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Things That Make You Go Hmmm

As the old saying goes, you can’t stop progress. Most progress probably has benefits overall, but there is probably not a single item of progress in our society that wouldn’t leave someone worse off in its wake. There are however some things that simply make you go ‘Hmmm, is this really the direction we want to head and what we want’?

 

Your Bankruptcy Is Now My Problem?

It used to be as simple as if you owe the bank a little bit of money, it’s your problem; if you owe them a lot, it’s the banks problem. As a supplier, if you provided a product or service, you were likely to be paid through retention of title. Now, a whole new industry has emerged driven by Accountants and Lawyers looking for their next carcass. But rather than wait for a business to die, they are actively approaching businesses in strife to arrange so called phoenix arrangements. Like the mythical bird, this is when a company emerges from the demise of another, where the directors have stripped assets and hid them, whilst leaving their creditors stranded. Sadly, this is an area where our industry leads the way, punching well outside its weight within the economy with Construction business collapses representing a quarter of all insolvencies (whilst accounting for less than 10% of all businesses).

Like many of our valued customers, RD Williams has been hit by these scumbags on an increasingly frequent basis. Aided and abetted by a legal framework that seems to only protect those committing the crimes, it costs the Australian economy billions of dollars a year, but nobody seems to care. I am not aware of a single person having been jailed for this activity, and even in blatantly obvious insolvent trading cases, even attempts at prosecution are few and far between. This is largely due to the onerous burden of proof being put on a creditor or administrator. In a rare case of supporting the reverse onus of proof, I believe if the books show insolvent trading it should be up to the director to show the company was solvent. In one recent case, we received a Creditors report whereby the Liquidator (who ranks at the top of the “getting paid” food chain) basically said: “As I (the liquidator) won’t get paid any more money, the case is being closed off, and it is very unlikely you or any other party will get paid any amounts owed to you.” Now that’s a bare cupboard when it collapsed…

It’s time we all fight back. Possible signs of a pending phoenix arrangement include:

-        Employees are not getting paid or super is not being put into employee super funds

-        Under quoting on jobs to get at least some money in the door

-        Requests that payments be made to a new entity, or the company directors or business name changes

-        Assets are being sold off, especially if the same item is then hired back from a company with any ties to the existing one.

So what can you do? Suspected phoenix arrangements can be reported to the Tax Office by either email phoenix@ato.gov.au or phone 1800 060 062. I’d also appreciate feedback from all our readers on what we as an industry can do about it, as I believe for instance the PPSR register and laws surrounding payment obligations need to be changed, and will be raising this with our industry association.

Tick This Box

We try to limit all paperwork in our business to only those that add value in terms of how we can better meet the needs of our customers. Unfortunately, we are getting more and more tied up in filling out other company’s or Government departments “tick the box” paperwork processes. It amuses us when we do it, because in most instances it is blatantly obvious that the company has never used the form themselves, don’t read what is submitted, and/or shows a clear lack of understanding of what the form is supposed to achieve, frequently even contradicting their own processes! Here are some common examples:

-        Tender documents, particularly spreadsheets, that have insufficient information to quote on, columns that can’t be edited or don’t add up correctly, and conditions that contradict the supporting documents

-        An anti-bribery and corruption document we received from a multinational company, presumably used worldwide, asks that we confirm that none of our employees as or will be involved in bribery or anti-competitive behaviour. Do they really think anyone who is likely to stoop to those lows wouldn’t hesitate to lie on this document? It also had a whole section of details of the person signing it, but nowhere to sign…

Short And Sweet

-        For the first time ever, there were more units completed in Australia (28,527) than houses (28,102) over the three months of the December quarter.

-        Rio Tinto has released details showing that their Komatsu autonomous dump trucks cost 15% less than their conventional trucks to operate. Whilst dump trucks are probably in duties more susceptible to automation than other tasks within our industry, Atlas Copco have released autonomous drills, and Perth company Fastbrick Robotics has developed the Hadrian X that can lay all the bricks for building a house from the construction drawings. Click here to see it in action. Over time as the technology improves and the prohibitive investment costs reduce, we can expect to continue to see a reduction of the need for people within our industry. This is driven as much by safety and industrial relations considerations (such as no breaks or absences, consistency of output, no housing or special allowances), as by other cost savings (less fuel consumption, reduced maintenance).

-        Caterpillar is changing its model designations and will no longer use any of the 15 letters previously used at the end of the model descriptions (except for on their dozers). Models will simply be known as 336, 16, 657, 980 etc., with differentiation only found in the name plate through build numbers. This will make it more difficult in the marketplace to differentiate model upgrades. Click here for more information.

-        A new report into taxation has found 60% of Australian’s now pay no net tax. Less than a year ago, it was thought to have passed the 50% tipping point. That is, once welfare benefits such as Family benefits, childcare refunds etc. are accounted for, only 40% pay the government more than they personally receive back. How can any Government ever change the “entitlement” mentality (or get elected) if they try to fix this unsustainable situation?

As always, onwards and upwards!

Fred Carlsson

General Manager