Australia’s financial watchdog finally takes action against the dodgy property developers running construction companies into the ground, but it’s too little, too late for creditors left footing the bill.
The Australian Security and Investments Commission (ASIC) disqualified ACT developer Paul Hamilton from managing corporations earlier this week due to his direct involvement in the collapse of five companies between 2019 and 2021.
Including major ACT developers like Lifestyle Homes, 3 Property Group and Be Athletic Canberra, the five companies owed a staggering $12 million to unsecured creditors and approximately $5.5 million to the ATO.
ASIC’s latest investigation found that Mr Hamilton showed a “lack of care and diligence and a lack of commercial mortality” in his role and concluded he had categorically failed to manage and direct the now liquidated companies effectively.
A toothless watchdog
While Hamilton won’t be allowed to manage any corporations for the next two years, the question remains why it took the Commission so long to take action against such a blatantly dodgy developer.
It’s an issue that the Construction Forestry Mining Energy Union (CFMEU) ACT wants to address, as they call on the Territory government to urgently introduce its long-proposed developer licensing scheme.
This policy would see property developers forced to be deemed a “fit and proper” person to maintain their accreditation status and would see them take mandatory yearly development training to test their effectiveness in their roles.
While the ACT Government has long-signalled its intention to introduce the scheme, the laws are still yet to come into effect – and creditors are clearly paying the price.
CFMEU ACT Secretary Zach Smith said the absence of developer licensing in Canberra continued to leave the community exposed to the unethical conduct of shonky developers.
“It’s a good thing that ASIC has taken this action, but it should never have taken this long to protect Canberrans from people with track records as bad as this,” said Smith in a statement provided to Build-it.
“This is someone who was a director of five companies that collapsed in less than two years. If he was required to pass a fit and proper person test to get a license to operate in Canberra, I suspect he would have been knocked back pretty quickly.
“People like this are currently allowed to operate with impunity in the ACT, and it’s only once they’ve created chaos that the regulator is able to do anything.
Out of the 919 developers that folded across the country in the 2021-22 financial, 682 were suspected of insolvent trading by the ASIC, according to initial reports lodged by external administrators.
Despite the frightening figures, the commission has never prosecuted a builder over insolvent trading.
According to Mr Smith said that “shonky” and unethical develops simply shouldn’t be allowed to do business.
“Shonky and unethical developers simply shouldn’t be allowed to do business in Canberra. So many Canberran lives have been damaged by the unconscionable conduct of developers,” he said.
“There are plenty of developers that do the right thing. There’s no need for Canberra to be giving the green light to entities with poor histories of behaviour.
“We know from polling that Canberrans are overwhelmingly in favour of the government moving on this now. The Minister has been promising and hesitating for years, it’s time to pull the trigger before more people get hurt.”
