The Australian newspaper again most usefully reports on the numbers of insolvencies, this time in the building sector – and in strong terms: plunging, collapsing, surging, strangling and soaring.[1]
This follows its earlier “the worst is still to come” story: The worst is still to come! apparently – Murrays Legal.
The paper relays ASIC data that is said to show 7,661 construction “firms” became insolvent between June 2022 and March 2025, being 26.5% of the total of 28,962.
Lower than the long-term average
The newspaper then reports that this proportion of all insolvencies is lower than the long-term historical average of 0.42% between mid-2001 and mid-2023.
ASIC has earlier explained that past figures have to be seen in the context that there are now nearly 3.4 million companies in Australia compared to around two million in 2012.
Productivity Commission – Housing construction productivity
These low numbers might well be higher given the recent report of the Productivity Commission – Housing construction productivity: Can we fix it? which details how productivity in the construction sector has fallen well behind the broader economy.
Among the problem of over-regulation, the PC says that the industry is afflicted by a lack of innovation and is fragmented, dominated by small players, with the average residential building firm employing less than two people.
Individuals or companies
What the newspaper means in its story by “firms” is a bit unclear. We know that the average residential building firm employs less than two people, suggesting sole contractors.
Much lower than the long term average
As to their financial position, the 2,794 new personal insolvencies in the 3-month period to December 2024 compares well with the 6,858 in the December 2018 quarter. The total of 11,644 in 2023-2024 was also well below the 10 year average of 21,252. Personal insolvencies in 2024 – well under half the numbers in 2018 – Murrays Legal
In so far as these construction ‘firms’ are companies, the ATO reports that the extent of unlawful phoenix misconduct is highest in the property and construction sectors, and labour hire, which may explain a good proportion of the corporate insolvency figures.
Regulatory relevance
The Australian reports these figures in light of the “abolishment” of the Australian Building and Construction Commission, described elsewhere [2] as a productivity failure, whose work is now handled by the Fair Work Ombudsman.
The FWO might have its work cut out in regulating the construction industry, but it may not compare with ASIC and others’ tasks in regulating the private corporate sector, described by ASIC Commissioner Sarah Court as a
“continuing vast, illegal and deceitful transfer of wealth from ordinary Australians to big businesses”: SMH 4 March 2025.
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[1] House of cards … 20 March 2025 The Australian | Latest Australian News Headlines and World News
[2] The ABCC was a disaster for productivity
