SA Construction Sector in Crisis as Another Builder Collapses 1

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Monday, June 29th, 2015
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The loss of more than forty jobs in another building firm collapse has sparked calls on the part of construction industry leaders in South Australia for more government action to avert an employment crisis within the sector as building industry conditions within that state remain extremely poor.

Following the appointment of corporate recovery accountants Clifton Hall as liquidators of Adelaide based commercial building outfit Tagara Builders, industry leaders say the latest collapse compounds the loss of several building firms over the past year as weak economic conditions dampen demand for new housing and commercial space.

“It’s a reflection of the poor state of the building industry in SA and a microcosm of factors playing out in all sectors — housing, commercial and civil construction,’’ Master Builders Association of South Australia state secretary John Stokes is quoted as saying in a News Ltd report, adding that around 70 contractors had gone out of business along with a number of housing companies over the past year.

Construction, Forestry, Mining and Energy Union State Secretary Aaron Cartledge agrees, saying in the above report that industry conditions were ‘as bad as we’ve seen’ across all sectors of the industry.

In contrast to eastern states, the construction sector in South Australia has undergone extremely difficult times in recent years as resource sector work pulled back and a combination of a stagnant economy, a higher than average (and rising) rate of unemployment, weak business and consumer confidence and low rates of population growth crimped demand for commercial and residential space.

As a result, the seasonally adjusted value of construction work done fell to its lowest level in more than five years over the March quarter and was down by almost a quarter compared to its peak in late 2013, whilst the sector has shed 7,100 jobs or around ten percent of its workforce over the past two years.

Leaders within the industry are calling on further government action to help create opportunities within the sector, which property and construction groups say is burdened by excessive and inefficient taxation as well as a problematic planning regime.

Whilst the industry welcomed a $389 million reduction in stamp duty in the latest budget designed to encourage commercial property transfers, Master Builders says the industry would like to see more details of the costs behind the government’s proposed planning reforms along with further action to reduce the tax burden associated with new housing.

Founded more than two decades ago, Tagara Builders grew to having more than 100 staff prior to the GFC in 2007 and was turning over almost $100 million in revenue as well as boasting a portfolio of work including the 5-Star Green Star rated defence building for Techport Australia.

According to media reports, however, contractors had been walking off the job after the company failed to pay them hundreds of thousands of dollars for work on the $22 million Murray Bridge shopping complex expansion.

At the time of liquidation, it was understood that the company employed 50 workers (who have all lost their jobs) and had 14 projects across Adelaide worth tens of millions of dollars on its books.

In addition to the workers, it is feared hundreds more contractors will be affected.

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  1. beverley-jane

    Between the financial and job crisis and dwindling confidence in the building industry due to lack on regulatory control and consumer protection, this was bound to happen. Who but the uninitiated would choose to risk their financial well being building a house?!