Expert ‘baffled’ by Homes NSW paying insolvent builder to construct Wagga public housing

One of Australia’s leading construction debt recovery consultants has told Region he’s “baffled” by why a NSW Government department chose and kept paying an insolvent company to build public housing in Wagga.

The Land and Housing Corporation (LAHC), now called Homes NSW, chose insolvent company Matrix Group Co as its main contractor to build four government units at 16 Spring Street in late 2020 and kept paying Matrix for almost a year while the Sydney construction business was deeply in the red.

When this company officially went into liquidation in October 2021, local subcontractors were left hundreds of thousands of dollars out of pocket.

“A government department needs to do more than just check public records. If you want to be a government contractor and do government work, you must be pre-qualified,” Anthony Igra of Contractors Debt Recovery said.

“Part of pre-qualification is that your company must be financially assessed by a government-appointed financial assessor.

“I don’t understand how Matrix could have made it through this process if they were insolvent … so many parts of the chain did not work for that to happen.”

Region asked Homes NSW if this financial assessment was done on Matrix Group Co, but it refused to respond.

Credit reporting agency Equifax generally conducts this assessment for the NSW Government.

Region also asked Equifax directly if it did checks on Matrix.

“We cannot comment on the specific circumstances of individual organisations that may or may not have been assessed by Equifax under the NSW Government Financial Assessment Services Scheme,” an Equifax spokesperson said.

Amy Burns, whose company Oasis Scaffolding and Bricklaying is still owed $90,000 from Homes NSW’s Spring Street project, wants the NSW Government to pay her directly.

“[Homes NSW] chose an insolvent company and didn’t do their proper checks,” she said.

Homes NSW rejected her pleas, claiming its contract was with Matrix and it can’t pay subcontractors directly.

This claim is also disputed by Mr Igra.

“Under the contract, I’d be almost certain that the contract allows for the principal [that is the government] to make direct payments to subcontractors,” he said.

“Why can’t they pay tradies directly? The government talks loudly about getting contractors paid, but then refuses to pay for the work because the builder goes under. Under the head contract the government does not have to pay the builder when it goes insolvent. This means the money to pay the subbies is still there, unused. Why can’t this be used to pay the subcontractors?”

Homes NSW also refused to answer questions from Region on whether it has discretion to pay subcontractors directly and why it didn’t use money withheld from Matrix to compensate tradies directly.

Region also asked if newly appointed Homes NSW chief executive Rebecca Pinkstone knew about this matter and if she was doing anything about it, but there was no response to that question either.

Ms Burns appealed directly to Housing Minister Rose Jackson when Homes NSW ignored her emails.

In September 2023, Minister Jackson told Region that the liquidator was responsible for recovering money for unpaid tradies.

“We are actively pursuing the liquidator and urging them to accelerate the liquidation of Matrix Group diligently, for the benefit of all creditors,” she said.

Region asked the liquidator about this at the time and he said he hadn’t heard anything from the minister and didn’t even know who she was.

We followed up with the minister’s office this week to see how attempts to accelerate the liquidation were progressing.

“We know this matter is incredibly frustrating and I agree that it is taking too long, and the subcontractors deserve better,” she said.

“I deeply sympathise with all the subcontractors who have been impacted by the careless and irresponsible actions of the principal contractor, Matrix Group … Homes NSW formally wrote to the Australian Securities and Investments Commission (ASIC) requesting the matter to be sped up.

“The liquidation process operates separate of the NSW Government. The appointed liquidator, Western Advisory, has the responsibility to call in funds to hopefully repay outstanding debts to Matrix Group’s creditors including the affected subcontractors and Homes NSW. We will continue to closely monitor this process.

“The NSW Building Commissioner is aware of this matter and will continue to investigate.

“To be clear, I want to ensure this does not happen again and will review the processes in place to provide more assurance to anyone working with Homes NSW.”

Richard Foley, a plasterer who is owed $55,000 on the Wagga Spring Street project, is not convinced.

“[Homes NSW] are ducking and diving and refusing to speak to the media; that tells us something,” he said.