Dear Supporter,
This update is about a number of important issues impacting home buyers, renters, the homeless and small to medium-sized builders.
Brian Burke
You are probably aware of recent publicity about the contact the Home Builders Action Group [HBAG] had with Brian Burke. For reasons that escape your HBAG Executive, it appears Mr Burke is the devil incarnate and that no one should speak to him under any circumstances. To give you an example: The Principal Adviser to the Deputy Premier and Treasurer, Dan Lines, met with HBAG and suggested regular monthly meeting would be a good idea. The HBAG Executive agreed but when the publicity about Brian Burke and HBAG hit the news, Dan suddenly lost any interest in the regular meetings he had suggested.
To make it absolutely clear – Brian Burke was one of many people from whom the HBAG sought advice and support. Some responded positively and others did not reply to our approach. Mr Burke offered us advice about HOW to present our case. He did not contact anyone on our behalf and his advice was welcome and valuable.
The HBAG is not party political and does not refrain from approaching anyone we believe can assist our members – small to medium sized builders – who are grappling with the worst trading environment any of us can remember.
Government Assistance
No Interest Loans Scheme (NILS)
The HBAG has repeatedly expressed its concern about a number of aspects of the NILS including:
- The timeline for implementing the NILS. The scheme was announced in the first week in January when it was labelled an urgent and necessary measure to assist the home building industry to deliver homes sooner. Registrations of interest were open for a month, and it was not until the last week that the deadline of 18 March was announced for applications. The indication is that loans will not be available to qualified home builders until mid-June or later. In summary, the NILS – an urgent and essential measure – will not take effect for about six months after its announcement. Obviously, the Home Builders Action Group and its members would like to see the NILS operating as quickly as possible and will do whatever it can to assist the Government in that implementation.
- The funding of $10 million announced for the NILS. Clearly with in excess of 100 registrations of interest and a maximum of $300,000 per applicant available in loans, the funding will be insufficient. In normal circumstances, the approach may be to attempt to reduce qualifying applicants by applying very stringent demands in respect of applications and to stretch out the time taken to approve applications in order to delay exhausting the funding. Clearly both of these approaches contradict the spirit and intention of the NILS.
- The allocation of the loans on an “as received” basis.Of course, the HBAG realises there has to be some system adopted but, married to the limit announced on funding, it is easy to understand the worry and stress that many applicants will feel as a result of this additional time pressure. It is also true that this system of allocation may well militate against the government’s intentions to see as many homes completed as quickly as possible.
- Uncertainty about requirements set out in the application. Many members have reported that the demands of the process require information and record keeping that they do not maintain. Of course, all have returns from recent and part financial years but very few maintain monthly reporting and other accounting practices which appear to be required of them by the NILS application process.
In SUMMARY, the very welcome NILS scheme is taking too long to kick in – 6 months must be unacceptable to everyone – and there is an urgent need to clarify questions about the amount of money allocated to the NILS. $10 million is obviously insufficient to accommodate even 50% of the 100+ builders who have registered their interest. And the uncertainty about the “first come first served” basis for dealing with the applications should be cleared up quickly by the announcement that although this means of allocating the loans will be followed, there will be sufficient funds to allocate loans to every builder who qualifies. Obviously, the Registration process should not be so complex or difficult as to discourage applicants and the HBAG will be monitoring the NILS closely to see how applicants progress.
ASSISTANCE PACKAGE
The HBAG has consistently said the NILS is just the first essential step in the framing of an Industry Assistance Package that is targeted and effective in making sure the home building industry has the capacity to deliver on the targets set for it by Government. There are few things as silly as saying Federal and State Governments are setting targets to build so many thousands of homes when the industry does not have the capacity to build 70% of the target.
It is important to understand the real depth of the financial difficulty that many small to medium sized home builders are confronting.
We all know the problems:
- Homebuyers confronting collapsing builders leaving unfinished homes; unmanageable cost increases and insufficient insurance cover;
- Well intentioned Government stimulus that simply added to the already overheated demand and made things worse;
- Building Company collapses at rates not previously seen;
- A seismic shift in labour away from building to, mainly, the resources industry; and
- Spiralling costs.
And when a builder closes its doors there are damaging ripple effects throughout the industry and the community.
- The Builder does everything possible to avoid insolvency including selling many of their own assets;
- The Client’s home is delayed by many months or years as the Builder slowly collapses;
- Staff, Suppliers and Sub-Contractors lose substantial income and revert to increasing prices to recover losses and then need to charge more to recover their losses;
- Housing Indemnity Insurance sees a new Builder is selected to complete the remaining works at a much greater cost; and
When the dust settles everyone has lost something.
What is not widely appreciated is the very damaging impact on the health – physical and mental – of many builders who have always operated profitably even in difficult times. Now, the find themselves unable to do anything about a situation provoked by well-intentioned but ultimately disastrous policies that saw government grants of more than $500 million boost demand and push costs higher in an already overheated industry.
In addition to implementing the NILS as quickly as possible, the State Government should immediately take steps to implement an INDUSTRY ASSISTANCE PACKAGE. The HBAG accepts that that assistance can’t be open ended or unfunded. But is it desperately needed in light of the mental and physical ill health provoked by the present situation.
The INDUSTRY ASSISTANCE PACKAGE – should be linked to present and immediate past (say three years) contracts which were turned into loss making contracts by two things – The Home Building Contracts Act and the Government Stimulus. If these two criteria are used in a properly thought-out assistance package, the assistance will go to where it is needed; will be quantifiable; restricted by qualification and isolated to the home building industry.
If any justification is required for the assistance requested, it is in the unique position of the home building industry where, to repeat myself, the problems are largely the result of the well-intentioned but wrong-headed government subsidies that put pressure on an already overheated home building sector. And it is clear too that the problems reverberate through the homelessness problem (worse than ever); prices (rising quicker) and the rental market (anyone lucky enough to find a rental has to pay through the nose with rents beyond the reach of most. And many people are paying their mortgage as well as rent with their homes taking more than 3 years to complete so they are clogging up the rental market.
Although we are at the tail end of the COVID-19 provoked problems and the Government missteps, The Home Builders Action Group [HBAG] believes the burgeoning housing/rental crisis will worsen to be a major issue at the next State Election unless action is taken now to assist home buyers and small to medium sized builders. Bigger building companies e.g. BGC obviously have balance sheets and the market power that allows them to simply tell buyers work on their homes has been suspended. Smaller builders do not.
The HBAG makes no apology for its plan to mobilise as much support as it can behind candidates at the coming election who are knowledgeable about and sympathetic to our member’s needs. The HBAG intends to circularise all candidates about their position on issues that are important to us and then to offer financial and voting support on the basis of the responses.
The HBAG does not care which party a candidate belongs to – our support to be directed to those candidates who support us.
Please go to https://hbag.com.au/ to see the latest reports on action we are taking.
Best Wishes
Yours sincerely
Jason Janssen
0412 373 404
CHAIRMAN
Home Builders Action Group