These tradies are cowboys . I have never seen a mess like that in a bath or else where in over 30 years . The bath normally sits on a bed of concrete slurry or if it is a cast iron bath it should be supported by either feet or the hob. The bath should have enough room under the edges to allow the tiles to go under the lip so a proper silicon seal can be applied all the way around the lip of the bath. As for the insulation it is not necessary to have it wrapped in any water proof protection. If the water is getting onto the insulation then you have bigger problems and from the look of the photos this looks like a definite future possibility.I like to put insulation batts all the way around the bath to try to retain the water temperature for as long as possible,not many people do this though ,but the more you insulate things the better. Looking at your photos the pipework connecting the waste is broken off so the hob will need to have atleast one side pulled off or an access hole cut into it to connect the plumbing. I would be getting these plumbers and builders checked out,if the photos are any indication to go by then there would be other areas of faulty workmanship for sure, -sorry to tell you.

Is it just a plain bath or a claw foot?. If it's claw foot, look at getting it re-enamelled (yes $$$), if plain bath, then replace it. There are various forms of re-finishing. The best being re-enamelling (they sandblast the bath back to original then rebake it). Cheaper versions include self-painting (White Knight paints) or automotive spraying. You will likely only get a few years out of either before it starts to come away. I personally don't think you can compare steel baths to acrylic baths. If you are used to steel, stick with it.

Hi How2Girl, I appreciate your follow up! The Reece document is good - thanks - I wish there was something concrete in the Standards though. Worth notiing is that a shower over the bath needs the same wall-sheeting details as if it was a shower base. Also wall framing in the bathroom needs to be done to AS 1684.2-2010 Residential timber-framed construction - Non-cyclonic areas (Which the James Hardie 'wet area design book' is based on) Very frustrating that the Australian Standards are not readily available - ie FREE- or at least, latest copies at local libraries. How are we meant to build to standards when they are inaccessible. Another factor in determining the overall quality of the Australian construction industry Also what I've found frustrating in this instance is that other trades in my small town are unwilling to agree that the work is of very poor quality - there is an unstated 'brotherhood' at work. So Im going to have to engage an independent Building Certifier, probably from out of town. Of course,the cost for this will come off the builder's fees on a pro-rata basis for below-par work

True the standards will be different, but as far as I know, the standards in Australia for waterproofing tubs only state what the outcome needs to be, not necessarily the exact equipment used to achieve it. I think something like this on the market would solve a problem for many people. I've just seen horrendous installations on NEW buildings that included MANY APARTMENTS especially where water clearly runs down between tub and wall and not to standard at all. I can't believe what builders get away with. The way I found out about this stuff is because I've pretty much exhausted my options. Scrolled till my eyes could scroll no more! :) Over many days. I saw a bath on Temple and Webster of all places which stated that it comes with an adhesive tile bead, and I was like, what is that?! I am now actually considering that tub, so I might not need to get a separate thing. But otherwise I was thinking another type of trim or flange attached to the tub could very well do the job just fine. I'm still very confused why island baths are more often offered as a wider bath and flange baths (and especially anti-slip ones clearly concepted to be shower baths) are narrower. I'm guessing they know what sells, but it goes against my design instincts!