Tough times in building trades won't end soon, experts say

Tony Lane, insolvency and reconstruction senior manager at chartered accountants firm Vincents, in Wright. Photo: Graham Tidy

An estimated 114 building and construction-related companies have gone to the wall in Canberra since the start of last year, leaving behind more than $80 million in debts, Australian Securities and Investments Commission data has revealed.

With the downturn in the building, home improvement and renovation sector expected to worsen as public servants remain uncertain about their futures, ACT insolvency specialists say the snowballing "tsunami" of economic pain documented in wind-up notices on the ASIC website wont end soon.

All things being equal we would generally expect an increase in insolvency appointments during such a period (as this), Tony Lane, the senior manager for insolvency and reconstruction with accountants Vincents,told Fairfax.

He warns "larger and larger entities" are likely to fail as the impact of liquidations and unpaid debt cascades through the sector.

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The collapse of one company leaving unpaid debts often will push others over the brink.

(Businesses) most exposed are those with poor and outdated systems, poor or non-existent cost controls, out-of-date service delivery mechanisms, inefficient work practices and poor cash flow, Mr Lane said.

Michael Slaven,of the insolvency firm Kazar Slaven,said he did not expect the rate of company collapses to increase but he wasnt expecting it to slow either.

Kazar Slaven has handled almost 30 per cent of the building and construction-related insolvencies in the ACT over the past 18 months.

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Tough times in building trades won't end soon, experts say