As published in CK Momentum Issue 1 (Click here to download)
The building and construction industry is facing mixed messages about the year ahead.
Litigation & Insolvency Partner Sarah Davies, looks at some of the big issues facing the industry.
OUTLOOK
In the 2013 financial year, the construction industry had the highest number of insolvencies and liquidations of any industry, accounting for 24% of all business failures. One of the primary causes of business failure was inadequate cash flow.
Master Builders Australia (“MBA”) has consistently said that restoring business confidence is the key to a turnaround in the construction industry. It is predicting a mixed outlook across the various sectors of the industry over the next 3 years. Whilst residential building is tipped to increase, non residential building is likely to flat line and there may be further decreases in the amount of engineering construction work.
MBA’s latest national survey shows a big rise in builder confidence in Q4 2013, adding weight to its forecast that residential building is set to improve strongly over the next 3 years.
QLD REFORMS
Building industry regulation in Queensland is being overhauled after the 2012 inquiry into the operation and performance of the Queensland Building Services Authority. The Government’s response to that inquiry in mid-2013 included the replacement of the QBSA with a new body – the Queensland Building & Construction Commission (“QBCC”), and significant change to the regulation of the building and construction industry in Queensland with a focus on licensing, certification, dispute avoidance and management.
Some of the important changes are as follows:
- The QBCC commenced on 1 December 2013, with a new professional governing body.
- A mechanism for the review of insurance decisions and home owner complaints will be established, in an attempt to reduce the number of applications for review being made to the Queensland Civil & Administrative Tribunal.
- QBCC will consider the development of a rapid domestic adjudication model to fast track domestic building disputes.
- It is hoped there will be improved governance through contractor licensing, a focus on consumer and contractor education about their rights and obligations, dispute handling, consumer protection against loss through statutory insurance, and prosecutions.
How these reforms play out for industry participants in Queensland remains to be seen. Anecdotal evidence from our clients suggests that the QBCC is taking a stricter and more diligent approach to the investigation and resolution of residential building complaints. Those engaged in residential building disputes should anticipate less leniency will be shown by the QBCC than before.
