Business

High-profile business collapse fuels payment law push

Family First Party Senator Bob Day of South Australia has quit parliament to deal with problems with his housing business group.
Family First Party Senator Bob Day of South Australia has quit parliament to deal with problems with his housing business group. MICK TSIKAS

THE collapse of Senator Bob Day's Home Australia Group bears uncanny similarities with the Walton Construction group of companies in 2013.

The latest in a series of construction industry collapses totalling billions of dollars has renewed calls for improved national security of payment legislation to protect subcontractors.

South Australian Senator Nick Xenophon has tied his support for the Australian Building and Construction Commission, which was passed by the House of Representatives this week, to the delivery of payment security for the industry.

The Turnbull Government is still to respond to the findings of the 2015 Senate joint-party report into construction insolvency which totals $3 billion a year including $680 for each of the past three years owed the ATO.

The report recommended project trusts to isolate money from clients to the work it was meant to pay.

Evidence given by ASIC to the inquiry suggested an emerging business model of planned insolvency.

Les Williams, head of the Subcontractors Alliance formed after the Walton collapse, has renewed calls for construction trusts to be introduced as the centre piece of security of payment legislation.

"The Prime Minister is talking about the rule of law with unions and I can't argue with that,'' Mr Williams said.

"But there should be a rule of law for everyone in the construction industry.''

He said project bank accounts operated by third parties would deliver payment security before anything and "take a lot out of the game".

"If everyone played by the rules, you wouldn't need a referee," Mr Williams said.

"But that doesn't happen".

Like Walton, the financial position of the Home Australia Group went downhill rapidly over the past two to three years of its life.

Mr Williams said the reason for decline was either poor business practice or potentially asset stripping.

As was the case with the Walton collapse Senator Day has blamed his non-performing NSW division for dragging down the finances of the group.

In an email to Home Australia staff informing them the company would be liquidated, Senator Day expressed sorrow for the pain and suffering that would be caused.

"While four members of the group all posted a profit in 2015/16, problems and losses associated with Huxley Homes ... has seriously undermined the group's balance sheet and ability to continue trading," the email stated.

Similarly Walton's NSW division's poor performance was blamed for putting pressure on Walton Queensland eventually leading to subcontractors who worked on the Nambour Coles project losing $3million for work done and materials supplied.

Mr Williams said in both company collapses payments to subcontractors and suppliers became problematic in the months leading up to default.

Walton Construction sole director Craig Walton and Senator Day also both claimed to have been let down by a White Knight investor.

In the case of Walton it was the late builder Frank Pellicano who was alleged not to have followed through with a deal.

Before his death Mr Pellicano denied any commitment.

Senator Day said he had looked to the sale of 75% of his business to Philippine company Goshen Capital Resources and that those funds would have provided the liquidity for it to trade out of difficulties with forward orders of more than $100 million.

That deal also didn't eventuate.

In 2013 an independent auditor's report found Home Australia Group's liabilities exceeded its assets by $31million. In the same year Deloittes, which had been engaged by NAB to assess Walton's financial state, found the company had negligible tangible assets and was using subcontractor retentions to fund the business.

And finally the NAB was a significant secured creditor to both businesses with more than $24million in exposure to Home Group Australia and was able to retrieve $20million owed by Walton in the months leading up to its demise in October, 2013.

Topics:  nick xenophon payment legislation senator bob day subcontractors subcontractors alliance walton collapse



Highway upgrade at Halfway Creek making progress

Works are progressing quickly on the Halfway Creek to Glenugie section of the Pacific Hwy upgrade. The project is due to be completed by the end of 2017.

Progress is being made on highway upgrade at Halfway Creek

NDIS prompts more training

Uni creates Disability Management courses

Christmas has arrived in Grafton

CHRISTMAS CHEER: Santa arrives at Grafton Shoppingworld on Saturday, ready to have his photo taken with all the kids in the Clarence Valley.

Santa has arrived at Grafton Shoppingworld

Local Partners

Sea planes land on the Big River

The Sea Planes Pilots Association were in Grafton to enjoy a weekend on the Clarence River


Bringing their Magic Mojo to Grafton

MAGIC: Head down to Roches Family Hotel for a brilliant mix of '70s, '80s and '90s music by Magic Mojo, a Coffs Coast band using their experience to give a brilliant performance.

Powerful trio to lift the top off Roches Hotel tonight

Catch Saturday night fever at the South Club

GEEZ WIZZ: Get your dancing shoes on for the UK Bee Geez Show.

The UK Bee Geez Show delivers a realistic tribute to pop legends

Audience in for a rare treat from husband and wife duo

Husband and wife Adam Eckersley and Brooke McClymont are playing at home this weekend for an intimate gig at the Pelican Playhouse.

"We love playing these up close and personal acoustic shows”

Jennifer Lawrence gives keys to new partner

Oscar winner Jennifer Lawrence

Oscar winner settling down with new partner

Rogue One star proud to lead new Star Wars film

Felicity Jones leads the new Star Wars film

Star Wars lead proud to be in front in sci-fi

What's on the small screen this week

Ernie Dingo stars in the TV series Going Places with Ernie Dingo.

ERNIE Dingo stars in a new travel series and Seven airs the AACTAs.

Mandy Moore feels like she's 60

Mandy Moore sees herself as a 60-year-old rather than a 32-year-old

Goooodbye Hamish and Andy (from our radios)

Hamish and Andy

The pair have been on air since 2006

David Attenborough on facing his mortality

Sir David Attenborough in a scene from the TV special The Death of the Oceans.

Life without Sir David Attenborough is hard to imagine

Chinese locked out of Australian property market

The rules are different if you're a foreigner

The buyer was from China - the trouble started right there

Morrison signs off on new affordable rental model

Australia's Treasurer Scott Morrison speaks during a press conference after a meeting of the Council of Federal Financial Relations at Parliament House in Canberra, Friday, Dec. 2, 2016.

Scott Morrison signed off on development of a new financing model

Coast high-flyer's fight back from bankruptcy, $72m debt

Scott Juniper went from millionaire developer to declaring bankruptcy in2012, now he is back on top of his game again with new developments including this one in Coolum.

'Apocalyptic lending storm' causes financial collapse.

How your home can earn you big $$$$ this Christmas

This luxury Twin Waters home rents out over Christmas for more than $6000 a week.

Home owners earning thousands renting out their homes this Christmas

2000 jobs at multi-million dollar Ipswich project

INSIDE: Artist's impressions of the interior of the new Eastern Heights aged care precinct.

Sub-contractors needed to build $15m aged care facility

Ready to SELL your property?

Post Your Ad Here!