Late last week yet another building company Batir Construction went into liquidation which is just another nail in the coffin of battered and bruised suppliers and subcontractors in South East Queensland.
This is on the back of The Cullen Group's package liquidation on 22 December 2016. The liquidator was appointed by Cullen Group but
it is suspected that facts may emerge that this company had serious financial problems long before they submitted their last unaudited financials to the QBCC to allow them to build projects up to the value of 60 million.
Those financials were given the stamp of approval so what does that say about the QBCC's processes?
On the surface, it appears that Housing and Public Works Minister Mick De Brenni is prepared call it as he sees it and will take steps to fix the mess that Queensland subcontractors find themselves in, that is an absolute must and cannot come soon enough for all industry participants including the builders who actually do the right thing.
In a 12th January Courier Mail story written by Glen Norris, Mick De Brenni is quoted as saying "the QBCC’s response to the recent collapse of Cullen Group Australia reflected a “failure of policy.”
Mr de Brenni said "the QBCC had adequate discretionary powers to investigate the finances of building companies such as Cullen but had to strengthen its regulatory responses."
He said the QBCC "had concluded in February 2016 that Cullen met minimum financial requirements to complete work up to $60 million even though there were already dozens of complaints from subbies about late or non payment."
“This should have been a trigger for a proper investigation to happen,” Mr de Brenni said. “The QBCC has a reputation as a bit of a toothless tiger but the issue is it chooses not to bite.”
Mr de Brenni said "the QBCC, which had 400 staff, had adequate resources to do its job but the organisation would be restructured to better align those resources to the “critical work of financial investigations.” He declined to provide further details."
“The QBCC has a lot of extremely talented people but they have not been given the tools to do their job,” Mr de Brenni said. “There has been a regulatory misalignment with staff resources.”
He said the dozens of complaints should have been a trigger for a proper investigation to happen.
Talented people? Maybe so but they don't have an alert system in place to protect suppliers and subcontractors because this happens time after time and will continue to happen while there are no regulatory requirements for builders and developers to use Trust Accounts for retentions and suppliers.
The liquidator told me there was 8 million in Cullen retentions that are unrecoverable. Talk about give up without a yelp!
The system as it is a pigs arse and offers ZERO protection for our life's work.
All we need is for one big builder to fail and our 30 years of hard toil while employing hundreds of Australians, could be gone along with our retirement.
Mick de Brenni said "Cullen’s collapse underscored the need for the security of payments system currently being proposed by the State Government."
Project bank accounts will be introduced on all government projects between $1 million and $10 million from January 2018, with Mr de Brenni vowing to eventually extend such protections to all construction projects worth over $1 million.
Big deal, a large percentage of subcontractors don't work on Government projects.
It's a start but:
- why does it take until 2018?
- why doesn't it include protection for all projects over a nominal amount of say $250,000?
- Why isn't our retentions held in trust?
There are just too many unanswered questions.
There have been hundreds of project home builders who have liquidated over my 30 years on the Gold Coast to avoid paying their debts.
The malaise engrained in the system has to be fixed. A prime example is an item noted by the Cullen Group liquidator where they said:
"Only two phone calls have been received from creditors concerned about potential phoenix activity."
Phoenix activity is illegal, one call should be enough for a thorough investigation to take place.
There is a requirement for a wholistic approach to subcontractor security of payments.
While writing this blog, in the last hour I have had phone conversations with two other business owners and both of them have reported that a building company we all work for is now around 20 days late with payment of their claims.
One of them is for a substantial amount for October.
The constant stress of dealing with these people takes a huge toll on business owners, they staff and their families, they need help and they need it now. 2018 will be too late for some people.
One subcontractor who has lost everything after 30 years of gut busting hard work said in a recent Facebook post "death would be better than this", that is the human side of a major construction company failure.
Many of us understand his despair, we know how he feels...