Vystal collapse the last straw for building boss
FED up with businesses going bust, a major Queensland construction player has called for an overhaul of the sector to ensure builders have enough cash should things go south.
The liquidation of Vystal Construction and Development owing $4.1 million to creditors has sent shockwaves through a Queensland building industry too familiar with the tale.
Now Hallmark Homes director Anthony Gilbertson has called for the Queensland Building and Construction Commission to crack down on builders which didn't have significant cash reserves.
Mr Gilbertson said Hallmark Homes, with an annual turnover between 60 and 90 million dollars, had at minimum $10 million in the bank to cover the company should its creditors fail to pay.
He said with those reserves and about $10 million more in assets, the QBCC permitted Hallmark Homes to turnover work up to $300 million annually.
"Based on our cash reserves there is no way on earth I would allow my business to turn over what the QBCC allows us to," he said.
"Based on our actual turnover we always hold three-to-four times our monthly creditors' bill in cash at bank, just in case our clients stopped paying their invoices all at once.
"It also comes in handy when we have extended periods of wet weather like we are experiencing now."
The Hallmark Homes boss said if the company turned over what the QBCC allowed, "we would have maybe two weeks worth of cash reserves".
Mr Gilbertson said builders were operating paycheck to paycheck, often meaning it only took one delayed payment or downturn for the company to go bust.
"There's been such a spate of them over the past 12 months," he said.
Vystal Construction and Development director Martin Graham has not responded to questions about his company's collapse.
It is not suggested changes to the company's operation would have prevented its collapse.
The director said repeated news of builder collapses was putting negativity in the marketplace and tipped buyers would look at existing homes to remove the risk of their builder going bust.
Mr Gilbertson said the QBCC should be stricter when assessing a company's turnover.
He questioned: "How many builders have to keep going broke before something changes?"
"How does a company like Vystal get an administrator come in and they have just $88,000 in assets?
"I don't like it because it has an affect on all the builders who are doing the right thing."