The New South Wales construction sector is under harsh scrutiny following a number of serious issues.
Not only does the Canberra sector face a safety probe under the instruction of the Attorney General after a number of work site accidents leading to fatalities, but now the NSW industry will face a state government inquiry into the collapse of three major construction companies.
NSW Finance Minister Greg Pearce has spoken of the enormity of the issue and has asked for much-needed information regarding to changes that can be made to avoid these major losses.
“Between 2009 and 2011, hundreds of companies in NSW collapsed owing billions of dollars, slamming the brakes on vital projects and investment,” says Pearce. “Up to 24,000 unsecured creditors, including suppliers and subcontractors, have been left out-of-pocket, some by millions of dollars.”
Of these, three major companies, Reed Constructions, St. Hilliers and Kell and Rigby have all faced massive losses this year.
While the statistics are in alarming within the state, they are not much better elsewhere in the country. According to Smart Company, insolvency statistics reveal that construction companies nationwide make up a vast number of major business collapses, with 80 companies collapsing in March alone.
Graham Wolfe, head of the Housing Industry Association, said this issue is not clear cut, citing that it is vitally important that the inquiry take in all of the complex factors that go into a company collapse.
“Construction companies are like any other business, trying to hold on to staff as best they can, and so on,” Wolfe said. “Margins can be sharpened, and the factors can be as much surrounding the company itself as the industry. I think we will need to see the terms of reference of the inquiry before we can make a clear comment.”
However, it is the “fragility of the construction sector” at large that is deeming a full-scale inquiry necessary for Pearce, and a majority of industry and governmental forces.
The issue regarding insolvency is one that industry insurance experts have warned about for some time, and will need to be dealt with on a case-by-case basis.
