Probuild collapse: ‘This will cut a swath through the subcontractors’

Thousands of tradies will lose their jobs as the collapse of Probuild creates a domino effect across the construction industry.

Thousands of tradies will lose their jobs as the collapse of Probuild creates a domino effect across the construction industry.

Probuild’s sites across the country were being shut down, with workers locked out after they picked up their tools.

The company was building a new home of Australia’s biotech giant CSL, which included nine levels of laboratories and a headquarters in Elizabeth Street, Melbourne.

In Sydney, Darling Harbour’s Ribbon Development, which includes a W Hotel and Imax, was now under a cloud after Probuild collapsed.

The developer had already spent millions with collapsed builder Grocon before signing with Probuild, which was until this week one of Australia’s major builders.

And a “subtropical” apartment tower at 443 Queen Street in Brisbane, which had losses of up to $120 million has been blamed for the majority of Probuild’s woes.

Workers outside a Probuild site in Elizabeth St. Melbourne. Picture: Ian Currie.

Administrators at Deloitte are pouring over the books of more than a dozen companies linked to Probuild, which collapsed when its South African parent company WBHO pulled out the rug from underneath it claiming Covid-19 delays sent it to the wall.

Building industry sources scoffed at that argument, saying that mismanagement of high labour costs and material price blowouts were to blame.

The company has at least $5 billion worth of projects on their books, with fears some that were half built may never be finished.

Probuild claimed only 750 jobs would be lost, but Daniel Wild, director of research at the IPA, warned: “Thousands of indirect jobs will be lost as a result. Red tape, green tape, land tax and enterprise bargaining agreements are making it hard to build things here.”

There are now questions about whether high-rise buildings are worth what people have paid for them after Covid-19 stripped tens of thousands of workers out of the CBD and apartment prices plummeted because there was a drought of international students when Australia closed its borders.

Shocked workers find out more about Probuild’s collapse. Picture: Ian Currie.

Probuild’s collapse will also cause problems at the CFMEU, with some in the industry nicknaming the company “Setka-build” because of Victorian secretary John Setka’s influence there.

“This will cut a swath through the subcontractors,” a building industry source said.

“It’s going to be a domino effect,” another added.

Probuild, based in Melbourne, made a $4m profit on a turnover of $1.3 billion last year, highlighting the thin margins in the industry.

A building industry figure said fixed price contracts were sending businesses to the wall.

“The price of labour has gone up, the price of materials has gone up, transport, even containers have gone up but builders have signed fixed price deals,” he said.

Probuild was one of Australia’s biggest builders. Picture: NCA NewsWire / Andrew Henshaw

Master Builders Australia declined to comment. The Master Builders Association of Victoria also refused to comment on Probuild, but said that it was worried about insolvencies in the building industry.

Victorian Liberal leader Matthew Guy said lockdowns, which had crippled Melbourne’s CBD, had added to Probuild’s problems.

“Thousands of Victorians, thousands of men and women who are just doing the right thing, are now worried about their jobs, particularly in our construction sector.”

Victorian Premier Daniel Andrews has floated the option of a bailout for Probuild, leading to suggestions that it was too big to fail like America’s banks which caused the Global Financial Crisis in 2008.

“All of us should want that business to succeed. So, if there’s anything we can do as part of that process – noting that it’s a for-profit, private company – we are always happy to try and provide support. And that can take many different forms,” Mr Andrews said.

The CFMEU’s national office said it was “seeking information from Probuild.”

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