Developers face scrutiny over building industry woes

The State Government will examine whether property developers should be held more accountable for the growing insolvencies afflicting the $47.4bn building industry.

The State Government will examine whether property developers should be held more accountable for the growing insolvencies afflicting the $47.4bn building industry, possibly by paying into special trust accounts earmarked for subbies.

Minister for Public Works Mick de Brenni said initial reforms introduced under the State Government’s building fairness laws had enhanced payment protections for subbies by making builders pay money into project bank accounts.

Mr de Brenni said the next step was to consider whether further changes were needed to ensure everyone who benefits from a booming building industry contributes their fair share.

Mr de Brenni said developers were the driving force behind much of the work undertaken in the construction sector but it was contractors and subcontractors who bear the burden arising from incomplete works, payment disputes and non-compliant works or products.

The moves comes as one of the country’s biggest home builders, Queensland-based Privium Group, teeters on the edge of collapse.

Privium, which posted a $28m loss in the 2019/20 financial year, last week shut down the bulk of its building operations. It plans to transfer 160 unfinished Queensland projects to Eight Mile Plains-based builder Torsion.

Mick de Brenni

The Parliamentary Transport and Public Works Committee recommends there be consideration of developers’ financial and operational capacity, ethical behaviour and work practices.

“The review will consider the benefits of ensuring everyone is accountable for the financial security and sustainability of our $47.4 billion building industry, and the range of options to achieve this,” said Mr De Brenni.

Mr de Brenni said a developer review panel would be chaired by industry professional Alison Quinn, who has more than 25 years’ experience as a chief executive officer and senior executive in the property development and aged care sectors.

The other panel members are property investment firm chief executive Adrian Pozzo, construction advisory firm managing director Gina Patrick and lawyer John Payne. The work of the panel will be supported by a reference group

Master Builders Deputy CEO Paul Bidwell said the entire industry would welcome the review.

“We know from bitter experience that late or non-payment is a blight on our industry and can have devastating implications down the contract chain,” said Mr Bidwell. “The reality is that problems frequently start at the top with owners and developers and trickle down to negatively impact builders, subcontractors and sub-subcontractors and suppliers.”