Queensland subcontractors owed $500 million across 50 building company collapses since 2013

More than 50 building companies have collapsed in Queensland since 2013 leaving more than 7000 subbies unpaid to the tune of $500 million, and more developers could collapse this year if urgent action isn’t taken to clean up the industry. SEE THE FULL LIST OF BUILDING COMPANY COLLAPSES

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

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

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

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

News Queensland will reveal the extent of the damage in a new ‘Back our Subbies’ series, which will call for the establishment of a police taskforce to clean up shoddy practices in the industry and protect workers and their families.

In our series, which will 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

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

WHY MORE BUILDERS WILL GO BROKE

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

Industry expert David Chandler, a former head of the Fletcher Construction Group and a foundation member of the Project Management Institute, said 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 if action had been taken then much of the damage since could have been avoided.

The Aldi construction site on Gladstone Road, Rockhampton, following the collapse of J M Kelly. Picture: Chris Ison

“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.

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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.

“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 he hoped Mr Goddard was right and that it would drive change.

“There is evidence the system needs to be fixed,” he said.

“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.”

The former offices of Queensland Custom Homes at Ormeau which are now for lease. Picture: Supplied

The Palaszczuk Government’s 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.

Subcontractors Alliance head Les Williams said there remained an enforcement void that needed to be addressed.

He said the numbers left him gobsmacked that no criminality had been found in any of the matters.

On behalf of his organisation, and with the assistance of specialist legal advice and industry consultants, he has filed a number of specific complaints about individual failed companies including Walton Construction Queensland, JM Kelly Project Builders and JM Kelly Builders.

Those complaints have been lodged with the Australian Federal Police, Queensland Police and the Crime and Corruption Commission.

All have been referred on to the Australian Securities and Investments Commission from whom he has received no contact.

“The Financial Services Royal Commission shows how ASIC has dropped the ball and let the Australian people down,” Mr Williams said.

“It’s not too late to go back and get it right.”

He has also written to politicians from the Prime Minister down in a bid to have the issues addressed.

“It’s incomprehensible no one has acted,” Mr Williams said.

“Walton Construction Queensland’s insolvency in 2013 set an industry standard for this type of behaviour. If it had been nipped in the bud then, a lot of this damage would not have occurred.

“And there were licencing issues that should have sent red flags well in advance to the Queensland building regulator.”

Walton Construction Queensland’s October, 2013, collapse left 600 small business creditors unpaid $30 million.

“The numbers depict a terrible environment for people to try to conduct business,” he said.

The Civil Contractors Federation in November called on governments at all levels to address the issue of payment security in the construction industry in light of the latest ASIC corporate insolvency report.

In a statement it said it was disturbed an ASIC report for the 2017-2018 financial year had found the construction sector responsible for 22 per cent of 5380 insolvency cases across all sectors.

Originally published as Queensland subcontractors owed $500 million across 50 building company collapses since 2013