Yesterday our welcome national housing target turned one.
What a little legend!
If you had a toddler who had changed the national conversation and spurred the first wave of long overdue planning reforms, you would call them a prodigy.
Abundant housing supply, not policy pumping up demand, has taken its rightful place as the favourite child of decision-makers across the country.
The downside? The federal government’s Supply Council says we are still 262,000 homes behind target.
In pursuit of the necessary 1.2 million homes some states will succeed and some will fail to make their share.
In this case, the act of measuring progress is almost as powerful as the outcome. It reveals which states are succeeding, which are falling behind, and — crucially — why. It creates accountability and helps refine policy and investment decisions.
To build momentum, we must embed a ‘culture of yes’ that outlasts the political cycles.
That means a housing sub committee of Federal Cabinet.
That means improving the housing target framework and design.
From one-off target to rolling five-year targets and incentives.
From narrow definitions of residential to every dwelling in the ‘living sector’.
Think beyond detached homes and apartments to sell or rent to retirement living, purpose-built student accommodation, land lease communities and long neglected social housing.
The target and incentives must also capture the systemic planning improvements needed to catalyse the industrial and commercial projects that improve our quality of life.
Today, we are building fewer than half as many homes per hour worked as we did in the mid-1990s. That staggering decline demands urgent attention.Â
The current system is too slow, too complex, and too fragmented. Facilitation programs have helped, but they are no substitute for whole-of-system reform.
That means bold leadership from premiers, treasurers, planning and housing ministers, and agency heads — not just the usual planning virtue signalling by media release followed by retreat at the first sign of any kind of local opposition.
We need to boost skills capacity — both homegrown and imported — to embrace construction innovation, and to accelerate approvals, assessments, and last-mile infrastructure.
We must also get serious about tax settings. The Victorian government derives 47% of state budget income from property and, in rough proportion, well over a third of the cost of a new dwelling is various taxes and charges.
Some of these costs on new home buyers do build local infrastructure, but many operate like taxes on alcohol and cigarettes — as a deterrent to investment and supply.
State-based foreign investor surcharges are a pernicious example. These taxes are counterproductive. They deter institutional investors from partnering with Australian developers and builders on new housing, industrial, and commercial projects.
Think Dutch, Canadian, and Singaporean pension and sovereign funds helping while states grapple with long-term debt.
We cannot afford to turn away these patient capital partners who get spooked by the tax hokey pokey that has sadly made Victoria an uncertain investment destination.
To meet the national target, we need to build more than 60,000 homes every quarter. In the December quarter, we built just 45,167. That is up slightly from the previous quarter — but still well short of what is required.
Interest rate drops will slowly assist here, but mega projects and green infrastructure draining market capacity, industrial relations problems in Queensland, multi-year power and water delays across every state and territory, tens of thousands of homes stuck in the federal environmental approvals process, and twenty years of bringing in less than 2% of migration hypothecated to skilled construction workers all add to the cost and delay of new housing supply.
The Federal Government has an important new role to play. It can lead the improvement of its own abundant national framework by turning the one-off target into rolling five-year housing targets. Targets backed by incentives, supported by data, and embedded in intergovernmental agreements.
This framework should be an outcome of the upcoming August Productivity Roundtable.
It could include a bring-forward of the various incentive monies due to successful states in 2029. That will help dissolve last mile infrastructure challenges.
As we mark the first birthday of Australia’s national housing target, let us not blow out the candle with positive urgency.
This special housing target has changed the conversation and sparked reform — but not yet changed the outcome.
Let us celebrate with a commitment to build a planning and housing system that delivers for all Australians.
This will require opposition cabinets around the country to come to the party, too — not over five years, but over the next 15 years it will take to make up for decades of planning neglect.
Next week: lessons from the development assessment framework age…