The Energy Efficiency and Conservation Authority (EECA) has increased the number of checks on homes insulated under the Government's Warm Up New Zealand scheme after problems.
NZPA reported last month that homes in New Zealand were being checked after house fires involving insulation in Australia.
In New South Wales a spate of fires were sparked by shoddily installed ceiling insulation. Different products are allowed to be used in Australia than those approved here.
Australian Associated Press reported that in during three weeks late last year 15 fires had started in roofs across the state, a far higher than normal figure. The fire service warned that roof fires could get well under way before smoke alarms went off.
The problem was identified as being caused by ceiling insulation touching heat sources such as downlights and exhaust fans.
In New Zealand Energy Efficiency and Conservation Authority (EECA) has doubled the number of audit checks it does after faulty installation was uncovered.
The scheme started last July and is open to all New Zealanders with houses built before 2000. The scheme provided up to $1300 towards a third of the cost of insulation and a $500 grant for clean heaters. Community Service Card holders can get more funding.
Audits of 570 homes so far had found 17 homes had downlights or extractor fans covered by insulation. Suppliers have to pay for remedial work done.
A Wellington man told NZPA that a supplier visited his home to check the roof because of the Australian cases and found the insulation was closer than it should be to downlights.
About 27,000 homes have been insulated since last July with no reports of fires or charring.
Energy Minister Gerry Brownlee this morning said the EECA audits checked a range of things and the agency assured him that all houses refitted under the scheme in a manner where complications could arise, namely where insulation covered heat sources such as downlights or extractor fans, had been rechecked.
"To say this indicates there is a massive problem is a bit of a beat up frankly. What it indicates is that we're very rigorous about ensuring the quality of those jobs."
He said he was satisfied that contractors were aware that shoddy work would not be tolerated.
"We've made it very clear that people will forfeit contracts if they continually miss on audit points. And further, we have said payments will be withheld until EECA are satisfied that all those audit points have been met."
A spokeswoman for EECA said the audit checks were increased from 5 percent to 10 percent, following the first round of audits received before Christmas.
Under the scheme there are financial penalties for companies that don't do a good job and they can lose the right to do the subsidised work.