Scott Hutchinson: builders need to take responsibility

Scott Hutchinson welcomes greater regulation of the construction industry in the wake of the cracking issues in two Sydney towers.

Hutchinson Builders chairman Scott Hutchinson Picture: Glenn Hunt

National building boss Scott Hutchinson would welcome greater government regulation of the construction industry in the wake of two highly publicised apartment defects grabbing headlines in Sydney in less than a year.

The chairman of Brisbane-based family business Hutchinson Builders said recent concerns raised about building quality following the cracking of two now infamous apartment towers — the Opal Tower in Sydney Olympic Park and Mascot Towers in Mascot — would ultimately be a good thing for the industry, noting increased scrutiny from developers and customers this year.

While the market has begun to self-regulate, Mr Hutchinson would welcome intervention from governments to ensure high standards were maintained across the industry.

“Governments are moving towards one point of responsibility, and really, that can only be the builder,” Mr Hutchinson toldThe Australian. “We are absolutely happy to be responsible.”

He is keen for builders to take responsibility for their work.

“The developer, they are usually not that substantial and the consultants are not going to be a part of it, so it’s going to have to be the builder,” he said.

“It (legislation) should affect undercapitalised builders. It won’t affect smaller builders who do small work but it will affect smaller builders who try to do big work. That’s the issue.”

The calls come after some now-homeless residents and owners of the cracked Mascot Tower apartments have said they will struggle to make payment for repairs. They voted in August to raise $7m in special levies for remediation works to start, with the repair bill now likely to reach $20m.

On Tuesday, the NSW opposition called on the Berejiklian government to provide low-interest loans to the unit owners to cover the unexpected costs. But the government has not committed to funding.

“That’s the issue,” Mr Hutchinson said. “When they (homeowners) in six or seven years go to look back and see who the builder was, there’s a flimsy little company there. That should stop.

“ Government will try to regulate, but it’s the market that should be most interested in building, they should be doing their due diligence.”

The builder, affectionately known as Hutchies, reported a net profit of $10.7m for the 2019 ­financial year, down 60 per cent from the $26.5m takings in the previous year. The result comes despite a greater workload, affected by an increase in construction costs.

Mr Hutchinson said the downturn may actually help the company perform better in the coming financial year due to the “counterintuitive” nature of the business.

“When a turnover spikes, usually our profits go down because we get caught with our fixed prices and the cost of subcontractors and suppliers increase,” he said.

“Also, when you get busy you’re not at your best. So, I think it’s coming off now, which we much prefer.”

When Ralan Group entered voluntary administration in July, Hutchies was working on 220 units for the developer. Mr Hutchinson acknowledged the collapse would have an impact on the builder’s bottom line but said the company was well-placed to absorb the blow. A $1m debt provision raising has begun for all work invoiced and unpaid, alongside a plan to reduce contract ­assets by $4.4m for unbilled work.

Hutchies missed out on being awarded the $2bn construction contract for Brisbane’s Queens Wharf development earlier this year. But it is now working on a variety of projects, including developer Third Street’s residential tower P.M. in Port Melbourne and Brisbane’s first vertical school in Fortitude Valley. Mr Hutchinson said the group was open to any nature of opportunity.

Hutchinson Builders has been in the family for 112 years, with only Mr Hutchinson and his 85-year-old father, John Hutchinson, on the board.