Enhancing eSignature Legitimacy in Australia's Construction Industry

How to eSign a document: eSignature legitimacy for Construction Industry in Australia

hi everyone welcome to today's webinar great to be back doing webinars not that we have a stop at creditor watch I've got the fabulous Ally Kane with us today as well as our moderator Ali thank you as always for joining good morning Patrick cool good afternoon I should say that's right just good afternoon um thanks to everyone for for coming online and joining today we've still got plenty of people signing on which is good um we'll do a very quick intro and and get into um the good stuff we've got a fantastic panel with us today no slides just discussion Ali likes to um ask the tough questions she's very structured but she also likes to put people under pressure every now and again and make sure she gets the full answer out of them which I love that's why we uh we love having you with us Ali so thank you for that um as always please ask questions along the way I know Ali will reiterate that but don't be shy there's a question and answer box for you um within the go to webinar control panel so so please ask away and we we should have some time at the end for some q a um if you wanted to ask a specific um uh panelist sorry get my words right there uh just pop their name in in the question as well just to make it a little bit easier for us to to direct it we always get plenty of questions which is good um and that's it from me so Ellie I'll uh I'll let you take over and you can run the show thanks so much Patrick now I'll ask all of our esteemed panelists to please turn on their cameras while I do a quick introduction so welcome everybody to today's credit to watch webinar rebuilding Australia's construction sector as Patrick kindly introduced me my name is Ali Kane I'm a finance journalist and your moderator today before we begin I'd like to acknowledge the traditional custodians of the land we're on and their leaders past present and future so what a wild ride for the construction sector one of the hardest hits during the pandemic and Beyond first lockdowns shut down work sites then supply chain problems set the price of inputs such as Timber and steel through the roof even getting tradies has become a great Australian Dream if you happen to know of a Tyler please let me know cap this off with a state of high profile company failures so what does the future hold for this sector in 2023 and Beyond that's the topic for today's webinar drawing on creditor watches proprietary data published in the monthly business Risk Index which I believe is out tomorrow so I'm joined by an esteemed panel of experts this morning and I would like to introduce them we've heard already from creditor watch CEO Patrick Coughlin good morning Patrick once again yeah good to be here um I'd also like to welcome Adam DeMarco founder and publisher of the urban developer very nice to see you Adam very nice to see you as well good morning from Queensland but good afternoon from uh the uh the Southern States we're also joined by Sarah Slattery the managing director of quantity surveyor firm Slattery good morning Sarah thanks for having me Ali great today here I'm also pleased to welcome Jeanette Mueller director of GM advisory good morning Jeanette good morning Ali and thanks for having me Patrick and Ali it's great to be here and our last panelist but certainly not least is Michelle Eisenberg Chief data and research officer of BCI Central good morning Michelle so before we kick off for as we kick off um I'd like to start with Patrick so Patrick there's been a lot going on in the construction sector what are some of the Salient Industries the businesses in uh this industry are facing at the moment yeah good question um and I think there's sort of three main things there's there's the obvious supply chain challenges that have existed there's inflation which is certainly hit the cost of you know products um materials and then labor shortages as well and I think uh the one good thing is if we look at supply chain there's a there's an index that I've been following um the last few months that someone else introduced me to I certainly didn't Discover it myself but it's the New York fair to have like this uh supply chain index and the the headline number at the moment is that we're back to pretty much back to possibly even below Feb 2020 um figures which is really positive so supply chain issues seem to be behind us somewhat um which is good and if you think back a few months um it wasn't that long ago that you know there was huge delays that doesn't mean that the that the cost of freight has has reduced you know we know that that went up sort of 10 times and we know that materials are still really expensive and some hard to come by but I think where there is a material that can be uh um actually purchased because they can afford it it is being delivered a little bit quicker and there's obviously you know that's a that's a very fairly generic you know global view which is good I think there's um we're seeing a softening in the labor market as well um and and that's coming off a very high high though so so at least it's heading in the right direction and I think you know the inflation and interest rate increases will only will only put more pressure on that so that's a good thing from a hiring perspective um we've obviously seen what's happening in the tech space but that's not necessarily happening in the construction space um but yeah look inflation and and interest rate rights are putting a lot of pressure on all Industries particularly construction and I'll I'll save I do have a question of my own later on Ali that I'll that I'll ask of uh of of everyone someone can jump in um if I've put a note down so please remind me if I do forget so you reckon I should be able to find some Tylers soon I think so I think so that Adam may be able to be better positioned to correct me on that one so if if it's normalizing what does that mean for the sector does it mean you know prices for for bills will normalize what how will businesses be affected look I think um I think if we if you can get Goods that's that means projects you know are continuing hopefully at a normal Pace rather get the materials here that's continuing at normal price doesn't take away the fact that they're really expensive and relates with you know the obvious fixed price contracts that they're still in a total spot off boiler so that that's a that's a positive right in the labor the labor sort of softening is as well as is a positive but it doesn't mean that they're they're out of the woods it probably just means that there's less slightly less pressure on on the industry as a whole um obviously the business Risk Index is a key part of what creditor watch does and it is coming out tomorrow and I have had a sneak peek so I'm wondering if you want to talk through um any of the trends maybe not revealing what the index is going to say but what the data says about what construction is doing yeah look I think um you know construction's another industry where they're you look at the weather you know you've got to you've got to keep an eye on the weather and that's that's that's just caused such Havoc right and I can see Adam nodding his head you know you you sort of take it for granted but you know if you're if you're building a house or you you're in the CBD you just see this how slow projects have been so I think they're welcoming the end of uh La Nina and hopefully if she disappears for a while and doesn't come back for a few years so we can catch back up so I think I think that's a positive um constructions you know traditionally even in boom years is is a risky industry you know there's there's large projects thin margins and and there's room for error at the end of the day so it's you know it's traditionally probably in our top three riskiest Industries uh from a from an insolvency or probability of default perspective um and and certainly from a slow payment perspective as well then the industry's definitely got better with that and there's pressure from from government on you know the large players and there's just general pressure to pay bills not on time but you know closer to on time than what we're used to but what we're seeing at the moment is you know payment times are still the worst in the construction industry out of all of them but not necessarily translating into insolvency um I think they're a little bit fairly undone so the industry is a little bit fairly targeted by the media and that's probably my question to everyone else I'd be Keen to see what everyone else thinks about that later on um but they're not they're not the they're not seeing the highest increases from a percentage perspective um when we look at insolvencies you know out of asset probably I think that wrecking my brain they're coming in at sort of fourth or fifth at the moment um which could potentially change but you don't hear about the other Industries as much as you do hear about you know collapses in the insolvency space Oh sorry in the construction space so I'd now like to move on to Adam and Matthew a little bit about what you're seeing in terms of property Development Across the different sectors commercial industrial and residential are we going to sort of see boom times return in 2023 look I think um the idea of a of a boom time in 2023 from a new development point of view might be um sort of stretching uh stretching the Friendship a little bit I think it's it's we're about to enter and I think we're already in uh what is a reasonably challenging development um period now if we go back a couple of years um effectively you know the industry saw nearly every every indicator fall off a cliff everyone put everything on hold demand then spiked enormously and then the industry played catch-up and obviously all of the the result and impacts that we see today around pricing and supply chain and everything else is is a function of that um what's happened from an interest rate point of view I think is is critical to the outlook for for Real Estate over the coming um in the coming couple of years when you see central banks um sort of Spike um their uh their their rates up to to levels that I guess people expected you know the idea of a of a cash-free rate four percent isn't hasn't been crazy as a concept but I think what's really kind of stunned the industry is the speed at which um you know the uh the interest rate increases both from the United States and then uh here in Australia not to the same extent have happened so what that does moving forward for commercial real estate is uh it it really changes the the expectation um around what kind of you know what kind of yield or what kind of capitalization rate does an asset um demand um and it's always been that the relationship between the risk-free rates and the ultimate capitalization rate of a of a commercial asset so so that's a big question in terms of where yields for commercial property go over the coming coming years we've got this kind of bifurcation of real estate particularly office and particularly industrial and Retail where really really good quality strategic highly demanded assets are still holding up from a from a yield point of view from a valuation point of view and there's many pundits out there that think that's going to continue in spite of changing kind of risk-free cash rates but then there's the secondary assets which um you know in the industrial space you know might be um you know development land with you know less less desirable buildings on them with less desirable tenants uh in the commercial space might be B grade C grade secondary Office Buildings and then the retail space will be under underutilized under um under rented perhaps challenged assets so so this kind of notion of two speeds to each of those commercial property segments I think is something that we're going to see more and more of and you talk you hear and read and we publish about Brown discounts as well for certain types of of assets so I think that's going to be really interesting from a pain and gain perspective over the coming years in the residential space affordability is the key thing right so you've seen the borrowing potential of the average punter um get hammered by interest rate Rises but at the same time the the rental uh or the the capacity for for an average Australian to rent a property has been impacted by the inflationary pressures so those two forces whether you're an owner occupier a renter are really going to take hold um and then from a development point of view that sort of puts a cap on the total sort of end values that you can try and Achieve so my gut feel my sense is that over the next couple of years there's going to be some sort of very specific sector kind of recalibration things like vacant industrial land I think would be at risk things like secondary Office Buildings uh would be at risk unless there's a very clear turnaround play um and I think some of the high-end um uh super high and luxury residential parts of the market will be will be challenged via sort of just confidence and affordability but taking another big step back back just a fundamentally Australian good deck but low unemployment generally speaking we've got reasonably low interest rates from a historical point of view strong economic growth which is sort of pegged towards our favor when things get tough so I think we're in a good place in a slightly challenging environment with pockets of opportunity and pockets of risk do you think that we'll see some projects be mothballed and if so what would they be yeah I think definitely and we're already seeing it at the moment um you know talking to to some developers that I I work with um you know the expectation is that you know permit approved development sites um of of substance will be coming back onto the market at a higher rate I've already started to see those listings kind of increase that's developers that have purchased sites thought they could buy it for a particular uh so I thought that potentially build it for a particular you know amount they get they get a shock they have a heart attack you've got to it's going to cost 30 more um I might try and dispose of it so the question then is what sort of situation is that developer in to then either hit a market price or to dispose of it and an opportunistic price for somebody else I think permit approved development sites will come you know come back um depending where you are and it will depend on sort of the extent of that um and um then I think it's just kind of new emerging inspectors like the life sciences and health sector the bill to rent sector and a few others um we'll we'll sort of feed back into that opportunism so sites that were once built to sell uh residential developments in say The Fringe of Melbourne are getting snapped up by Bill to rent developers sites that were once you know thought of to be a retail Center or a um or a commercial office Precinct where there's sort of softening demand for those two things might reposition into the life sciences and education sector so so I think there's there's always those sorts of transitions that happen but again I think it's a reasonably tempered kind of couple years for the broader industry here thank you Adam um now let's have a look at some of the issues around supply chain bottlenecks um Sarah if I can ask you obviously Patrick said things are starting to normalize is that what you're seeing yeah um definitely Ali and I agree with with um what Patrick had said although I think it's going to take a while for it to feed through the the market some of the bottlenecks were saying um over the last or 18 months to two years of um that were particularly acute in steel copper nickel aluminum facades um they're plateauing and there's things like the still Futures price we saw six months ago is eating um we're seeing steel down about 45 this year um other examples reinforcements Fallen Fallen 20 um from the peak Timbers two-thirds lower than what it was at its peak um and copper as well as seen a steady decline um I think while the copper price in particular brings down the cost of piping and power cabling um it's cop is considered a Dependable barometer of economic health and I think the other side of that is falling prices could be a bad Omen for the global economy um still seeing impacts from transport costs um with the war in Ukraine uh although shipping and Patrick touched on this has come down however the last couple of days the news with um the what is it Tugboat giant Spitzer um hundreds of workers threatened to to be stored down or locked out from Port that could just you know start a whole nother impact for Australia in terms of supply chain so yeah that's that's got the potential to create absolute chaos uh so yeah they're the sort of the it's looking a lot better from Supply from the um material costs in particular but um there are some some um I think we've seen over the last few years that the precarious nature of of cost predictions and how things can turn around with you know floods and um the war in Ukraine and and now this sort of industrial action it's sort of coming from all fronts so yeah you know it's Christmas when the strikes have started I'm sure the post is you know next week's strike so so in what sort of impact is that having on the cost of construction Sarah yeah I mean I think um prices are normalizing and we're expecting that to sort of go to sort of four to six percent in the major centers over 2023 um and then after that probably reverting to three to four percent average now that's for the major centers obviously Tasmania and wa are probably higher than that they're impacted more so with um economies of scale and supply chain um so I think again you know we always qualified on on these sort of um one once in a lifetime events that seem to happen quite regularly these days um but I think um as yeah projects we're seeing a lot of the large contractors still trying to fill their pipeline take for example in Victoria one of the tier ones really needs work so that's going to help with pricing I think on the other side margins are going up um which I think they need to after a number of years of really um low margins way before covert and I'm sure um uh well I'm not sure who will speak about subcontractors and margins in that in that market as well so um yeah it's a tricky time but definitely we're seeing some more realistic pricing and projects getting off the ground rather than um sort of being mothballed which was sort of the view a few months ago or even yeah as much as um a couple of months ago where it just wasn't stacking up because of the high pricing yeah it is nice to see things normal normalize uh a little so that's a good segue um to Jeanette who's got her eye on the ball of the smaller end of the market so let's talk about smaller construction firms first how are they faring are things improving for them as well Jeanette um look just before we go there I just wanted to pick up on something that Patrick said about those supply chain index and back in February 2020 it's sort of interesting for me with the insolvency background to note that insolvency appointments haven't even caught up to where we were in 2020 so if it feels do me and gloomy it's not it's like we're not even back to where we were pre-covered so we're getting there and look it wasn't a busy time back in 2020 in in any event so that sort of um you know this this whole idea of normalizing seems to be um starting to to kick in um but in terms of um you know the smaller Construction production side of the market I put it in the white paper and you know it's worth repeating again the profitable firms are those that watch their margins and they need to at the smaller end of the market it's it's really really important and it's nice to hear Sarah mentioning that those margins are starting to go up um but having said that you know I speak to a lot of subcontractors and subcontractor organizations and a lot of them are doing it really tough um one example is a subcontractor who's expected to deliver very quickly might get paid 45 to 60 days later maybe only 20 of their invoice and then drip that along the way and there are other terrible stories about slow payments but on the positive side they expect eventually to get paid some of course don't result in that we see collapses and that can be catastrophic for a small a smaller player who lives you know from invoice to invoice in this and there's plenty of them in that industry and so it calls into question for me how are these how are some of these smaller projects being funded and um you know you'd sort of think well um the retentions have long been considered a a part of a um Capital funding option for developers and Builders and others but equally I'm now hearing stories about um certain invoices getting back charges and parts of payment Advance has been withheld on top of the retention so um you know it's it is sounding a little bit tough out there at the smaller end I'd have to say um so we only hope that that that will improve uh thank you very much for mentioning the white paper I should uh tell today's audience that we have got a white paper available on the Creditor watch website of the same name rebuilding Australia's construction industry and I would encourage everybody to go to the website uh after this session and download uh the white paper for some more insights into this uh very interesting topic so back to you Jeanette let's talk a little bit about subbies we've talked about small construction firms what about subies what's happening at that end of the market Okay so we've um I'm I'm based here in Queensland and recently we've had a large collapse um anecdotally even though there were 286 creditors on that particular matter um various commentators are saying that they're surprised that it wasn't more um there wasn't a larger um amount of Carnage so to speak in relation to that so it sort of calls into question well what's happening with the government legislation and it looks like particularly in Queensland that maybe some of that is starting to have a positive impact in that um you know you've got the money Zone process and you've also got the minimum Financial requirements um a system that we have up here in the qbcc Audits and they may be seeing starting to to have some bite on certain people and maybe those that are distressed and potentially under capitalized uh having to um act quicker than they ought uh may have in the past so they're reaching a fork in the road potentially where they've decided oh the writing's on the wall um this that we're going to get found out much quicker and we need to take some action and so that has um less of an impact on those that rely on on those projects succeeding so potentially that's what's starting to happen there it doesn't hurt any less if you get caught at the end of the chain but um perhaps we might be beginning to see less Carnage that would be um you know welcome for everybody so I'd like to now move across to Michelle so data can make all the difference in terms of helping a business um it can make or break a business so tell me about the importance of data and also data technology um to help construction firms whatever what is still a pretty tricky trading environment yeah thanks Ali and uh I I totally agree with my uh other co-panelists that a lot of things are getting back to normal or at least improving um but it's still pretty turbulent times out there as far as supplies as far as interest rates and inflation and a big factor I think everyone is facing is Staffing being able to retain and get the people that we need um and in these turbulent times data and Technology are critical um we need data Tech to observe identify and manage work on a micro and also a macro level um everything from specific project and stakeholder information so that we can keep an eye on the details to having an accurate picture of the current state of the market so we know where we need to navigate um and and we strongly believe that sector-specific data technology stuff that's designed for the construction industry empowers the industry businesses to diversify their market and expand their Network um it's critical to allow them to build longer and more future-proof pipeline because we don't know a million percent what's around the corner but we can try and be smart about it um and they can also improve efficiency by implementing a more strategic approach to business management and development um and lastly we really believe that increased transparency and options in products and services are a life raft in a crisis where lead times might be improving when it comes to products but costs are still high what's the best way for construction firms to use the data at their fingertips to make a success of their business um thanks for that question as well uh the construction sector is big one of the biggest and it's super diverse and and we know that the solutions need to be just as diverse so I'll cut it into just a few sections and these could all be subsected further over and over again but broadly speaking suppliers and manufacturers of construction projects sorry products can gain immediate benefits from a Project Lead sourcing and management solution which not only offers them opportunities best suited to their particular products but it's also really in critical that they can ensure that they can secure those deals by having the right data and tools to keep their products specified so they don't waste a whole bunch of time energy and money in trying to get their products involved only to lose it at uh at construction stage when everything gets purchased um and then we have architects who for decades have been using in software for specification writing building information modeling or Bim to design more quickly and accurately and it's not only having the most advanced tools but the best available product data especially in these times which can make all the difference to their efficiency and being able to get the right outcome for their clients and the last sub-sector have already been talked about by some of my paliness co-panelists the builders and subbies who are under pretty severe pressure at the moment being able to rely on early stage and tender data as well as Tech Solutions like e-tendering platforms allows them to win work and do it more efficiently and sustain and grow their businesses through tough times thank you so much Michelle um I'm going to move across to Adam in a minute but before I do that I do encourage everyone in the audience to send through their questions in a few moments we're going to have um some time for questions from the audience um but before we do that I want to just quickly ask Adam uh about what are the structural changes in the sector which is the rise of online shopping which obviously created huge demand for industrial assets at the start of the pandemic um one of the comments I think you made was that there may be sort of less sort of demand for industrial land going forward what do you see in terms of demand for industrial land and and for that sector in general I I think the the big picture is that the demand is still really really high it's just um my comment there in relation to values was that they've probably just overshot um a little bit a little bit more than what's reasonably uh sustainable but the the long Arc of the demand profile is that there is so much demand for um for e-commerce and Logistics related um uh real estate and and that's not going anywhere I think you know the interesting part about what covert did was it it really brought forward probably four or five maybe up to 10 years of of demand for um for for Logistics related space and that's not going anywhere and I think the other the other bit to to Really sort of unpack there is that when we talk about Logistics and and the demand that comes from a from a real estate point of view it's everything from Major Distribution precincts or distribution um facilities that sort of require 10 20 hectares through to the the kind of facilities that are required in the middle of the city for that last mile Logistics and everything kind of in between I think there's also been this kind of really interesting kind of Confluence of um of the logistics but also the the office and the workspaces and the retail and the experiential real estate occupants that all kind of come together and a good example would be you know inner city Brownfield real estate converting into storage Brewery co-working spaces and um and you know some sort of kind of funky um retail experience that might relate to some of the the online businesses that uh connect back into the logistics space that's there as well so there's Confluence of different uses becoming sort of more aligned and and um and and actually more interesting is that's at the kind of the University inner city level so um it's an extremely interesting sector I remember you know studying in in University and the option of studying Logistics and Industrial real estate was a choice and it was certainly nowhere near as glamorous as uh as residential or luxury apartments but for those for those people that took the took the major in that particular space I'm sure they were having a good laugh today but it is it's a fascinating sector and and our cities have a long way to go in relation to adoption of of War yes it's amazing what becomes sexy over time I guess um okay so I'm going to ask everyone a wrap-up question before I move across to Patrick who'll be able to um take some questions from the audience so my question to everyone is what needs to happen to affect a turnaround in construction so Patrick what do you think needs to happen um time that's probably the only thing that's that's really going to get us there I think um there was a good point mate I think it was it was Sarah was that while there's some positive signs that takes a fair amount of time to wash through I think arguably there's still some negative some of the negative aspects of the last 12 months still to rush through first right so I don't think we're we're certainly not at the top we know that insolvencies are climbing back to pre-covered levels constructions I'm pretty sure the num always the number one on a monthly or quarterly basis um we're actually going to see this really random dip in in October which I think is due to probably um all of the the school holidays and various public holidays that we had the Queen's morning as well falling on a Thursday meant that you know it became a three-day weekend in Melbourne seems to get a public holiday every week through sort of September October with uh with with wall and and also Melbourne cup anyway um so we we see a dip there so I think timing you know a lot of it's got to wash through there's a lot of firms that probably are um I won't say insolvent but are just dormant that need to actually be wound up um I think there's a lot of firms that are just haven't updated their Asic um you know and you'll submitted their annual Asic um submission and and will ultimately be struck off so so we'll see some some that actually do have creditors some that don't but really timing is going to be the big thing and until there's certainty as well to the whole you know particularly from the investment perspective you know that the cost of capital the cost of goods has gone up significantly that that means that people aren't going to be taking those punts anymore they'll wait until that settles down before before they do so that's that's probably my answer thank you Patrick Adam what's your view what needs to happen for a turnaround it was it was certainty until you just just pitched it then but it sort of relates to what I was going to then sort of expand on uh which is um which is confidence right and the confidence is bred off off the certainty I think a couple of things are really important in relation to that I mean obviously knowing that the interest rate cycle is tapering um and if that's happened sooner than everyone expects I think that's a really positive thing for the broader industry so there's probably a bit more hope than most pundits we're anticipating pre-Christmas that that's actually tapering and that's then correlated very closely to inflation right so um once there's a bit of certainty around the inflation piece and the um the interest rate cycle then the confidence will come back and then you know at the same time if we can tell that the construction cost you know escalations are also aligned to the inflation and all of a sudden we can see it picture of what the next couple of years looks like with a higher degree of certainty than what we've got and had over the last 12 months then that bodes really really well for for the market the interesting part around all of that is does the economics of property development Stacker based on all of the inputs once that certainty is there that's a big question mark that I've got around expectations around you know what developers can buy and sell land for and what it's actually the reset level of you know production costs are construction and then the reset revenues in a particular in a particular development there's I think the jury's out whether the market has come between buyers and sellers to an agreement on what the uh the new economics are property development but the certainty and that those those those interest rate cycles and inflation and construction costs we can see what they look like over the next couple of years and I think the market will pretty quickly reset and then it will get back onto the the next next phase of a cycle I guess so I guess we're approaching and normalization but we're not quite there yet yeah and I think the other thing is for anyone in property development a rising market or uh um or an inflationary Market is not actually a really desirable thing of course everyone wants their revenues to kick but if their costs are kicking at the same time it's a hard thing to manage whereas in a reasonably stable kind of like predictable three percent three percent kind of um phase then I think a lot of developers are happy with the the decision making that goes into that so I think um if even if we're going to into a period of of of low growth low escalation then that's that's cool I think that the property industry will see see positivity in that certainty that's great Sarah what's your your view on when things might recover yeah I think well the confidence certainty that would have put in the the top two I think a couple of things um need to happen um and probably around Australia the CBD um activation I think we'll we'll not just from a occupancy for commercial um um owners landlords but also from a night time and Retail and perspective um I think that will really um there's still so much um uh capacity and room for improvement in in those CBD activation numbers um I think the other one's probably more an opportunity and it might feed into what Adam was saying in terms of ESG and um embodied carbon um driving local manufacturing I think some of those more more um I suppose we wouldn't say macro because it's local but some of that Innovation that can come out of it is a real opportunity and I think that will make a difference in terms of productivity um which will help with that sort of that whole numbers game around margins for developers in in the future we've got to do things differently and this is a huge opportunity to do that um so yeah I think it's an exciting um really exciting time um to to sort of Drive innovation in in our supply chains uh and in the way we do things which we're seeing already we've built to rent um and other um you know last last what do you call that last mile delivery um that Adam touched on before so exciting times thank you Sarah Jeanette at the smaller end of the market what needs to happen for recovery okay um well strangely enough we had a change of government this year which I think you know it feels pretty seamless I don't think you know you feel like there's been a Major Impact from that but what's come from that um is a number of inquiries particularly in the insolvency space so we've got Asic and not necessarily insolvency place but the regulation space so we've got an Aztec inquiry that got announced within the last month and we've also got an insolvency inquiry um which has really broad it's basically can put a submission in about anything that's not working in any part of the process um so I suppose what I would think about that is that some of the things that might be able to help people at the smaller end of the market is look preferential payments when a company does go into liquidation do we really need to then punish those subcontractors and others by clawing back payments from them when you know they probably had no idea I've heard it said many times no idea that um the uh the bill build up was entering into this zone of insolvency so I think we really here's an opportunity for the government to really look at the fairness of that piece of legislation and and try to bring some some more balance into it I mean they have made some some changes there where it's in certain circumstances you can't call back um less than thirty thousand dollars within a certain period of time but I think they need to go a little bit further um and on top of that I think Queensland specific perhaps because we've got different rules in different states um retentions I think we really need to look at um how these retentions are working on the smaller end and um is is there another way and how how um how can we help the builders who uh sorry the subcontractors to get access to the to the retentions a lot faster and make sure that they end up with them and it's not just a discount on their invoice that's it from me thank you and finally Michelle what's your view on the trajectory for a turnaround uh thanks ali um as far as my view I mean I'd like to represent um a lot of the developers Builders and Architects that we recently surveyed and interviewed including Adam thanks Adam um uh For an upcoming report and it was really interesting when we asked some questions around this topic because a lot of firms told us about the innovative solutions they were figuring out in their own sphere um to navigate the issues and improve things but there was also a lot of calls for government support and it wasn't necessarily just give us money um it was get inflation under control um get some certainty there it was removed some of the bureaucratic hurdles that come in especially in pre-construction phases so people can just get the projects done that people need um and it was also about out some bigger picture non-crisis related things so a lot of people are actually looking at for instance ESD environmental sustainable design in construction which for a long time has been hugely important to people inside and outside the industry but kind of got sidelined as other more urgent things seem to be more pressing so yeah there are a lot of people calling for that to be reprioritized and to be supported financially with regulations um and and to be brought back into the conversation so I think all of those or any or all of those things as well as what my colleagues have said would help thank you so much I'd now like to throw back to Patrick who will close off the session over to you Patrick I'm gonna um ask a couple more questions anyway I know at my point at the end and if any of the panelists do have a hard stop don't be shy to interrupt but we've got a bunch of questions that have come through and I think there's some some good ones in here if that's all right with everyone but if you do have to go I appreciate it the same to our attendees as well we do record this and share it so you can always jump back in um there's a question you Jeanette you mentioned retention there was a question that came through that that is is another language to me but then you mentioned retention which is good so I'll I'll uh I'll put you on the spot here but if anyone else wanted to have a go at it please please do it's it's talking around um it's basically saying is anyone aware of of data or is there data being captured around the dollar value of cash retention still held by Builders historical retention's yet to be paid out in Queensland there is some concern that the rollout of retention trust accounts in private projects creates a cash flow pinch point for Builders who can't benefit from retentions in their cash flow moving forward it's still up to pay out historical retentions um why don't we just take that as a comment and say it's a it's it's it's got so many hairs all over it this whole retention area it's just hideous and when a company collapses of course um you know some of these are not only they're not cash they're they're guarantees their Bonds in some cases or Bank guarantees and it further complicates the situation and um you know an insolvency scenario once that turns to cash that goes to the Liquidator and the Liquidator can distribute that amongst subcontractors who may have charges um in Queensland we have added complication up here as well and you can charge some of those those funds um whereas if it stays as a bank guarantee and doesn't get split open it can go straight back to the bank so there's a lot of competing claims in relation to these um retentions it's complicated and I'm certainly not going to go into it here so right we've addressed it that's good did anyone else have any and want to touch that hot potato there if not I'll keep I'll keep moving forward see those um Adam one for you could the could the recent bad weather lead to a recovery or even a boom in the construction industry so assuming that we get some you know consistent uh weather in the future thinking about those sort of flood ravaged even the Bushfire sort of areas that have been hit hard that they need to be redeveloped at some point is that is that a you know is that a potential positive glass half full view coming through in this question it it certainly is um look there's someone that's building a house at the moment I can I can tell you that every day I wake up and there's a blue skies one less day of um you know PTSD but the um the interesting thing about the weather is it sort of a bit of a double-edged sword on on the one on the one side um we've had these serious um serious weather events where not only have they um now required rebuilding Works uh but a lot of those rebuilding works are being you know managed or funded via the insurers and so the the insurance work is a much more desirable piece of work to get um than generally a private practice work for most subjects and tradies I'm interested to perhaps if others have different views of that but the feedback that I get from from subbies is it pays really well and they pay quick um and you can get in there and and knock it out pretty well so a lot of the you know the labor that's already in short supply um is attracted to this insurance building work again from an economic point of view is good work because it's good stuff you know a law contributed to to GDP it'll all come back into better retail sales at Christmas it'll mean more cash does get bored all those sorts of things that make a positive contribution to the economy it will continue to to support but at the same time um put put additional pressure on um on on the the industry when you then look at you know a clear run of weather over the course of maybe the next six months if La Nina doesn't sort of materialize it certainly hasn't in safaris Queensland is concerned everyone that was expecting pretty much September October November to be rained out here in Queensland and it's and it's not been the case it's been blue skies and moderate temperatures so um we've uh We've that's been a shot in the arm for people to get on and actually double down and a lot of builders that I know are playing catch-up now so um you know can we get to you know lock up by a certain day and can we can we actually now double down and try and try and do things quicker to try and make up some of that lost time so I'm not sure whether it's a it's a positive in the sense of it being you know a free-for-all in terms of growth but there are lots of positive attributes to it yes yeah yeah good point Thank you And and as I asked these questions feel free to jump in if you if you've got additional uh comments to make um I might do that just on that one Patrick and just um I think it's hard to find a silver lining with the with the um events we've had weather-wise however um in the same way I think that going back to the Innovation piece and local manufacturing with bushfires with you know wet weather we've got a surely take it and look at different like prefab which we've sort of had a bit of resurgence a couple of years ago hopefully that will start again how we build quickly off-site take it to site and and deal with the short-term issues of housing I think in these in areas as well as um you know longer term issues around um Innovation and just protecting um sort of local Manufacturing yeah fantastic thank you um uh next question we've been seeing several tier one two tier 2 Builders buying subcontracting businesses hiring labor onto payroll are we seeing this in other states and is this a you know do we do we see this sort of continuing trend of um subcontracting sort of not not dying obviously but you know seeing those larger Builders obviously bring bring labor and and the typical subcontracting roles back onto the payroll any any comments here on that one but definitely de-risking in terms of um buying a concrete plant and stockpiling um reinforcement and I think that will be a focus moving forward for the big contractors really trying to shore up their supply chains by by bringing it in-house yeah Adam did you have a comment there oh I've actually I've got a question for Sarah to be entirely honest on on that one um is vertical integrate like that's an interesting thing to consider is it's the vertical integration of contractors to to de-risk further um to have more control and to probably presumably lower price um are you seeing that Trend uh generally anywhere like I haven't I haven't really seen a huge amount myself but it would it would make sense when times get really tough it's just a different risk proposition as a contractor then yeah absolutely I don't migrate I have haven't really seen it other than that material um supply chain but it would be great and I don't think from a cost perspective I think from a risk and just the sophistication of head contractors I think we've you know going back you know 15 20 years there was more of you know the the Carpenters and um concreters often work well concrete is definitely with some of the big Builders like broke on that they did it all um which was a great way to minimize risk I think um so yeah I think it'd be good to see more of it from a sophistication from a client perspective dealing with a contractor and having you know 40 50 60 of your dollars in that that business rather than it being spread to who knows who is going to be on your sites and and uh who could fall either all right thank you everyone I'm conscious I'm conscious of time there are two more questions but I'll uh I'll I'll let them I'll let them go through to the keyboard one was more of a comment just supporting what Jeanette said earlier and and James if you if you're still online um sorry to pick on you buddy I'll uh I'll buy you a bit the next time I see you but I think I think you are correct just making a point there around um if demand got pushed forward because of covert would we expect to see the disproportionate number of insultancies and I think we see that across a number of Industries right when there's a when there's a hot industry by now pay later you know real estate doesn't really matter you see an influx of people into it seeing quick easy money and then when it gets tough that they realize it's not not for them in the long term so um James I I agree with you there so I've answered that question so that beer is no longer on the table um so everyone I just wanted to to wrap up I really appreciate the the panelists hanging around a little bit longer than uh that is scheduled and also for all of the attendees as well we well over 200 there which is which is a phenomenal effort so thank you all so much not long to go now in the year probably about four weeks very much got my sales hat on when I think about how many working days and weeks are left Adam Michelle Jeanette Sarah great to have you um as as part of the uh the commentary today so thank you very much and Ali as always being a fantastic moderator for us and host thank you again um and thank you to the team at creditor watch of course for putting together a fantastic white paper and also a fantastic webinar for us today so don't be shy to jump online and have a look at that white paper you can download it at creditorwatch.com Jump onto the news Hub and you can also see the business Risk Index will be out tomorrow but you can see the historical ones and some of the stats too so without further Ado thank you all very much stay safe and we're almost at Christmas so thank you