Sally Sara:
There are fresh warnings that the federal government will miss its key housing target as the Housing Minister Clare O’Neil vows to forge ahead by slashing red tape. The government has promised to build 1.2 million homes by the end of the decade to stop a generation of Australians being locked out of the market. But property research firm Cotality has become the latest sector voice to warn that the current approach isn’t working and that accelerating building approvals won’t get things back on track. It comes as Australia’s peak welfare body joins the trade union movement in pushing for a phase out of negative gearing ahead of the Treasurer’s roundtable.
Clare O’Neil is the Minister for Housing and Homelessness. I spoke to her a short time ago.
Clare O’Neil:
Good morning, Sally. Great to be with you.
Sara:
This warning from Cotality follows advice from Treasury that your housing target will not be met. Is it time to be frank with the Australian public and adjust the target to something that is more realistic?
O’Neil:
Sally, we’ve got a housing crisis in our country because we have a housing shortage. So for 40 years our country has not been building enough homes, and whatever debate there may be about housing policy, we know one thing – and that is the best way to alleviate the pressure on Australians is to build more homes more quickly. So we’ve got 3 targets that are driving the government’s work in this area. We’re doing something that a Commonwealth government hasn’t done since the Second World War, and that is build – en masse – social and affordable housing for Australians – 55,000 over 5 years. We’re building 100,000 for first home buyers with the states. And then the final target is the one that you referred to.
So what the PM did last term is sit with states, territories, local government and set a national aspiration to build 1.2 million homes over 5 years. Now, this is a really bold and ambitious target, and it’s designed to be. What we are trying to use this target to do is drive change to our national housing system so that we don’t continuously confront the kind of affordability challenges that we’ve – that we’re dealing with at the moment. So it’s bold, it’s ambitious, but I can tell you that that’s exactly what’s needed. We’ve got to get states, territories, local government and the private sector working together better on housing, and that’s the reason why we’ve got this target in place.
Sara:
So let’s have a look at this target of 1.2 million new homes by 2029. How many have been built so far?
O’Neil:
So we’ve built about – about half a million homes have been built in Australia since we came to government. And we are not yet through the first year of that target. That is to say we don’t have data for the first year –
Sara:
Are these homes that the government has built –
O’Neil:
No, they’re not Sally.
Sara:
– or are these just homes that have been built in general?
O’Neil:
And that’s exactly the point. So the homes the government are building are the 55,000 and the 100,000 for first home buyers. The 1.2 million is not just a Commonwealth government target; it is a national aspiration. And the reason that we’ve set that is because it’s not just the Commonwealth that’s involved in housing; all 3 levels of government have controls here. The private sector and the investment community are very important too. What we are trying to do is use this 1.2 million to galvanize change to housing in our country.
Now, do we have more work to do? Absolutely. Our housing crisis has been cooking for 40 years because it is a very hard problem to solve. But one thing I can tell you is, you know, since the election, a lot of the work that we’ve been doing is building consensus with all the people that can make a difference here, and some of the proposals for our next raft of reform will be discussed and I hope agreed to at the roundtable coming up in a few weeks.
Sara:
In your view, will this target be met?
O’Neil:
Look, I’m doing every single thing that I can as Housing Minister federally to make sure that we meet the target or get as close to it as we can. The target will depend on lots of different things, Sally. It will depend on what state governments do. It will depend on what interest rates look like. But what I can tell you is that having a big, difficult target is exactly the kind of thinking that is going to need to snap us out of what is a 40‑year‑old problem confronting our country. And if I can just say to you, something our government is doing is actually wading into housing in a way that a Commonwealth government really hasn’t done since the Second World War. We’ve got a $43 billion agenda here, which is mainly focused on building, building, building, because more housing means more affordable housing for Australians.
Sara:
So the targets of homes that will be built by the federal government, what are the numbers there right now? What are the latest numbers you have?
O’Neil:
We are building 55,000 social and affordable homes over a 5‑year period. We’ve got about 28,000 of those in planning or in construction right now. And if I can just help your listeners understand the scale of what we’re undertaking here, Sally –
Sara:
But how many of those 55,000 have been completed as of now?
O’Neil:
We’ve completed more than 2,000 of those homes and 28,000 are in planning and construction right now. And, Sally, if I can just explain to your viewers what an endeavour this is, you know, as your viewers would know – as your listeners would know, for the 9 years the Coalition were in power they tapped out of housing completely. We’re building 55,000 social and affordable homes over 5 years. They built 373 homes over 9 years. You didn’t mishear me – for the first 2 terms of their government they didn’t build a single social and affordable home in our country. They are –
Sara:
You’re the minister for this government, so let’s focus on what’s happening now –
O’Neil:
No, no, no, but, Sally, I want your listeners –
Sara:
– and your targets.
O’Neil:
– to understand how seriously we are taking this. We are taking the Commonwealth from basically having totally tapped out of this problem to being the most bold and ambitious Australian Government on housing since the Second World War, and we’re going to continue to build on that work in this town.
Sara:
So of – on that target of 55,000, 2,000 have been completed. What’s the date when you need to get to 55,000?
O’Neil:
Well, it’s the same as the accord target – so mid 2029.
Sara:
So at this pace you’re not going to get there.
O’Neil:
Well, no, that’s not correct. So we are funding 55,000 social and affordable homes over a 5‑year period. We’ve got 28,000 in construction or development right now. You know, unfortunately in the last parliament we faced a number of delays on social and affordable housing. You’ll remember that the Housing Australia Future Fund, which is sort of the centrepiece funding mechanism for this, was delayed for more than a year by the parliament.
But we’re progressing towards that target. And I’d say again to you, Sally, we’ve got 28,000 of these homes in planning or construction right now. I could take you to Arncliffe in Sydney, to Kensington in Melbourne where you will see massive housing projects that are funded by our government. Building housing does take time, and that’s part of the problem. But it’s really important that we’ve got a Commonwealth government in place that’s actually having a crack at doing something about this.
Sara:
What are you going to do about productivity? Because we know that for detached homes, completion times have blown out from 7 months to 10, for unit blocks they’ve blown out from 18 months to 2 years. And approval times, you’re lucky to get completed within 4 years.
O’Neil:
Yeah.
Sara:
How are you going to meet a 5‑year target when that’s the reality?
Neil:
Yeah, yeah, and this is a really big part of the problem. It is too hard to build a house in Australia today. And one of the reasons why I feel confident about the Economic Reform Roundtable being able to deliver us some big outcomes on housing is because there’s actually really good consensus about why this is such a problem. So the Productivity Commission has done a big report saying that construction productivity in the residential sector has roughly halved over a 20‑year period. So we’re actually building homes even more slowly than we were 20 years ago.
And they’ve told us why that’s the case. Three big reasons: the first is red tape and regulation. You would not believe what builders have to confront before they’ve even laid a brick in this country, and that’s holding us back. We’ve got real issues with innovation. So we’re building homes much the same way that we were 40 years ago, and this is a big part of the puzzle, too. And the final one is skills. This is a long‑running issue, not just in residential construction but we have a shortage of tradies generally. And so at the roundtable we’re really going to frame the discussion around these 3 big areas – what can the economy, what can various levels of government do about these 3 big problems.
Sara:
ACTU Secretary Sally McManus has called for a one property limit on negative gearing tax breaks. It’s an idea that’s also been supported by ACOSS. Is winding back on negative gearing on the table or off the table?
O’Neil:
Look, the PM, I think, was really clear about this yesterday – we’re really respectful about these voices calling for changes in the tax system. These are long‑running positions of both the ACTU and ACOSS, who have come out also supporting similar proposals. Our tax policy as a government is really clear – we’re giving a tax cut to every single Australian taxpayer. And, indeed, on housing, our policy is pretty clear too. We’ve got a $43 billion package which is principally focused on addressing the main game here – and that is that our country is not building enough homes. And until we make a difference to that problem, we are not going to see any tangible difference to this massive challenge in the lives of Australians.
Sara:
Clare O’Neil, thank you very much for your time this morning.
O’Neil:
Thanks, Sally. Really appreciate it.
Sara:
That’s Clare O’Neil there, the Minister for Housing and Homelessness, speaking to me there.