Building and construction insolvencies concern

A SPOKESPERSON for peek industry body, Master Builders Victoria, is concerned about Victorian building and construction insolvencies.

The organisation has sought to shed light on the issue of soaring costs of materials and labour shortages, which may be leading to more building and construction companies being forced into administration.

MBV Acting CEO Michela Lihou said that the proportion of insolvencies accounted for by building and construction had grown steadily over the past two years.

It is now close to the highest it’s been since data recording started in 2013.

“With building contract prices locked in, the large and unanticipated surge in the prices of many building items such as timber and steel-based products means that many of our members are finding that the cost of completing work is more costly than expected,” she said.

As a way of addressing issues facing the sector, Ms Lihou said MBV is actively involved in finding supply shortage solutions to ensure sustained growth for the building and construction industry.

“Last year, MBV requested that the Victorian Government ask the Commissioner for Better Regulation and Red Tape Commissioner, Anna Cronin, to investigate the issue of building and construction material shortages,” she said.

“At the start of November 2021, the Commissioner delivered a report to Government on the state of supply shortages in Victoria.

“This issue is now urgent, and we look forward to hearing the Commissioner’s recommendations as soon as possible.

“We are keen to work with the Victorian Government on solutions before any more Victorian building and construction companies end up in trouble.”

In Victoria, building and construction accounted for 30 per cent of all insolvencies in the state in the three months to December 2021.

Over the final three months of 2021, well over half of building and construction business insolvencies were accounted for by creditor wind-ups at 57.6 per cent.

A further 16.8 per cent resulted from court wind-ups and 12.2 per cent from voluntary administrations.

Manwhile, the average cost of supplies used in home building rose 13.5 per cent in the year to December in Melbourne, compared to 12.9 per cent in both Brisbane and Adelaide, with a 12 per cent average across Australian cities.