27 March 2024

Developing licensing laws, government contracts on table for building industry roundtable

| Ian Bushnell
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Michael Hopkins

MBA ACT CEO Michael Hopkins said there was more to be done to solve the ACT’s housing woes. Photo: Region.

The ACT Government will convene a building industry roundtable in the coming weeks to find a way through the current crisis in which four ACT companies have folded in the past two months, leaving projects, employees and subcontractors in limbo.

The move comes after crisis talks this week with Master Builders ACT, which says the government agreed to put aspects of the proposed developer licensing laws and the new ACT security of payments system on the table.

The government says it will also look at a shared-risk approach in its contracts.

It also comes as subcontractors owed money by the failed Rork Group of companies learned from administrators that they had little chance of being paid.

READ ALSO Who’s going to build the 1.2 million homes? Pocock calls on government to protect subcontractors

Chief Minister Andrew Barr said the roundtable would include Planning Minister Chris Steel, the Minister for Business and Minister for Industrial Relations Mick Gentleman and the Minister for Sustainable Building and Construction Rebecca Vassarotti, peak bodies, unions and other associated entities – both national and local.

The roundtable would work collaboratively on the issues the sector was facing and report back to the ACT Government, he said.

Master Builders ACT CEO Michael Hopkins said the government had committed to engage with industry on controversial parts of the proposed property developers licensing laws, including their retrospective nature.

“We have also secured a commitment to review security payment laws so that these laws properly support subcontractors and suppliers who deserve to be paid on time while also being workable for the head contractors who rely on being paid on time by their clients,” he said.

Mr Hopkins said how the government managed its contracts also needed to be addressed, saying it needed to do away with inflexible contracts that locked in contractors to labour and material prices before inflation really hit.

“We believe that the ACT Government has a responsibility to be a model client. We then expect private sector developers and other clients to follow the government’s lead by allowing fair risk sharing in building contracts,” he said.

two men on building site

Rork Projects’ Brian O’Rourke and John Paul Janke: unsecured creditors unlikely to see a cent. Photo: Rork Projects.

He said the message to government at all levels was that they should adjust their reform agenda to suit the economic conditions.

“Every new regulation adds cost, impacts productivity, and adds to the stress that small local businesses are currently feeling,” he said.

Mr Barr said the building industry crisis was a national issue primarily driven by increased costs and reduced availability of finance compounded by fluctuations in the cost of materials and labour.

He said the best way the ACT Government could support the industry was to provide a strong, public infrastructure pipeline with a range of project sizes and types.

“These projects will create local jobs and reduce uncertainty in the market into the future,” Mr Barr said.

“This is what this government will continue to focus our efforts on.”

He said practical measures, such as innovative procurement models that appropriately share risk while achieving value-for-money outcomes that support both industry and the community, would also be considered.

But it will be little comfort to the ACT tradies left out of pocket by the recent spate of business failures.

Administrators for the Rork Group say in a creditors report ahead of a creditors meeting on 2 April that its companies owe about $30 million, half of which is to trade creditors across the three states and the ACT in which they operated.

They will recommend to creditors that the Rork be wound up but also say unsecured creditors are unlikely to see any return.

The companies’ 77 employers may receive a portion of their $2.2 million in entitlements through the federal Fair Entitlement Guarantee.

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When Rork went into administration on 1 March, it cited a “tsunami of impossible economic conditions”, but the report says other factors were loss-making contracts in 2022 and 2023, fewer new tenders being won, and continuing high overheads.

It had 60 projects on the go, 14 in the ACT.

The report says the group was insolvent from at least 30 June 2023 and possibly earlier.

Other ACT building companies to go under recently have been Cubitt’s Granny Flats and Home Extensions, Project Coordination and Voyager Projects.

They followed the failure of PBS Building last year.

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devils_advocate7:56 am 28 Mar 24

What we need is higher regulatory, tax and capital barriers to entry.

Impose draconian developer licensing laws. Make the regulatory barriers to new housing supply insurmountable. Raise the lease variation charges, stamp duties, hell let’s come up with some new taxes too.

It’s not easy getting a seat at the big boy’s table, and once in we damn sure don’t want any upstarts getting in on the action and creating unwanted “competition”. That’s just going to drive prices – and profits – down.

We’re only a small jurisdiction but when it comes to crushing the supply of new housing though regulation and taxes, I’m 100% confident we got this.

Go government!

I can’t understand this smarmy rant or the point the author is trying to make!
What are you on d-a?

devils_advocate10:38 am 29 Mar 24

In summary, if you can’t be part of the solution, there’s huge money to be made in prolonging the problem!

I’m simply setting out the policies that will achieve this.

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