AN insulation installer says he will be forced to axe 75 per cent of his Cairns workforce after the Federal Government's Home Insulation program was cut.

Environment Minister Peter Garrett yesterday scrapped the controversial program, which has led to the deaths of four people, including Mitchell Sweeney, 22, who was electrocuted putting in foil insulation at Millaa Millaa on February 4.

The program has been replaced by a renewable energy scheme that contains tougher safety regulations and reduced rebates for roof batts and solar systems.

Mr Garrett told reporters in Sydney the change would crackdown on "shonky operators" who have been selling insulation door to door.

The Office of Fair Trading has received five official complaints in the past year over insulation providers in the Far North.

"There is no question at all that the number of installers who have sought to contravene the guidelines that I have put in place, who have not discharged their appropriate duty of care either to the householder or to their employees, and who have sought to subvert this program, gives rise to an additional level of risk," he said.

"That is the situation that I face and I am responding to it."

Under the new renewable energy scheme, householders will be able to apply for a $1000 rebate after they’ve paid for insulation. Previously, installers received a $1200 rebate.

At the same time, the Government's solar hot water rebate will be cut from $1600 to $1000. The refund for heat pump systems has been cut from $1000 to $600.

Michael Jensen, the owner of Batt-Man insulation, said the announcement was expected.

"We've been fearing this would happen because (the scheme) has been copping so much flack in the media," Mr Jensen said.

"It was almost inevitable, but we were still holding on to that glimmer of hope."

He said the changes would "cripple" the industry and force him to make 15 of his 20 staff redundant in order to cover costs.

"Obviously, overnight there will be thousands of people out of work," he said.

"Installers who have spent a lot of money on set-up costs, leasing premises, marketing and buying stock are going to be left in an extremely difficult financial position."

Mr Jensen believed the Home Insulation program should have been more closely audited.

"There should have been a lot more auditing, especially at the start of the program to enforce that installers would not get away with sub-standard products and procedures," he said.

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