Report

Insolvency in the Australian construction industry

3 December 2015

© Commonwealth of Australia 2015
ISBN 978-1-76010-333-0

View the report as a single document - (PDF 1324KB)


View the report as separate downloadable parts:

Senate Economics References Committee (PDF 20KB)
Executive summary (PDF 47KB)

Insolvency affects everyone
Early detection is critical to curbing illegal phoenix activity and preventing smaller scale insolvencies from becoming more significant
More needs to be done to protect honest industry participants from unscrupulous individuals
Subcontractors have a right to be paid for work completed
Information asymmetries

List of recommendations (PDF 37KB)
Chapter 1 - Introduction (PDF 23KB)

Conduct of inquiry
Acknowledgements
Structure of report

Chapter 2 - Overview and background (PDF 132KB)

What is insolvency?
Structure of the Australian construction industry
Insolvency in the construction industry
Causes of insolvency

Chapter 3 - Economic effects of construction industry insolvencies (PDF 143KB)

Creditors
Total Economic Cost
Public Revenue
Conclusion

Chapter 4 - Broader effects of construction industry insolvencies (PDF 73KB)

Social impact
Effect on productivity
Potential to attract criminal elements

Chapter 5 - Illegal phoenix activity and other misconduct (PDF 160KB)

What is phoenix activity?
Incidence of phoenix activity
Effect of illegal phoenix activity
Curbing illegal phoenix activity
Other criminal and civil misconduct related to insolvencies

Chapter 6 - The Collapse of Walton Constructions (PDF 107KB)

Background
The National Australia Bank's relationship with Walton Constructions
Problem of pre-insolvency advice
Licensing—a failure of the regulator?
Impact of Walton Constructions Collapse
Conclusion

Part II  - Assessing the legislative framework (PDF 14KB)
Chapter 7 - Action against directors (PDF 85KB)

Disqualification of directors
Director Penalty Regime
Transactions entered into in order to avoid employee entitlements 

Chapter 8 - Security of payments legislation (PDF 102KB)

Early warning signs of insolvency
Security of payments protections

Chapter 9 - Problems with the Security of Payments Acts (PDF 145KB)

False statutory declarations
Intimidation and retribution
Enforcement costs
Education and support
Authorised Nominating Authorities
Adjudication timelines
The problem of insolvency
No national security of payments Act

Chapter 10 - A Statutory Construction Trust (PDF 86KB)

Exploring a statutory construction trust model for security of payments
In favour of the trust
Opposition to the trust
How would the trust operate?
Conclusion

Chapter 11 - Licensing arrangements (PDF 85KB)

Conclusion

Chapter 12 - Additional proposed reforms (PDF 95KB)

Legal obligation to warn of impending insolvency
Increasing transparency and verifying company directors
Problem of pre-insolvency advice
Valuing debt assignments fairly
Transfer of jurisdiction of insolvency matters

Coalition Senators' Additional Comments (PDF 40KB)
Appendix 1 - Submissions received (PDF 14KB)
Appendix 2 - Public hearings and witnesses (PDF 19KB)

Committee Secretariat contact:

Senate Standing Committees on Economics
PO Box 6100
Parliament House
Canberra ACT 2600

Phone: +61 2 6277 3540
Fax: +61 2 6277 5719
economics.sen@aph.gov.au