Construction industry in NSW: background to the insolvency inquiry

Australia New South Wales
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The global financial crisis (GFC) significantly affected the house/office building and engineering construction industry in Australia. From the December 2007 quarter to the December 2008 quarter, for example, owner occupied housing commitments fell by 22%. Although (in early 2009) the Rudd government launched the $42 billion Nation Building and Jobs Plan (70% of which was to be spent on schools, social and defence housing, insulation measures and various road/rail works), many building companies encountered difficulties in the adverse conditions. During financial year 2011 – 2012 there were 1,113 insolvencies in the NSW building and construction industry. Those involved included Kell and Rigby (February 2012), St Hillier’s (May 2012), Hastie Group (May 2012), Reed Constructions (June 2012) and Southern Cross Constructions (October 2012). Leighton Holdings reported an after-tax loss of $409 million for financial year 2010-11. In the wake of the insolvencies, many subcontractors were left empty-handed. This situation, in turn, led the O’Farrell government to establish an inquiry (headed by Bruce Collins SC) into insolvency in the NSW construction industry and to consider possible remedies.

This paper sets out to provide a general survey of the industry, the key areas of activity and the main participants. It also looks at the regulation of the industry and at the more important recommendations of the Collins inquiry.

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