Mr Murphy, a sole trader carpenter who branched into insulation under the Federal Government's failed stimulus program, said that cutting off the money supply "like a tap" left him and others like him high and dry.

"I've been waiting since early last month to be paid for about a dozen jobs that amount to about $15,000," Mr Murphy said.

"It's good work, we've done the right thing, and the Government is so disorganised that they can't even tell me when we are likely to be paid.

"They keep putting the dates back time after time. They say they are helping the industry with wage supplements but when you apply they send you out dole forms. I've never been on the dole and I don't want to go on the dole."

Mr Murphy said he and other tradesmen in the area had done good jobs at proper prices and were being punished by the actions of fly-by-night cowboys.

He was backed by one of his customers, Swansea retiree John Hunter, who said Mr Murphy's team was fast, neat and efficient.

"I'm a retired engineer and I got up in the roof to make sure they'd done the right thing and they had," Mr Hunter said.

State and federal governments alike are vowing to clean up the insulation industry, with Newcastle company ABC Insulation the first company to be taken to court by the NSW Department of Fair Trading.

A spokeswoman for Fair Trading Minister Virginia Judge said the State Government had received 693 insulation complaints.

She said 41 companies were being investigated for breaches of the Fair Trading Act under state law but it was too early to say how many of these would result in prosecutions.

She said complaints related to alleged "rorting" of the $2.45 billion stimulus scheme were being referred to federal authorities.