Vic: Home builder crisis leads to GST amnesty call

AAP General News (Australia)
04-22-2000
Vic: Home builder crisis leads to GST amnesty call

MELBOURNE, April 22 AAP - The financial crisis facing a major Victorian home builder
has prompted a call for a GST amnesty for home buyers whose construction is delayed by
the crisis.

Archicentre, the home inspection service run by the Royal Australian Institute of Architects,
said tonight that up to 600 Victorian families could be affected.

They would face a GST bill of about $7,000 on the cost of building an average home
if their home was not completed by July 1.

As well, they faced paying tens of thousands of dollars extra to have their homes completed
and would have to find somewhere else to live in the meantime, Archicentre managing director
Robert Caulfield said.

Avonwood, Victoria's fourth biggest home builder, is in financial crisis after losing
the support of its financier last week. It reportedly owes sub-contractors millions of
dollars.

The firm is trying to negotiate its way out of financial difficulty after being forced
to close its doors to protect staff from angry customers.

It has about 500 homes under construction and 430 orders.

Mr Caulfield said building prices had risen by up to 25 per cent in the past year as
people rushed to beat the GST.

This created pressure on the bottom line for builders with fixed-price contracts.

"The increased work in the system rapidly pushed the cost of subcontract prices to
record levels."

Mr Caulfield said changes by the previous State Government meant housing guarantee
scheme payouts were limited to 20 per cent of the contract price if the building company
collapsed.

He called on the government to reverse the changes to minimise the pain for future victims.

"A GST amnesty by the federal government and a review of the housing guarantee system
by the Victorian government should be supported by all political parties to stabilise
the building industry and protect families," he said.

AAP sjg/ps

KEYWORD: AVONWOOD (CARRIED EARLIER)

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