Bob Day’s Companies Owe Suppliers Over $12million 5

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Wednesday, October 19th, 2016
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Failed building boss and departing Senator Bob Day has gone to ground as the fallout continues over the liquidation of his building group which has left hundreds of contractors and home buyers counting the cost.

Debts to contractors and suppliers are reported to top $12.5 million but the construction union has warned that most are likely to get nothing once Senator Day’s Home Australia Group is wound up.

In a statement to staff and contractors, the Family First Senator apologised for the “pain, stress and suffering” the failure of his group will cause.

He’s confirmed he will quit the Senate and has detailed some of his group’s financial issues but has made no further comments.

He has not tweeted since problems with his businesses emerged last month and his Facebook page has been taken down.

A meeting of creditors will likely be held next month, but already there are fears other smaller companies, which relied on work from Home Australia, will collapse.

The Construction, Forestry, Mining and Energy Union says once contractors become creditors, “that generally means they get nothing”.

“For many of those contractors, we’re talking about mum and dad businesses with maybe an apprentice,” CFMEU state secretary Aaron Cartledge said.

“For them to be owed $20,000, it’s a lot of money and it’s devastating for their families.”

The union has questioned Home Australia’s extensive use of contractors, which prevented them getting access to protected entitlements, including redundancy payments and superannuation, despite being “quasi-employees”.

The union has also raised concern for the 200 or so families who had been left with partially-built homes, including an estimated 70 in SA.

Mr Cartledge said while insurance was in place, many would find themselves out of pocket because of delays, questions over the quality of work and pricing going forward.

South Australian Treasurer Tom Koutsantonis urged any home buyers with unfinished projects to move quickly on an insurance claim.

“This is devastating news for families who, in many cases, have put everything on the line to build their dream home,” Mr Koutsantonis said.

The treasurer has also expressed concern for the hundreds of building contractors who are out of pocket because of the collapse, hoping Senator Day could find a way to repay those debts.

“Our small contractors are critical to our economy so Mr Day needs to make good on these debts so we don’t see further damage to the economy as a result of this liquidation,” he said.

It looks like a two-horse race to replace Senator Day in the Senate with South Australian Family First MP Robert Brokenshire and party staffer Rikki Lambert vying for the vacancy.

Mr Brokenshire, who holds a seat in SA’s Legislative Council and is a local dairy farmer, said it was important the Family First executive had ample choice while Mr Lambert said after 10 years working for the party, he felt he was “just getting started”.

Also on Tuesday, a number of the departing Senator’s parliamentary colleagues praised his contribution while the Greens questioned the large donations made by Senator Day’s company to Family First, something the liquidators are likely to look into as they examine the group’s finances.

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  1. Alan Marshall

    Whilst this is dreadful from the point of view of suppliers, subcontractors and customers, at least one positive to come out of this is that Day seems to be of good character, appears to be genuinely sorry for what has happened and appears to be doing his best to try to do the right thing by selling his assets. He does not appear to be running away from his responsibilities.

    Compare this with the situation with that of the clown over in the US who is actually running for presidency, who actually boasts about putting some of his companies into bankruptcy and not paying his creditors and contractors and according to USA Today has had around than sixty lawsuits against him for late or non payment or late payment and has whose companies have been cited for more than twenty breaches of the US labor code (for not paying correct minimum wages etc.).

    We in Australia have seen a terrible situation for home builders and subcontractors. But at least we seem to be seeing one of our politicians who is genuinely sorry and is genuinely not running away from his respsonsibilites. This man could arguably still be considered to be a genuine success. Over in the US, we have one contender who boasts about how he avoids all his responsibilities regarding creditor and taxes for all his property and other companies and then tries to boast about how much of a 'success' he is in business.

    In Australia, we have a good politician who with dignity and integrity appears to be doing the right thing. In the US, they have someone who cheats contractors and is manifestly and totally unfit to lead the free world.

  2. Anne Paten

    I agree with Les and David. Les is absolutely right on the dribble from the pollies – we either have the wrong legislation for contractors and consumers or the legislation is not enforced – and by default essentially non-existent! correct re legislation and 'insurance'. The peak industry groups direct the pollies and the policy, they in the driver's seat and all the rest of us who do the work and supply the cash have no voice.
    David makes an excellent point about the CMFEU and their lack of advocacy for the customers of the housing industry – and of course many of their members as building consumers are at risk of harm from the effectively lawless industry. The unions are the obvious organizations to step up to the plate here. But they have declared their hand and will not. Yes David, a decent insurance would at least be a positive – however, even now when the very few owners that can claim under the DDI put in their claim with supporting documentary evidence, the insurers refuse to pay. No-one will take them to task (Ministers or Govt agencies with jurisdiction) and make them – be it DDI or PI – and so the insurance is worthless. So it could be a game changer, but no insurer will ensure in an industry full of rogues and run by all the beneficiaries who are meant to be the 'regulated'. We have a system with no rules, one that defies rationality and there is no will for those on the gravy train, including the pollies who get their donations (via consumers' pockets), to change what is a most rewarding regime. It is just getting worse by the day – and all the little people – workers and home owners are the fall guys.
    As for Mr Day being sorry, this is questionable. It seems his is still going to be a good life!

  3. Les Williams

    Tom Koutsantonis comments are laughable. There is Security of Payment legislation in South Australia that is not worth a cracker – if it was then we would not be witnessing these innocent consumers and small businesses suffer these losses.. It is a misnomer. What legislation is there is currently under review. There has been serious allegations raised about the conduct of that review that needs some serious answers – where are they? The answers are simple Mr Koutsantonis – legislate for the use of properly constructed trusts that have been recommended for years and used elsewhere successfully. These financial catastrophes will continue to happen otherwise and we will still have pollies like Koutsantonis saying the same thing over and over. It is like a bloody broken record. A senate committee report identified that industry small business lose $3 billion annually to this type of insolvency, $800m in lost tax receipts and $200m reliance on FEG. The blame for providing the legislative environment for this to occur can be placed firmly at the feet of our state politicians including Mr Koutsantonis who have listened to and been influenced by peak industry groups whose strings are pulled by the big builders. Day's financial position has been declining for a number of years and this liquidation like the Walton collapse of 2013 seems very worthy of investigation. Over to you Mr Koutsantonis you have had the answers to these problems for years but have failed to act and let these businesses down. We are sick of listening to the rubbish excuses that dribble from politicians mouths. I wonder how long before another state politician will be saying the same thing about another building company collapse – soon.-

  4. David Chandler

    Does the HIA want the CFMEU to be the key advocate for housing customers, surely not? Where are they in all of this?
    Missing in Action. The HIA has acted as a defence for the lowest common denominator house builders who should have been routed out of the industry long ago. The HIA advocate for less red tape – aka less accountability. Home purchasers are thrown to the wolves when it comes to the design and affect of Home Owner Warranty Assurance. As Les Williams correctly states its not worth a cracker. Warranty insurance has helped make the housing industry associations very wealthy and politically influential. That's fine until its not. Its time for governments to make a stand and realise that in the modern construction era 'one size fits all' policy does not work because it just gets dumbed down to enable the weakest links in the chain to hang on. Its time that home construction performance insurance was priced on constructor fundamentals – capability, paid up capital, track record and management systems. The days of running 'two bob' housing companies out of a ute are over. The HIA is for private enterprise and small business. They are anti-union. When consumers get sufficiently angered with existing institutions that let them down they try alternates. The CFMEU in my view would not be a great alternate. But what say they came up with a new Home Owner Warranty insurance product for their members that meant something? That would be a game changer. This is the age of disruption so the HIA should expect the unexpected. What a tragedy for housing in Australia if the most appropriate organisation to deliver customer assurance dropped the ball. Ask the taxi industry they did not see Uber coming. And I guess the HIA won't.

  5. Les Williams

    In 2013 an independent auditors report found Home Australia Group's liabilities exceeded its assets by $31m. Reports also indicated the group had forward orders of more than $100m. How much of this $100m [unsecured money in lieu of consumers deposits] were in the accounts of Home Australia when they went into liquidation? How do ordinary Australians wishing to own a home access financials indicating the $31m deficit in the company's accounts? That a top end insolvency firm has been appointed to Home Australia indicates to me that NAB may be unsecured creditors. If so this needs to be watched very closely. [Walton] These insolvencies do not just happen over night, Senator Day should have known his company's financial position when he sought re-election to the senate. The collapse of Home Australia Group bears uncanny similarities with the Walton Construction group in 2013. How the QLD entity, like Walton, kept a builders license with those financials is worrying.
    Given that Mr Koutsantonis has quite rightly acknowledged his outrage and the importance of industry small business to the South Australian economy maybe it is time he and the small business commissioner respond publically to the serious allegations raised about the conduct of the review into amendments to the security of payment act now being considered and why the answer to these problems for consumers and small business, that has been on the table, has been ignored for so long