More Morrison Mess

Phil Dwyer, president of the Builders Collective of Australia and builder of 40 years' experience, says the insolvency crisis in the construction industry is a "nationwide problem".

So what's causing it, and how can it be fixed?

Dwyer says, currently, "there's a great escalation in insolvencies".

The data bears this out. According to ASIC, 1,709 construction companies entered administration between July 2022 and April 2023, up from 1,284 in the same period 12 months earlier.

Dwyer traces the current insolvency crisis back to the HomeBuilder grant, which was introduced by the Morrison government in June 2020 as part of its economic response to the COVID-19 pandemic.

The program offered a $25,000 grant to owner-occupiers who signed eligible contracts between June 4 and December 31, 2020, or a $15,000 grant for eligible contracts signed between January 1 and March 31, 2021.

As a stimulus measure, it worked — too well.

As Tim Lawless, research director from CoreLogic, told ABC Melbourne's The Conversation Hour in 2022, HomeBuilder became "over-subscribed" as people rushed to sign contracts before applications closed.

By February 2023, the scheme had received 138,000 applications and distributed $2.52 billion in grants.

Dwyer says introducing the HomeBuilder scheme into an already "heated industry" created a volume of work that has proved unmanageable for the nation's builders.

"[The government] should never have done it," he says.

Two years on, supply chain issues and inflation caused by factors such as COVID-19, Russia's invasion of Ukraine and labour shortages have created a crisis.

Builders operating on fixed-price contracts who cannot pass on increased costs to customers have been hardest hit.

With the price of raw materials such as steel and timber increasing between 40 and 50 per cent during the pandemic, many operators have simply run out of money to finish projects.

"It's devastating for the building industry [and it's] devastating for consumers … We're in a lot of trouble," Dwyer says.

https://www.abc.net.au/news/2023-06-06/construction-industry-insolvency-crisis-hurts-home-owners/102390786