Australian Restructuring Insolvency and Turnaround Association chief executive John Winter said governments banked on construction-generating economic activity during the pandemic.

"It seemed like a logical solution but supply chain issues,infrastructure projects and now interest rate rises has meant the construction industry has been hard hit."

In February,the collapse of building companies prompted the Victorian Building Authority to issue a warning about the risks of “phoenix” activity in the industry,which occurs when companies deliberately and repeatedly go bust to avoid paying debts.

Winter said phoenixing was often part of the business model for some builders and has led to the construction sector being over-represented in insolvencies. But he said the latest jump in companies collapsing was more likely caused by “real stresses” on an industry that already had thin margins.

The list of briefings,obtained byThe Age,also reveal Pearson received departmental advice about domestic building insurance abandonment cover – also called builders warranty insurance – which is taken out by builders before taking a deposit or any money.

Pearson’s office was contacted for comment but did not respond by deadline.

The state-backed Victorian Managed Insurance Authority (VMIA) is the primary provider of cover if a builder dies or becomes insolvent.

Pearson received advice on the insurance 10 days before the VMIA reported adeficit of $249.2 million in the 2021-22 financialyear. It said it had higher-than-expected claims last year.

Opposition housing spokeswoman Jess Wilson said the documents show the minister was warned months ago about failings within the domestic construction sector and presented options to de-risk consumers.

“Home buyers who have lost deposits deserve to know why the Andrews government ignored options to better protect consumers,” she said

Keith Ryan,executive director for Victoria at the Housing Industry Association,said the industry had spent months lobbying the government for planning reforms. The lack of movement on reforms contributed to the current crisis in the sector,he said.

“A lot of the problems we are seeing with builders now are due to the laws being out of date,” Ryan said.

“When we have had the chance to meet with government,we have had a sympathetic hearing,but it was obvious that it hasn’t been a priority,which is disappointing.”

Earlier this month,Opposition Leader John Pesutto met more than a dozen representatives from the residential building industry and offered bipartisan support for reforms that would support the building industry and offer greater consumer protections for home builders.

“We want families to be able to see their homes finished ... and we want to make sure we keep industry afloat.”

The Morning Edition newsletter is our guide to the day’s most important and interesting stories,analysis and insights.Sign up here.