The Federal Government has promised a $3.5 billion carrot to states and territories building more than their allocated share of dwellings under the Housing Australia Future Fund (HAFF), but that won’t be enough to protect the fund from the political cycle.
That’s according to the Property Council of Australia, which put forward a submission to the government ahead of the May 2024 Budget urging it to double the monetary sweetener.
“Right now, Labor is in power in every state government bar Tasmania, but the time will come when that changes and we need to keep our eyes on the national housing prize,” Property Council CEO Mike Zorbas said.
“History tells us housing supply repeatedly gets shoved in the too hard basket when politics intervenes.
“We need to break that cycle by offering the states a carrot no premier from any party can ignore.”
Right now, states and territories building more than their share of new dwellings over the five years to mid-2029 will get a slice of a $3 billion New Home Bonus.
Another $500 million is being offered through the Housing Support Program, providing funding for the likes of water, energy, and sewerage connections.
“Over the forward estimates where trillions are divvied up across the economy, a pool of $3.5 billion between eight states and territories to boost housing supply won’t survive changes in state politics,” Mr Zorbas said.
However, the topic itself might offer some protection for the HAFF.
“Housing will always be an issue regardless of who is in power,” PRD chief economist Diaswati Mardiasmo told Savings.com.au.
“It’s the dynamics – the ‘devil in the detail’ – that is not so protected.
“Therefore creating a system that surpasses who is in power will give this protection.”
Dr Mardiasmo also pointed out that different governments will likely prioritise different types of housing (private market dwellings compared to social housing, for instance) which could impact new housing stock in the nation.
Is the government's housing policy achievable?
The 1.2 million target – previously bolstered by 200,000 – is considered a high bar to leap by many in the current climate.
This is particularly as building approvals continue to decline.
“I think this [target is] overly ambitious and needs to be adjusted,” Dr Mardiasmo said.
“That or the Federal Government needs to provide a breakdown as to how it will ensure these targets are met, especially from an availability of skilled labour perspective.”
Dr Mardiasmo believes doubling the current incentives to a collective $7 billion – equivalent to around $35,000 per dwelling over the million-mark – while also cutting the number of homes targeted could have a more notable impact.
“Yes, it may not match up with the population projections,” she said.
“But in some ways it is better to deliver something fully, on budget, and well; as opposed to attempting to meet higher estimates just to match up with another set of data.”
Mr Zorbas noted young Australians in particular can’t afford a “swing and a miss” when it comes to housing supply.
“Beyond a twentieth century tax system, the greatest economic and social cohesion challenge Australia faces is the delivery of affordable new homes for renters and purchasers as well as adequate supply for those who rely on government housing support,” he wrote in the submission.
The Property Council is also pushing for Australia to open its doors wider to global investment, grow its trade workforce, and chart its path to de-carbonisation.
Treasurer Jim Chalmers unveiled proposed changes to Australia’s foreign investment fees late last year, suggesting the fees charged to those leaving dwellings vacant could be doubled.
Calls for more tradies to meet 1.2 million homes target
The Housing Industry Association (HIA) called for more tradies in its own pre-budget submission earlier this month.
“The Federal Government’s target of building 1.2 million homes over the next five years will fall well short if Australia’s chronic shortage of skilled trades people is not dealt with soon,” HIA managing director Jocelyn Martin said.
“A strong construction workforce is the only way that Australia will ever solve the problem of housing affordability.”
HIA’s proposes a ‘tool bonus’ or ‘tools rewards program’ could increase the number of people entering trades in Australia.
Such a bonus could provide apprentices with $1,000 to purchase tools, as well as a $500 supplement each year, the industry body suggests.
The proposal reads similarly to the once-proposed Tools For Your Trade scheme from the Abbott Government.
The scheme was scrapped in the 2014-15 Budget, replaced by loans of up to $20,000 that work comparably to HECS-HELP debts.
The HIA is also calling for an education program highlighting career opportunities in trades, as well as immigration reforms to make it easier for in-demand tradies to work in Australia.
Image by Dillon Kydd on Unsplash
Ready, Set, Buy!
Learn everything you need to know about buying property – from choosing the right property and home loan, to the purchasing process, tips to save money and more!
With bonus Q&A sheet and Crossword!
Brooke Cooper
Harry O'Sullivan
Dominic Beattie
William Jolly
