*CHECK AGAINST DELIVERY*
6 March 2024
MEDIA RELEASE
Property Council Chief Executive Mike Zorbas address to National Press Club
Our national housing aspiration and our task must be to give as many people access to housing and to the hope of owning their own home as possible.
However we hope to get there, I hope we can all agree on that.
Why is this important?
Because housing sits at the heart of our social contract with each other and is ultimately essential to our long-term social cohesion.
My argument is that government industry partnership focused on supply across all housing typologies and ownership states is the rock, the paper and the scissors of solving the housing crisis.
I’ll share our 9-point plan for better housing in our cities to open but, in speaking today, I first acknowledge the traditional owners and custodians of this place, the Ngunnawal and Ngambri peoples, and pay my respects to their elders past and present and other aboriginal and Torres Strait Islander people here and watching today.
Given time, things I won’t address in this speech but go to the heart of housing affordability: high cost and hurdles of financing, bad weather impacts, rising material and labour inputs, decreasing construction productivity, unprecedented new household formation since the 2016 census accelerated by the pandemic, low market capacity, labour market competition from welcome and historically large state infrastructure builds and green infrastructure construction, all of which are factors that combine to add cost to new housing for buyers, renters and people who need social housing.
Having laid that out, I now move to a warning.
There will be four million more people here by 2034. That’s three Adelaides.
And so, my warning to every level of government, to every single parliamentarian is this: Grandstanding, gridlock and policy grenades won’t put a roof over anyone’s head.
And so, to the Property Council’s 9-point sustainable housing supply plan – clearly keeping the need for increasing energy efficiency and planning for a changing climate in mind, is a combination of actions that we have never properly tried as a nation.
The plan
- When it comes to the 1.2 million new homes national housing target, I’m sick and tired of hearing the whinging about whether or not we will hit the target – let’s have a proper crack
- Improve our broken state planning systems
- With governments’ taxes making up 20 to 40 per cent of the cost of every new home built across the nation let’s stop randomly increasing taxes on investment in new projects each quarter in our big states especially Victoria and NSW
- Back in the government’s industry training improvements and complement this additional skilled construction trades from overseas as part of a smaller overall intake
- More modular and prefab construction
- Use the airspace over existing buildings as a first resort for new development which goes to circular economy considerations
- Grow the types of housing choice at different stages of life – fix the investment settings for the best kinds of communities – purpose built student accommodation, retirement living communities, and build to rent housing
- Consider the role of our regional towns and growth corridors
- Spend more of the monumental property taxes we all pay nationally on social and affordable housing while supporting the vast bulk of the market that is customer-led.
Now those nine points are derived from the collective expertise of the 2,500 largest and leading organisations in the property industry that the Property Council represents. While the Property Council has better planning and smarter investment frameworks for our great cities as our bread and butter, I should note we are also known for shaping sustainability and diversity leadership and outcomes across the industry.
The last time the Property Council got a call up to speak here was twenty years ago under my friend and mentor Peter Verwer AO. The challenges inherent in shaping our cities and communities for the better – the very purpose of the Property Council of Australia over 55 years – have arguably intensified since he spoke.
For my own part I’ve been attending the National Press Club since at least 1998 when at Dad’s insistence I started in property working for the late, great Jim Service AO.
A self-made property person, it was Jim who taught me that the creation of the built environment requires all the problem-solving skills that we humans possess: from conception and design, through consultation and placemaking, to construction and operation.
Equally, Jim taught me that the most challenging thing about bringing property projects to life in Australia, is making the finances and the management of risks and delays and ultimately the affordability of the end product, work in a marketplace mired in the quicksand of Australia’s relentlessly unproductive planning regimes and ever-changing property tax systems.
WA’s planning reforms will hopefully make that state a recent exception to this.
The stark reality Jim showed me is that even after the headline approval has been given to any property project, the money invested through the developer by banks, individuals, superfunds or domestic or overseas capital partners must then be risked against an approval process far more complicated than the measurement of a one-off approval indicates.
There was a terrific case study of this in the Sydney Morning Herald on the weekend by architect Tone Wheeler, near the Prime Minister’s own electorate that well describes the infill planning challenges that will directly add in that case $8,000 per dwelling to future renters’ bills. We can and must do better.
Suffice to say, much of this planning process is necessary. All of this planning process, especially agency and utility overlays and bottlenecks, could be more efficient. And of course, some plain vanilla planning should be deemed to comply more often than not. Then there are investment repelling gimmicks like the ACT’s developer licensing regime.
Looking past broken planning systems, it is important to note NIMBYISM is by no means always irrational – but being inherently a local movement – it often does not, cannot and will not consider what’s in the broader interest – which is the level at which decision making on housing must occur.
The greater good of the suburb, of people who may wish to move to the suburb, of grandchildren who would benefit from living near their grandparents before they go through the various stages of their lives, of nurses needing to work at nearby hospitals, of teachers needing to work at local schools, and if we are going to do this right – the greater good, shared opportunity and social cohesion of the region, territory, state or country as a whole.
But time is precious, so back to Jim.
More eloquently than I do now, he helped me understand, there are no hospitals, schools, universities, stadia, factories, office towers, shopping centres, data centres, there are no warehouses for storing and moving goods, no retirement living communities, no purpose-built student accommodation and no social, rental or owner occupier homes – there is none of the associated infrastructure – there are no great Australian cities of which we are all appropriately, globally, proud, without the work of the property industry.
In fact, every year the property industry contributes almost $130 billion in taxes to all levels of government – more than 18 per cent of the country’s total tax receipts.
The property industry directly supports more than 1.4 million full-time Australian jobs, more than 3 million if you include indirect support.
That’s more than the mining, manufacturing and financial services sectors combined.
Those millions of Australians work in the only development system that is long term compatible with liberal democracy – a designed and competitive market place for the 97 per cent of non social housing that needs to provide adequate choices for our many phases of life and differing individual needs.
These are the champions of the solution to our housing supply and availability crisis.
What then is the challenge ahead of us all?
Cruelly, we are blessed with a trifecta of housing supply advantages as good as any on this earth.
- We are the 55th largest national population in the world. Not very big.
- We are depending on the cycles – the 12th to 15th largest national economy. Sizeable enough.
- We are the sixth largest nation by landmass. Spoiled for land then, even if much of it is arid.
Given this trifecta… a million homes by 2029 – our national cabinet agreed target should, and can be, a modest target in this revenue and land-rich nation.
And yet, by all published measures – anywhere – Australia is the one of the global housing supply wooden spooners.
Perhaps the most dire analysis I’ve come across is that of ex RBA economist Tony Richards in the AFR in May 2023 showing our national housing supply performance over successive twenty year periods to 2021 has our housing delivery systems, especially planning our cities, in steep decline as the going gets tougher.
He found that our housing supply productivity has slumped radically compared to the turn of the century and concluded we are a confronting 1.3 million homes – behind where we should be over the past 20 years in overall housing supply.
Add to that the $290 billion the Leptos review told us we must spend over the next 20 years on social and key worker housing and it’s a big challenge indeed.
No wonder the NSW Productivity Commission boss said a month ago that Sydney could become a city without grandchildren. No wonder Peter also previously restated that that a ten per cent increase in national housing supply could drive down prices by 25 per cent.
You read that and you weep.
But how did we get here?
Our housing supply deficit is largely born of the failure of past state cabinets, past governments and past parliaments to hold themselves or local governments to account for productive housing delivery over the past two decades.
Property taxes are the lion’s share of the large state budgets and yet we have chosen not to hypothecate, not to spend enough of that money on delivering social, affordable and at-market housing from those consolidated revenues.
To be clear – most people who go into public life at federal, state and local levels of government do so to improve the country and may well be qualified to do that. Personally, I admire the difficult choice.
Equally it is no insult – rather a fact – that precious few parliamentarians or councillors know anything about how to fund or deliver the creation and renewal of cities on assuming office. It’s a steep learning curve even for politicians who are quick learners.
And historically, on housing supply deficits, some of these same modestly qualified representatives have tended to shift the blame, to any other available level of government (which may be true), to negative gearing (which actually supports new supply and enables upkeep of existing supply), to the excesses of a customer driven market, (rent freezing is a supply killer that directly reduces new housing funding and production, as no less than the Brookings Institute tells us), to ‘land banking’ (a quick look under the hood shows this is an evidence free statement as these as these cash flow oriented businesses owe the bank and investors always with interest).
And finally, many of our leaders are all for housing supply. Provided of course that it’s “one suburb over”.
So that is the key part of the origin story of our many housing problems but let’s not whinge about it.
So let us hit our 1.2 million homes national cabinet targets, as driven by The Prime Minister, Treasurer Chalmers and Housing Minister Collins, which the Grattan Institute says will reduce rents by $32 billion and realise that hitting those targets involves an unprecedented parliamentary and business partnership going forward.
Out of courtesy, I also note the work of Shadow Minister Michael Sukkar in establishing NHFIC and deploying HomeBuilder when it was needed and the ongoing work of Senator Bragg and colleagues in attempting to aid scale investment into new housing.
Only if we hit the targets can we achieve smarter and more sustainable planning, stable, investment-welcoming tax settings and intelligently manage our overall migration intake while increasing the absolute number of people with construction skills in, and coming to, Australia.
And so, in closing, the paramount idea I leave with you is the grand housing partnership that needs, especially state parliaments, above all other things, to publicly commit their treasuries and their planning systems to deliver better supply and choice of housing to a changing and ageing population at a scale and an affordability level that we have failed to manage in the past.
This unprecedented era of partnership is needed across Parliaments – not just National Cabinet – not just Premiers Treasurers and Planning Ministers – but all parliamentarians, with industry and the profit for purpose sector to fix our capital and regional cities and solve the structural causes of the housing crisis.
Let’s create the right approval systems and champion housing and building our cities, project by project, not just as the productive physical bricks and mortar that we need but the social infrastructure the nation needs.
The final call to action is simple – let’s give this challenging issue a crack together.
ENDS
Media contact: Rhys Prka | 0425 113 273 | [email protected]
Ellie Laing-Southwood | 0416 007 830 | [email protected]