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Category: Building and Construction / Government and Politics

Northern Territory builders say industry shake-up will send them broke

Monday, 29 Feb 2016 13:35:54 | Nadia Daly

The controversial Master Builders Association Fidelity Fund is the only form of insurance for the Territory's residential building industry. (ABC News: Katherine Gregory)

The Housing Industry Association has added another voice of criticism from the industry towards the Territory Government's review into the sector.

The Cureton Review examined the building industry and made 35 recommendation, including a trust fund where payments for builders would be set aside until the project is complete.

The review said the industry needed bolstering because the Territory's "volatile" construction industry and "systematic weakness" had caused a loss of trust with the community, and the industry was vulnerable to contractors failing to fulfil commitments.

"The contracting chain, combined with the construction industry's structural reliance on cash flow, creates a systemic weakness of the industry to payment default and contractor failure," the review said.

Abode New Homes manager Justin Gill this month told the ABC the review and its proposed reforms would be "a red tape nightmare".

"It's just not realistic, it's not practical. If anything we'll see a negative response and a lot more builders go broke," Mr Gill said.

He said the changes would cripple the industry because of its low margins.

Those views echoed the Housing Industry Association, which found the recommendations extreme.

They were also concerned about what they said was a lack of consultation in the preparation of the review.

Submission to government voices "serious concerns"

In their submission to government, HIA said it had "serious concerns with the Cureton Report and its recommendations".

"The Report also appears to be predicated on a number of assumptions and misconceptions, such as the reference to 'systematic weaknesses' in the industry," the submission said.

We can expect that the issues of contractor failure are going to continue to rise over this year

Cris Cureton, Housing review report author

The submission said some of the proposals, such as the trust fund, were not supported by any modelling to demonstrate the impact on builders cash flow or project costs.

"Industry feedback is that this recommendation alone would send many builders into liquidation," the submission stated.

The Housing Industry Association's NT executive director, Neilia Ginnane, told the ABC earlier this month it was "really important we're able to maintain a sustainable industry".

"The residential building industry and the construction industry contribute about 20 per cent to Gross State Product, so it's a major contributor to our economic position and growth," she said.

The review was commissioned by the Government following the slowdown in the Northern Territory's construction industry.

The review's author, Cris Cureton, said the review was timely.

"We can expect that the issues of contractor failure are going to continue to rise over this year," Mr Cureton said.

The Master Builders Association was also scathing in its submission, suggesting it might take legal action.

The Association was furious at the report's suggestion that the Master Builders Association Fidelity Fund be scrapped, and replaced by a government-run residential warranty scheme.

Earlier this month the Housing Industry Association held a meeting with Planning Minister Dave Tollner to voice their concerns about the proposed changes.

Mr Tollner said it was established to examine the effectiveness of existing consumer protection in the industry, and whether it was effective.

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