect at least as good performance.
• Resistance to the programme of change is possible.
• The reputation of the programme might suffer.

• Allow flexibility/ exceptions to eligibility criteria in certain circumstances.
• Insulation should be part of the package.
• Provide appliance choice and flexibility.

• There may be resistance to the programme of change.

• Provide appliance choice and flexibility.
• Provide insulation as part of the package.

• There may be unwillingness to commit to investment where there may be no benefits.

• Promote HERS to indicate the private benefit of home improvements on capital/ resale value.

There may be:

• difficulty gaining local commitment to partner central government
• difficulties for local government in justifying expenditure of local rates on a centrally determined problem
• higher risk of failure to meet deadlines.

• Create community engagement though local forums and local champions.
• Develop a united front from key agencies.
• Tie clean air improvements to messages on private benefits (health, comfort, control of costs, etc).

• Lack of information hinders individual household decision-making and therefore may reduce participation in the programme, particularly where full subsidies are not available.

• Institute more systematic and timely evaluation of outcomes and use the findings to educate and inform households, the commercial sector, and health and social agencies (ie, all programme participants).

• While solid-fuel burning is a visible criterion, cold homes are not 'visible', which hinders the effective promotion of the Healthy Homes objective and the effective targeting of information, education and assistance to such households.

• Work through local agencies and groups with established relationships to households.
• Create local networks of referral agencies.

• This hinders the search for what might be the most cost-effective improvements to existing programmes.
• The absence of information to differentiate the important social drivers between one market segment and another gives us no guidance on what might be useful and more effective segmentation in programme design.

• Introduce systematic evaluation of responses to existing programmes.
• Commission consumer/ householder research on social drivers.

• The messages about health consequences are not getting through.

• Involve local health professionals in programme delivery.
• Use community education efforts, again using locals who have established relationships and are trusted.

• This creates householder resistance to converting to electricity for space heating or total dependence on electricity.

• Government and sector initiatives improve system reliability and reserve capacity.
• Run (ensuing) information campaigns about improved system reliability and reserve capacity.

• Children are an important avenue of community learning to build receptiveness.

• Work with education agencies on associated curriculum initiatives.

• The present focus on direct household subsidies with relatively little expenditure on, for example, education and capacity building in local networks for implementation, may not be the most cost-effective application of public funds.
• This is potentially significant for the scale of public funds involved.

• Encourage existing programme funders to devote a higher proportion of financial resources to other aspects of programme implementation.
• Apply partner funding and partner 'in-kind' contributions to education and capacity building for local projects.

• They may not be cost-effective.
• There is the potential to reduce the overall call on public money, or potential to increase the total number of households benefiting from the same level of public expenditure.

• Introduce loans into the mix of financial assistance available, ranging from 100% low-interest loans through to part loan/ part grant arrangements (with loans sourced from government funds at the public sector discount rate).

• There is an inability to target appropriate financial incentives to some households.
• This will affect the cost-effectiveness of public funding.
• Complexity of incentive design may be influenced.

• Accept the degree of simplicity or crudeness in the current segmentation of incentives.
• Introduce loans into the mix of financial assistance available, thereby achieving a better potential match between the need for assistance and the type of assistance offered.
• Evaluate the uptake of loans across different market segments.
• Introduce different/ more flexible ways of achieving participation (eg, referrals from particular community agencies).

• A strictly 'rational' approach to programme design is likely to significantly under-achieve its expected outcomes.

• Increase the proportion of public investment in promoting programmes and encouraging and educating householders.
• Promote and implement programmes through a variety of channels.
• Adopt pro-active approaches to programme implementation, particularly to accessing households; and don't rely on commercial channels alone.

This lack:

• leaves gaps in the financial products available to help promote home heating change
• inhibits potential market uptake and puts a greater burden on public funding
• restricts opportunities to fund improvements beyond a basic Warm Homes package.

• Central government needs to engage financial services in public/ private partnership at a sectoral level.
• Target education at financial services providers (eg, Sentinel) that have potentially useful new 'products', particularly for the private loans/ mortgage market.
• Develop pilot funding mechanisms and incorporate them as part of existing programme options.

• This may create disincentives or delays in participation, with consequent programme scheduling issues.

• Introduce regulations which embody earlier phased deadlines (eg, open-fire phase-outs, wood-burner replacements).

• This discourages participation with cross-compliance requirements for eligibility.

• Assist compliance (eg, the need to install insulation to qualify for a heating subsidy) by packaging an assessment and installation service as part of the incentive programme.

This:

• undervalues the private motivations for participation in these programmes
• is a missed opportunity for an incentive or driver.

• Introduce the Home Energy Rating Scheme (HERS).
• Work with property investor associations to promote HERS ratings as a desirable marketing tool for their members.
• Work with Real Estate Institute of New Zealand branches to promote recognition of HERS in the residential property market.

• In the past the conservatism of the Building Code has not been as supportive of raising insulation levels as it might have been.

• Consider differential insulation standards for different climatic zones in the country, linked to a (proposed) minimum standard for warm homes.

• This requires specific programme design considerations for rental properties.
• In some sectors it can be more difficult to achieve change in home heating that is affordable.

• Make assistance programmes available to non-resident property owners.
• Work with property investor associations to promote the private benefits of improved housing stock.
• (See below under 'Difficulties engaging residential property investors').

• This is a significant and growing segment of the residential market.

• Introduce measures/ standards into the Residential Tenancy Act review.
• Run an information and education campaign through property investor associations.
• Promote dwelling assessments (by registered installers) through property managers.

• More households are moving to the 'harder to engage' rental sector.

• See Government's policy initiatives regarding home ownership.

• This creates challenges for institutional responsibilities and programme co-ordination.
• Similar programmes lack integration.
• Differing incentives can create confusion for recipients.

• Establish a common incentive platform from central government for particular outcomes or a package of outcomes.
• Establish a common 'brand' of programme.
• Seek agreement between central and local government and between environment and health agencies on financial contributions and how these may be applied to various elements of programme implementation.

• National and regional initiatives with overlapping objectives fail to reinforce each other.
• There are perceived inequities between programmes.
• There is a mismatch between funders and the outcomes achieved.

• Establish a common incentive platform from central government for particular outcomes or a package of outcomes.
• Seek agreement between central and local government and between environment and health agencies on financial contributions and how these may be applied to various elements of programme implementation.

This misses out on:

• additional sources of funding
• institutional commitment/ promotion from other funding parties.

• Develop partnerships at all levels, including: central government agencies, regional councils and local health providers, and networks of community-level services with links to a wide range of groups in their communities.

• There is a need to optimise the application of public funding in the most cost-effective way.
• The distribution of responsibility for public funding at central, regional and local government level needs to be determined.

• Include loans in the funding mix.
• Experiment with different levels/ mixes of financial incentives in the pilots.
• Encourage private mortgage arrangements (eg, Sentinel-type mortgages).

• This has consequences of non-compliance for regional councils.
• Environmental and health costs continue if targets are not met.
• It is time to re-evaluate existing programmes and re-design them to achieve faster rates of household change.

• Implement 'feasible improvements' to existing programmes.
• Run pilot programmes in other centres with variations.
• Institute an 'outcomes' framework as the core basis for programme design.
• Institute more systematic and timely evaluation of outcomes.