Gold Coast construction industry: Urgent action needed or more developers could collapse in 2019

The State Government has been warned that more major developers could collapse this year, leaving thousands more subcontractors out of pocket, if urgent action is not taken to clean up the state’s construction industry.

THE Queensland Government has been warned that more major developers could collapse this year, leaving thousands more subcontractors out of pocket, if urgent action is not taken to clean up the state’s construction industry.

Construction directly employs more than 21,000 Gold Coast locals and supports 12,300 small businesses – more than any other sector in the city.

More than 50 building companies have collapsed in Queensland since 2013, ­leaving more than 7000 subbies unpaid.

Peter Wrafter, Director of T. Wrafter and Sons Stonemasons, says he is “aghast” at the inaction of authorities to clean up the construction industry. (AAP Image/Richard Walker)

Among the collapses chronicled by the Gold Coast Bulletin are those of the Cullen Group, Queensland One Homes and Future Urban Residential which between them owe more than $45 million to more than 700 creditors, with some small businesses caught up in more than one of the failures.

Scores more have have been burnt by the failures of Auzmet, AB Hill, Bluestone, Batir, Ware Building and others.

No criminal charges have been laid against any of the major companies in that time, despite industry figures estimating $500 million has been left owing to subcontractors.

There is also evidence supporting allegations of some builders submitting false statutory declarations that they have paid their subcontractors.

THE INSIDE STORY OF THE CULLEN GROUP COLLAPSE

Owners of collapsed developer company Queensland One homes Paul Travis Callender and Amber Patrice Callender. Photo: Facebook

News Queensland will further reveal the extent of the damage in a Back Our Subbies series, which will call for the establishment of a police taskforce to clean up shoddy practices i and protect workers and their families. In the series, to run across the state’s 14 biggest daily newspapers, we will reveal:

• Why Queensland needs a properly resourced taskforce to enforce laws that already exist;

• The impact on thousands of hardworking subcontractors and their families;

• How developers are gaming the system with the support of banks to protect both their self-interests; and

• The extent to which senior government figures were warned of major collapses and failed to act.

Already this year, a string of Queensland builders have hit trouble, including Queensland Custom Homes and G.J. Gardner Homes at North Ipswich.

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Rod Mattingley poses for the camera ouside his half finished home in Griffin. Rod Mattingley with his botched Q1 Homes house which is now being comlpeted by related company Empire Constructions. Wednesday September 20, 2017. (AAP image, John Gass)

Industry expert David Chandler, a former head of the Fletcher Construction Group and a foundation member of the Project Management Institute, said that authorities needed to get tough and to start charging wrongdoers, instead of seemingly extending them a “get out of jail free card”.

JM Kelly Builders at Rockhampton, the Brisbane-based Cullen Group and Queensland One Homes are some of the biggest builders to go into liquidation in the past 18 months.

Subcontractor groups point to the 2013 planned exit of Walton Construction and Walton Construction Queens­land, saying that if action had been taken then, much of the damage since could have been avoided.

“Governments can’t ignore it,” Subbies United founder John Goddard said.

“These (affected) people are taxpayers and this impacts down the line.”

He said it was shocking that thousands of unsecured creditors were left unpaid.

Mr Goddard said he believed the Cullen Group public examination, expected to be held in the Federal Court in the first half of this year, would change the industry.

Valarie Kargar with her son Patrick, who built their home with Q1 Homes. Picture: Jerad Williams

INSIDE THE COLLAPSE OF QUEENSLAND ONE HOMES

“Governments will have to do something about it,” he said. “I can pinpoint to the minute when 650 creditors were ripped off. The result of that public examination has to change the industry.”

Mr Goddard said changes to legislation under the Newman LNP government had seen independent financial ­reporting changed to self-reporting. “It has become an art form,” he said.

Liquidator Michael Caspaney of Menzies Advisory, who will direct the Cullen public examination, said there was “evidence the system needs to be fixed”.

“The Government has to admit it needs fixing. Subcontractors are suffering too much. They have become a source of unsecured money.

“I agree with John Winter of ARITA (Australian Restructuring Insolvency and Turnaround Association) that the regulator needs to be stronger against directors who are guilty of misconduct.”

Amber Patrice Callender now owns another construction company. Photo: Facebook

After sustained pressure from the Bulletin, the Palaszczuk Government brought forward a new Building Industry Fairness Act includes Project Bank Accounts to insulate, in trust, money owed to subcontractors and suppliers.

The Government has also announced stiffer Minimum Financial Requirements for building licence holders, aimed at addressing stark weaknesses in existing legislation.

Gold Coast Senator Murray Watt repeatedly and specifically referred to the Bulletin’s coverage in Federal Parliament in a national push to drive better enforcement of anti-phoenixing legislation, which culminated in a damning Senate Inquiry and the announcement the Government would spend $40 million to crack down on directors who try to avoid debts by shifting to new companies.

But still, the collapses keep happening, and more decisive action is needed.