I thought this worthy of it's own topic.
Most of it was posted under Interest Rates.


I also heard of a Developer being screwed by the Government.
The crux of this one is the Minister keeps delaying the signing of the Contract
even though the Developer has made a huge number of changes.
This Contract was due to be signed in late September.
The Developer has been run around constantly. A typical response from the government has been:
"We will sign the Contract next week."
The government has requested a number of changes to the development
and requested a large number of diocuments.
Both changes and documents were revised and submitted to the government.
Some of these documents were NOT read and astonishingly, the same documents
were requested to be resubmitted !!.....one should ask "WHY?"

To make matters worse, the governement has been screwing down the price it will settle upon.
From what I hear, the government is aiming at Fire sale price. No profit or hardly any.
Are you reading this Reserve Bank? This is the Economy from my Lounge Chair.

RESULT:
The delays in signing the contract means NO CASHFLOW to this small Developer.
This Developer, his business and his family are under enormous financial stress.
The government keeps breaking promises that the developer has relied upon with his bank.
It has gotten to a point where the developer is seriously considering shutting the doors.
This would mean 10 more people are out of work. Maybe higher.

To make matters worse, the governement has been screwing down the price it will settle upon.
From what I hear, the government is aiming at Fire sale price. No profit or hardly any.
Are you reading this Reserve Bank? This is the Economy from my Lounge Chair.

My own impression, anecdotally based, supports this view. I have been in Sydney for the past three weeks and have spoken to people whose construction companies have been competing for government stimulus funded contracts. One of them, an executive in a well known private east coast building firm, has successfully negotiated contracts after the tender process, which the government seems to be using to short list preferred firms which it then asks to modify the submitted tenders by reducing their profit margins. In this case the contractor has been given the work on margins which, long term, it regards as unsustainable but which will at least allow it to maintain its work force over the next 12 months.

In contrast, another building company, this one much smaller, is surviving and even expanding its work force, for the time being, on stimulus funded contracts in the schools sector of the government's spending program. However, its time line for sustained work is only for the next 6 months. After that the principal does not feel sure of the company's future.

Cheers,
Catron

I am not sure it is Playing HARDBALL, but just simple naivety, and administative sub-competence, coloured by political bias.

Don't forget this govt has only been in power for lesss than 2 years, and had a bit of a challenge developing the monetary response when presented with a set of issues needing rapid solutions. Rudd is a bit of a micro-manager and hence moody is going to put forward their, perhaps ore sensibele, ideas. Gillard is the other one with input, and much more a creation of Labor factions, thus beholden to all sorts or corridor whispers and inputs. And the echelons of the bureaucracy are somewhat timid with new masters/ some swept away (ministries well politicised by 12 years of Howard)

So what do we end up with: another well intentioned bit of nonsense. In the attempt to cater to various electorates, meaning human rights, equal opportunity, slight (Ha ha) tilt towards marginal seat boosting, union ways of doing (undoing) (not doing) things, we come up with the camel when asked for a thoroughbred.

My brother-in-law runs a fairly successful business that ges most of his work through govt contracts. however, as a not Tier 1 tenderer, he spends inordanate amounts of time and cash resources tendering and not winning. Invariably the winner is some largescale multi-national with deep pockets. He then picks up the subtender and does the work. Is this fair? No. The tender winner inflates the bid for their cut, passes it through and then our 'guys' do a fair job but for bread and butter. The rationale. Amongst other reasons, it is 'depth of resources' and that old hoary chestnut of insurance/ PI/ backup.

Trying to win Govt work is a quick way to go broke. Lucking out and getting a win can lead to fat margins. Many apply; few are chosen. And it is a system open for abuse, networks, cronyism, and machinations. Will it ever be any other way?

It seems it will not be any other way.
Some years ago an ex-government person told me that the NSW Government was run by Property Council of Australia. Not government.
Since I heard that I have watched keenly a lot of developments and news items.
We have all heard the Wollongong affairs.
It is all about Money and Lobby groups NOT Democracy.
I smile whenever I learn about a new Lobby Group setting itself up in Canberra.
I frowned when I learnt Goldman Sachs was the largest corporate donar to Obama election (a goor President in my mind).
Perhaps Lehman Brothers donated to the wrong party?

Returning to the topic, the content of the Contracts are also HARDBALL.
There are also a lot of Local Government Contracts being signed that breach PI Insurance agreements.
Architects are being advised NOT to sign them. Insurance companies will not provide cover.
The theme is a constant shift of liability away from government.
We need a COMMON SENSE ACT that legally over-rides everything.