Domestic building insurance is compulsory in Victoria for work valued at more than $16,000.
Andrews said regulators needed to first investigate how widespread the issue was, if genuine, before considering what support was required for affected people.
A Porter Davis display home in Clyde.Credit:Joe Armao
Porter Davis went into liquidation on Friday, affecting 1700 customers with homes under construction in Victoria and Queensland and a further 779 who held contracts with the failed builder.
Porter Davis had approached Treasurer Tim Pallas for a bailout, but Andrews said it was right not to because the business was not viable. The Commonwealth Bank, the group’s largest secured creditor, had already declined to step in.
“There was a due diligence process done by the Commonwealth Bank, they got external consultants … the size of the problem got bigger, not smaller, when the externals had a close look at it,” Andrews said.
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“Where a bank refuses to prop up a business, that’s exactly the place where I don’t think we should be stepping in … To go without an administration, to go straight to a liquidation phase, tells you that the fundamentals of that business were not strong.”
Andrews said regulators were also investigating whether Porter Davis was slashing prices of new homes by up to $50,000 until the day it went into liquidation, luring in buyers who could struggle to get their money back.
“Again, I caveat all this saying this is all to be proven. But there’s enough evidence that that seems real. We are looking at that actively,” the premier said.
