Call for reform after Probuild collapse

CANBERRA, AAP – The collapse of national construction firm Probuild is part of a trend that without urgent reform will continue to rob tradies of livelihoods, contractors warn.

“There is a role for government to lead the way in creating a more sustainable industry,” Australian Constructors Association boss Jon Davies said on Friday.

“Industry reforms are urgently needed or more contractors will go under.”

The construction sector already accounts for a quarter of all insolvencies in Australia and this trend will continue, putting at risk the nation’s economic recovery, unless radical action is taken, Mr Davies said.

Probuild was placed into administration by its South African parent company on Wednesday.

More than 1000 directly employed workers’ livelihoods are now in jeopardy, along with contractors and sub-contractors across a long supply chain.

At least a dozen major projects are affected across NSW, Victoria, Queensland and Western Australia.

“Contractors are being asked to lock in prices for risks that they cannot control such as material price escalation and pandemic risk, for projects that in many cases will take years to deliver,” Mr Davies said.

He said the adversarial culture of the industry can be addressed by moving toward a fairer risk transfer and collaborative agreements.

Probuild’s parent company, Johannesburg-listed builder Wilson Bayly Holmes-Ovcon (WBHO), said it was pursuing “several options” to raise the capital needed for Probuild to continue, with Deloitte appointed as administrator.

Two other businesses under WBHO Australia – Monaco Hickey and WBHO Infrastructure – have also been placed into administration.

Deloitte is planning a sale and recapitalisation process in order to secure a new owner for the businesses.

In the meantime, clients and sub-contractors can register with the administrator as an “unsecured creditor” to try to get what they are owed.

WBHO has blamed Australia’s “hardline” COVID-19 border closures, lockdowns and months of enforced working from home rules that emptied city office blocks and shopping malls.

“The protracted effect of COVID-19 has delayed any meaningful economic recovery and procurement activity in Australia,” the firm said.

The rising cost of materials is also a key factor, compounded by a shortage of skilled workers.

Australia’s largest apartment and unit owner advocacy group says a “conga line” of major builders is likely to face financial difficulties.

Australian Apartment Advocacy head Samantha Reece said she was getting reports from all around Australia that costs for materials and long delays in completing contracts have devastated the construction industry.

“As usual, it may be apartment owners who have to foot the bill and we need to know where off-the-plan buyers are going to be left when all of this pans out,” she said.

“It’s time for the relevant state governments to provide greater protection for apartment buyers and owners.”

Contractors are calling on governments to act as “model clients” and lead the way through their own procurement practices.

“Lowest price doesn’t mean greatest value,” Mr Davies said.