Housing minister warned of risks months before Porter Davis collapse

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Victoria’s housing minister received advice about reducing the risks for home building customers months before one of the nation’s largest home builders collapsed, but he failed to boost consumer protections.

Documents released under Freedom of Information laws show former housing minister Danny Pearson received a briefing from state bureaucrats on July 11, 2022, advising him on potential insolvencies in the residential construction sector and “options to de-risk consumers”.Porter Davis went into liquidation, leaving 1700 unfinished homesAnother 779 customers who had signed a contract and paid a deposit were also affected, while 410 employees were made redundant.

No legislative changes were introduced during his time as housing minister to reduce the risks faced by home builders.Australian Restructuring Insolvency and Turnaround Association boss John Winter says construction businesses are over-represented in insolvencies. In February, the collapse of building companies prompted the Victorian Building Authority to issue a warning about the risks of “phoenix” activity in the industry, which occurs when companies deliberately and repeatedly go bust to avoid paying debts.

Keith Ryan, executive director for Victoria at the Housing Industry Association, said the industry had spent months lobbying the government for planning reforms. The lack of movement on reforms contributed to the current crisis in the sector, he said.

 

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