WA builders, restaurants among the hardest hit as insolvencies surge

Company collapses in Western Australia have surged 24 per cent, with more than 1200 businesses plunging into insolvency in 2024.

9News Perth and WAtoday can reveal new figures from the Australian Securities and Investments Commission, analysed and provided by WA Senator Dean Smith, which showed construction and hospitality companies were among the hardest hit.

Construction business insolvencies are impacting businesses higher up the chain.Credit: Eamon Gallagher

It was blamed, in part, on tightened consumer spending as the Reserve Bank embarked on the swiftest interest rate tightening cycle in a generation.

Nearly one third were building, accommodation or food, with 396 accounting for collapsed businesses between January and December 2024.

Similar figures were reported across the nation.

“Western Australian businesses have battled difficult operating conditions for years under Labor, but the scale of these insolvencies leaves no doubt the situation has badly deteriorated,” the Liberal Senator said.

“These are not just numbers, either. They are real WA businesses, real WA jobs, and real WA households being impacted.

“We know that many small businesses use their personal assets, their private home to invest in their businesses.”

While the Reserve Bank of Australia cut the official cash rate for the first time in four years this week to 4.1 per cent, more pain is likely with insolvency numbers expected to peak in the middle of this year.

Federal Treasurer Jim Chalmers was in Perth on Friday ahead of a soon-to-be-called federal election, spruiking the effects the cut would have on the economy.

“Prime Minister Anthony Albanese puts WA front and center in our economic strategy,” Chalmers said from Perth Airport.

“I’m such a huge believer in the economic contribution and capacity of WA, [which] has been arguably among the biggest beneficiaries of the way that we’ve managed the economy.

“This election will be close. It will be hotly contested in WA and right around Australia.”

The new data comes as the construction industry reels from a string of high-profile company collapses following a period of building activity buoyed by uncapped COVID stimulus, which drove labour and materials cost hikes at a time when supply chains were constrained, pricing builders out of jobs.

It also left behind hundreds of stalled home builds, costing families tens of thousands of dollars in mortgage and rent costs and leaving them in limbo.

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