Families of the young men who died during the rollout of the Rudd government's home insulation program will be compensated by the Commonwealth.

Prime Minister Tony Abbott has outlined his Government's initial response to the royal commission into the scheme.

"Nothing can bring them back," Mr Abbott said in a statement to Parliament.

"[The] families should know that government won't walk away, that government accepts responsibility and will do its best to make amends.

"That's why Minister [Greg] Hunt and the Minister for Finance [Mathias Cormann] have been asked to recommend options to compensate their next of kin."

Insulation installers Matthew Fuller (25), Rueben Barnes (16), Marcus Wilson (19) and Mitchell Sweeney (22) died between October 2009 and February 2010.

The program was part of Labor's response to the global financial crisis.

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There was no detail about how much money might be provided.

But Bill Potts, the lawyer representing the family of Rueben Barnes, told PM the Government must be generous.

"Some form of compensation will be valuable for two reasons," he said.

"One is that it will be the most muscular representation that the Government accepts responsibility for the deaths.

"Secondly, it will go some way to recognising the pain suffered by Rueben's father and his family.

"It is only hoped that the high-flown rhetoric of Mr Abbott, which was very well intentioned, can be met."

Businesses also set to be compensated

Senior ministers are also looking at ways of compensating businesses that closed or lost large amounts of money when the scheme was scrapped.

Peter Stewart from the Home Insulation Industry Action Group said he was relieved.

"I couldn't put a figure on how much [money] might be required to adequately compensate people," Mr Stewart said.

He said anyone who thought the royal commission was a political witch hunt into a Labor policy, did not understand the impact the scheme had on insulation installers.

"One of the unfortunate aspects of the whole home insulation program was that it ended up tainting most people in the industry as shonks," Mr Stewart said.

As part of the Government's response to the royal commission, Mr Abbott will discuss the dangers of roof cavities with state and territory leaders at the next COAG meeting.

"That's a really important step," said Peter Koutsoukis, the lawyer representing Mitchell Sweeney's family.

"These deaths could have been avoided. We are happy there is an acknowledgement of that, and of course the family wants to make sure that this never happens again."

Labor supports move to improve workplace safety

The Government will also examine the commission's findings about occupation health and safety laws and appoint someone outside of the public service to see what lessons can be learnt from the program.

"This is not a witch hunt, but we do need to recognise that the home insulation program was a tragic failure," Mr Abbott said.

Opposition Leader Bill Shorten told Parliament Labor supported steps to improve workplace safety.

"There have been, even in the last 12 months, over 200 traumatic fatalities in workplaces," he said.

"Taking the Prime Minister's words, that's a failure across our society in terms of people going to work and not returning home."

The final response to the royal commission will be released by the end of the year.