By Maggie Tait of NZPA

Wellington, May 28 NZPA - A budget designed to deal with chill economic times has delivered one warm fuzzy -- a insulation grant of up to $1800 for homeowners which is expected to provide nearly 11,000 jobs over four years.

Funding of $323.3 million over four years is tagged to fit houses built before 2000 with insulation and clean heating under a programme the Government designed with the Green Party.

About 180,000 homeowners will be eligible for the grants from July after the programme is launched on June 18. An assessor will establish how much insulation each house needs and then homeowners will decide how much they want done.

Community Service Card holders will be able to get grants as high as $3000 and $32m a year has been ring-fenced for this group.

The programme will be delivered by the Energy Efficiency and Conservation Authority (EECA) and subsumes $79.6m of its funding, previously used in grants targeted at people on lower incomes.

"This will be a significant stimulus to the building industry and will have positive environmental and health benefits," Finance Minister Bill English told reporters at the budget lock-up.

Greens co-leader Jeanette Fitzsimons estimated job creation at 2700 new jobs a year or 10,800 over the four years.

Grants of a third of the cost of home insulation are being offered, capped at $1300. EECA will register assessors who will decide what insulation is needed. Homeowners will be able to meet the remainder of the assessed cost through loans provided by electricity companies, councils and banks, which have indicated they are interested in backing the scheme.

Money can be paid through power bills, council rates or mortgages. Interest will be charged.

Energy and Resources Minister Gerry Brownlee said finance would vary between providers but the subsidy would cover the interest paid for the loan.

Those who took up the programme would also benefit from lower power bills.

A further $500 will be available for sufficiently insulated homes to go towards buying clean heating devices, which include approved log burners, pellet burners, heat pumps or flued gas heaters.

Community Services Card holders can get up to $1800 for insulation and a further $1200 for heating.

Landlords of card-holding tenants will be entitled to a maximum $1800 for insulation and $500 for heating.

The heating grants are for fixed amounts rather than a third of the cost.

Mr Brownlee said the New Zealand Insulation Fund would generate jobs for people in the industry and reduce health problems.

"It's designed to reduce health risks from living in cold, damp homes and provide energy efficiency gains," he said.

Ms Fitzsimons said the country would recover its investment four-fold in 20 years through energy and health savings.

Mr Brownlee said the Wellington School of Medicine estimated one hospital admission for a respiratory illness cost the same as a single retrofit of one house.

About 19,000 homes are insulated each year. This is expected to increase to 27,500 in 2009-10; 40,500 in 2010-11, then 52,000 and 60,500 in the two following years.

In 2012-13 more homes would be insulated than had been over the previous decade, Mr Brownlee said.

Both he and Ms Fitzsimons were confident capacity could be built quickly to meet demand. There were 30 providers licensed with EECA to carry out work.

Ms Fitzsimons hoped landlords would act to improve the value of their asset and to attract and retain tenants and to prepare for potential regulation of minimum insulation standards.

The Greens were disappointed when the new Government dumped their 15-year $1 billion home insulation fund which was negotiated with Labour.

Ms Fitzsimons said this scheme would see more spending faster than the Labour one, with more delivery partners and more ways of getting financing.

The previous scheme was targeted at low income people but Ms Fitzsimons said the programme was generous enough to make her happy.

People on higher incomes in uninsulated houses used more electricity.

"You get your highest carbon energy savers from the higher incomes, you get your best health savings from people on lower incomes."

The Green Party is not voting for the budget despite the inclusion of the initiative.

Ms Fitzsimons said the party was willing to work with National to make positive change but it remained at odds on many policies.

NZPA