restructuring process.
Many in the #development industry have a view on the Nightingale model which I'm not here to address. Other things in the article really struck me.
Mostly notably the Australian Taxation Office voting to accept 30c in the dollar for unpaid PAYG and GST.
Can anyone imagine any other building or development business in the country being anything other than up-to-date on its tax payments? We are target number 1 on ATO lists.
Which developers and builders that went bankrupt in the last two years were also offered such preferential treatment? You might get a payment plan, but 70% forgiveness? I find that extraordinary.
In essence, tax payer subsidies for a business which has used its "media-savvy" (per Sarah Danckert) to create the perception it is holier than all the other development businesses which are all trying to meet the same goal – building more homes.
Further, Michael Lennon's comments should warrant close attention for those in government:
"they [Nightingale] needed to accumulate more income and more asssets to safeguard the business".
💰Property development requires incredible amounts of capital/assets and ongoing income, especially at scale. Without a suitable pace of income or enough margin on your costs to cover overheads, you end up in scenarios just like this – even if you are a social darling like Nightingale.
This simple fact applies to every developer and builder in the country. Cashflow is critical to survival and success. And cashflow needs to generate enough return on the capital invested (margin), or people won't make the significant investment needed to build new #housing in the first place. Margins in development have never been tighter.
⏳This is why the industry continually screams about the importance of time. Time delays cost us inordinately in holding costs, taxes, interest, overheads you name it.
Whether its delays on zoning, planning, authority approvals, construction, or on settlements, every day hurts – first the business, but ultimately the consumer. And the more we don't address shortening these critical timeframes, the worse it will get.
For those who run out of runway, the music stops – they just usually don't get the Nightingale kid gloves.
I'm obviously not across the detail of Nightingale's business situation and don't wish them or Jeremy McLeod ill – quite the opposite. They have their hosing niche, and they should fill it.
🤔But I am astounded at the special treatment given to trendy ideas and "rockstar" brands by government – special State Government planning pathways, deals on land, and now Federal tax discounts – in lieu of addressing the real systemic problems needed to address improving #housingsupply.