Much has been written in the media after several established building and construction companies have been liquidated this year due to rising material costs, supply chain delays, and labour shortages.
This perfect storm is causing mounting pressure on our industry.
The vast majority, if not all, of the state's builders, are experiencing a challenge to their profitability. We are calling it a profitless boom.
However, the number of building and construction insolvencies in 2022 must be put into perspective.
While several high-profile builders have gone into liquidation this year, insolvencies are still relatively low compared to pre-COVID levels.
The building and construction industry recorded 541 insolvencies in 2019. This dropped to its lowest point of 311 insolvencies at the end of 2020.
Unsubstantiated claims by some industry commentators that "up to 50 per cent of small builders could go to the wall in the next 12 months" do not appear to be based on hard evidence.
Master Builders Victoria (MBV) has consistently advocated that the best way to protect consumers and help prevent further insolvencies is to protect builders.
Many builders in the residential sector have signed fixed-priced contracts. Unlike other products like fuel and food, these unforeseen price increases cannot be passed on to consumers.
If builders cannot pass increases onto clients, there is a risk of insolvency, and clients may end up with half-finished homes.
That's why MBV has continued to advocate to the Victorian Government to include rise and fall clauses in domestic building contracts.
In the meantime, we urge all clients to be kind and patient with builders – everyone is doing their best in exceptionally challenging circumstances.
We remain confident that the building and construction industry will overcome these challenges and continue to be the cornerstone of Victoria's economy.
CEO Master Builders Victoria