‘Pink Batts 2.0’: Dodgy hot water systems flood Australia

Multiple government rebates have allowed new household heat pumps in NSW to be sold and installed for free, but this has caused an explosion of low-quality foreign-made goods sold by “cowboy” installers and the results have been catastrophic.

Plumber Bill Armstrong, board member of the Master Plumbers NSW, (left) with Tim Mackie owner of Kirrapak in Braemar who had two hot water system installed in his factory with one breaking down after only one month. Picture: Jonathan Ng

Taxpayer-funded handouts combined with poor regulation have allowed Australian homes to be flooded with dodgy and potentially dangerous hot water systems – a crisis that has been described as “pink batts version two”.

Industry experts have warned lucrative government discounts, which until last year allowed some new heat pumps to be installed for free, have unleashed “cowboy” workers who have been selling cheaper, Chinese-made products to unsuspecting customers.

The NSW Building Commission has also conducted spot checks of properties and hot water installers that revealed shocking compliance rates of just nine per cent.

The fiasco has been likened to the Rudd government’s pink batts disaster, a home insulation program that resulted in widespread rorting, dozens of household fires and the death of four young workers.

Acting Fair Trading Minister Paul Scully described the reports as “concerning” when contacted on Wednesday. He has requested his department “urgently look into the matter”.

The Minns Government has also fallen behind Victoria regarding consumer protection. For example, Victoria has mandated a five-year warranty for heat pumps and also banned cold-calling and door-knocking from the industry.

Tim Mackie, a small-business owner in the Southern Highlands, was contacted multiple times by a call centre before accepting two free heat pumps in 2023.

“Two guys showed up in a truck, put the units in and then disappeared,” Mr Mackie said.

“We received no paperwork, no warranty, no number to chase them up on.”

A month later, one of the heat pumps stopped working. Mr Mackie will have to pay for the replacement.

Veteran local plumber Bill Armstrong described the second system in Mr Mackie’s business as the “worst installation job I’ve seen in 55 years on the tools”.

Mr Armstrong claimed the heat pump had an “illegal” charging structure, leaky connections and cables running out of the room so a door could not be closed. “This is not the work of a plumber. No way,” he said.

Legendary local plumber Bill Armstrong said the heat pump in the Southern Highlands was the “worst installation job he’d seen in 55 years on the tools.” :Picture: Jonathan Ng

Nathaniel Smith from Master Plumbers claimed the government scheme was “pink batts version two”.

“These are poor-quality products sold by unqualified cowboys,” Mr Smith said. “A takeaway store at Bankstown had a heat pump placed inside the kitchen next to open flames. This could be fatal. When governments offer these incentives, they are always gamed by the wrong people” he said.

Ads from 2023 in NSW offering free hot water systems as part of the lucrative government rebate.

Mr Smith’s assessment is supported by NSW Building Commissioner James Sherrard, who wrote to representatives of the hot water industry on Tuesday night to acknowledge a “systemic” issue.

“A target audit compliance program in March and April 2024 included site inspections of 174 properties and desk audits of 240 installers, only nine per cent were compliant,” Mr Sherrard wrote.

Mr Sherrard confirmed another 247 inspections had been conducted this year, discovering a compliance rate of 37 per cent. A total of 69 penalty notices have been issued.

Commonwealth incentives for users to switch from electric and gas hot water systems into more energy-efficient heat pumps has resulted in more than 400,000 discounted devices sold over the last five years.

Tim Mackie, the owner of Kirrapak in the Southern Highlands, was given two free heat pump systems courtesy of state government rebates. One stopped working within a month. Picture: Jonathan Ng

With additional NSW-based discounts, which were introduced and championed by the former Coalition government, eligible commercial businesses were able to receive a new hot water system for free, with households were charged just $33.

One reputable industry representative who asked not to be named said: “the combined discounts were well over $1,000. The dodgy operators imported cheap Chinese water heaters for $600 and were paying workers $150 a job. The rest was cream for them.”

The Minns Government was last year forced through the IPART to increase the minimum consumer payment for households and businesses to $200 in June following a spike of complaints surrounding “incorrect installations”, “high-pressure sales tactics” and “misleading advertising.”

NSW Premier Chris Minns deflected when asked about whether he was concerned by the Telegraph’s report.

“It’s a completely legitimate question but I just haven’t had an opportunity to review the files on that, given the disaster we’re dealing with at the moment,” he said.

Amid reports NSW is considering whether to follow Victoria by banning door knocking and putting warranties in place for hot water pumps, Mr Minns flatly rejected introducing the changes on Thursday with a one word response: “No.”

In a statement, a spokesman for the NSW Department of Climate Change, Energy the Environment and Water (DCCEEW) said: “All products that receive incentives under the scheme must meet specific requirements or standards.

The DCCEEW has previously stated the three combined incentives for heat pumps “exceeded the cost of installation, resulting in pressuring sales tactics and an increase in installations where the system was not fit for purpose.”

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