Thursday 12 October 2023
Mr Peter Tinley MLA
Chairperson
Standing Committee on Economics and Industry
Of the Legislative Assembly
Parliament House
PERTH
Via Email: peter.tinley@mp.wa.gov.au; willagee@mp.wa.gov.au
C.c.
Ms Merome Beard MLA
Via Email: northwest@mp.wa.gov.au
Mr David Scaife MLA
Via Email: David.Scaife@mp.wa.gov.au
Ms Emily Hamilton MLA
Via Email: emily.hamilton@mp.wa.gov.au
Ms Ali Kent MLA
Via Email: ali.kent@mp.wa.gov.au
Dear Mr Tinley
I refer to the report in The West Australian on Page 25 of 11 October 2023.
The Home Builders Action Group [HBAG] was established to represent small and medium sized home builders and their clients (who are almost all West Australian families) to decision makers, including Government.
You can see HBAG at:
https://hbag.com.au/
https://www.instagram.com/homebuildersactiongroup/
HBAG strongly supports your foreshadowed inquiry and will cooperate in every way possible in its efforts to define solutions to the very difficult financial and trading conditions confronting the home building industry and impacting their clients.
The rash of building bankruptcies reported in the news recently is nothing to the tidal wave we will soon see if swift, sensible action is not taken by government. The shaky, fly-by-night builders have already collapsed and now many long-term reputable builders are facing impossible financial pressures with no relief in sight.
And for every builder in trouble, there are 50 families affected, many in impossible financial situations, waiting for their homes to be finished.
Costs have increased by more than 50% in two years and well-intentioned but poorly thought-out government grants have increased the pressure on an already overheated industry, pushing costs up and stretching completion times out even further. Combined with a rental market where there is record low stock the result is the makings of a perfect storm.
When a builder is forced to close its doors, everybody loses. From the hundreds of home buyers left facing massive extra costs to finish their partly built homes, to the sub-contractors, suppliers and staff who are left unpaid. Multiply this by hundreds of builders and it’s not difficult to see how the situation could spiral out of control past the point of no return.
The Home Building Contracts Act is not fit for purpose in the present climate and a review and amendment of that act is the centrepiece of the 5 Point Plan HBAG proposes as the first step in preventing further building company collapses by restoring balance and predictability to the home building industry.
HBAG is proposing:
1. To review and amend the Home Building Contracts Act which is not fit for
purpose in the present environment. (as discussed with DMIRS – Building and
Energy)
Areas to be reviewed include:
- Part 9 (1) (a) – 45 days for Building Permit from Contract Signing date
- Part 10 – 6.5% maximum deposit. Due to the increased level of regulation, time and cost that Builders need to cover prior to works commencing on site the 6.5% Deposit is no longer sufficient and HBAG believes 10% deposit is appropriate
- Part 12 – PC or PS item – This has not been possible to comply with during the past 3 years due to spiralling Price Increases
- Part 13 – Price Increases – There is no provisions for Price Increases once works have commenced on site. There needs to be flexibility to protect Builders and home buyers when unforeseen and unprecedented circumstances arise
- Part 19 – Breach of Contract – There must be a way of clients terminating a Contract when the Builder fails in their responsibility. Prior to and during construction.
- Part 3A – Housing Indemnity Insurance should be discretionary for Contracts above $500,000
- Division 3A – 25GB – Indemnity Insurance to be reviewed – in particular, for Apartments and Developments which are not covered under the Insurance Scheme.
- Time Extensions – There needs to be an easy and as of right of notification to the client that the Builder is advising them of time extensions due to unforeseen delays. The past 3 years have been fraught with delays outside of the Builders control.
2. The SME Recovery Loan Scheme https://treasury.gov.au/coronavirus/smerecovery-loan-scheme should be reinstated as quickly as possible; (this can be reactivated by Treasury as a matter of Urgency)
3. Further Government stimulus must be directed through the builders and the
trades to keep the industry afloat; (This will be managed by Treasury and other
Authorities as required)
4. An intelligent industry assistance package should address: (This will be managed by Treasury)
- The funding crisis resulting from 2 years of losses and that means No and Low interest loans
- Assistance for legacy and loss-making contracts resulting from the shortcomings of the Act;
- Indemnity schemes that work and don’t leave builders and homeowners high and dry; and
- The need for a much closer working relationship between the industry and government.
As an example, the federal government’s plan to build another 1.2 million homes is absolutely unrealistic. In this state, the builders can’t afford to finish the homes they have started and there’s no capacity to take on more orders.
5. Trade Training has to be addressed and reshaped to produce skilled workers
quicker.
On behalf of HBAG, I’d like to congratulate your committee on its initiative and to once again promise it every cooperation. Please don’t hesitate to contact me should you require any further information.
Best wishes
Yours sincerely
Jason Janssen
CHAIRMAN
Home Builders Action Group
0412 373 404