Latest building company collapse sparks calls for reform
Workers, subcontractors and clients face distressing losses totalling around $25 million following the collapse of yet another builder, this time PBS Building, which had 80 residential and commercial projects underway.
The collapse on Tuesday (7 March) of PBS Building, which had 180 staff and 80 residential and commercial projects underway, has prompted calls for greater protections for workers, subcontractors and small business exposed to such industry failures.
PBS Building has left in its wake around $25 million in debt owed to more than 1,000 unsecured creditors.
National construction union CFMEU said that their failure would impact stakeholders in New South Wales, Queensland and the ACT.
Incoming CFMEU National Secretary Zach Smith said the Labor Government needed to act immediately.
“The Federal Government must urgently make good on its election promise to implement nationally consistent security of payment laws,” Mr Smith said.
“Too many subcontractors and workers simply don't get paid when companies like PBS collapse.
“It is unacceptable people are not getting paid for their hard work.
“Subbies and workers being ripped off when businesses are liquidated is one of the biggest problems in our industry.
“We need an effective national security of payments regime that stops workers being ripped off.
“What’s the point of a body like the Fair Work Ombudsman if it doesn’t recover money owed to workers and subcontractors when construction companies go under?”
PBS Building latest in long list of failures
The failure of the 33-year-old Canberra-based company is the latest in a long list of construction industry casualties.
The company had worked on prestigious projects such as the Sydney Olympic Village, while it has also delivered $100 million-plus projects around the eastern seaboard and the national capital.
A joint company statement from the board of directors and founder Ian Carter blamed record material costs, fixed-price contracts, labour and material shortages, extreme rain events, floods, bushfires and wars for creating an environment too hostile for builders to flourish.
“We are the latest, but we won’t be the last construction group to buckle under the weight of a broken industry and way of doing business that needs urgent reform,” the statement said.
It added that staff had been paid their full entitlements in being made redundant.
RSM Australia Partners Jonathon Colbran, Richard Stone and Mitchell Herrett were appointed as voluntary administrators.
Work on 80 sites, including the Belconnen Markets, Doma Group’s The Melrose residential tower in Woden and Doma and Stockland’s The Parks development in Red Hill, has stopped, and the administrators do not know whether these projects will resume.
“This has been a gut-wrenching decision that we know will impact many lives and livelihoods,” the company said in a media statement on Tuesday.
Administrator Mr Colbran said the five entities that comprise PBS Building have 80 residential and commercial projects in various stages of construction, from the early design phase through to various stages of construction.
“All work on these sites ceased immediately prior to the appointment of the administrators and it is not clear at this stage whether works will recommence,” he said.
“If works do not recommence, the operations of the PBS construction companies will progressively be shut down and sites will be handed over to customers.”
At least 20 construction companies in Australia folded in 2022 and this year is shaping up to be just as challenging, with LDC Pty Ltd, Hallbury Homes, EQ constructions, WA Housing Group and others already folding.