Event: Denita Wawn interview with Cassie McCullagh, ABC Sydney
Date: Wednesday 26 October 2022, 9.20am AEDT
Speakers: Cassie McCullagh, host ABC Sydney, Denita Wawn CEO Master Builders Australia
Topics: Housing Accord
Cassie McCullagh, host ABC Sydney: Denita Wawn is with us. She is the CEO of Master Builders Australia, and they are a signatory to this new Housing Accord. Denita Wawn, good morning.
Denita Wawn, CEO Master Builders Australia: Good morning.
Cassie: Look can you just talk us through this. I am not the only person, I think, still trying to get my head around it.
Denita: Totally understandable. It’s a recognition that all levels of government along with industry and investors need to collaborate to get the most out of our housing. Many people are saying we have already built a million houses over five years. Well that’s true historically, but industry forecasts were indicating that we were going to fall well short of that between now and 2030. And we needed to not just look at investment in housing but why we continue to fall short, and we have this housing crisis. And the Accord recognises that many of these problems occur at a state, territory, and local government level. It is the restrictions on planning, it’s the cost of land, it’s a lack of land release, it’s about delays in building approvals on occupancy certificates and so forth. And so, we have been asking for a long period of time to have federal intervention in leading the way for massive policy change at a state and territory level. But you’ve also got to recognise that we have investors, whether it’s mum and dads right through to superannuation funds that do want to get into the housing market but they simply don’t get sufficient returns. And so we also need their input as to what needs to be changed for their additional support and investment. And again, many of their complaints have been around those supply constraints. So, we know that we need to be building at least 200,000 homes each year to meet the housing needs of Australia. Preferably more as Alan quite rightly said in terms of additional migrations into this country. So, we don’t see the million as an aspirational target, we see it as a must target to house everyone that we think we will have by 2030.
Cassie: So, it’s a collaboration between…this Accord is between the federal and state and territory governments, also the big investors and who else? Who else is part of this?
Denita: A number of the industry associations from the building and construction industry have collaborated with the federal government in the development of this Accord including Master Builders Australia. We saw it as a first step to get all the parties interested in housing into one room and actually look at the really significant policy barriers that are precluding investment in housing and they are very much at the state and territory level. The feds, while they don’t have direct control, do have funding levers available to them. So, for example, they are currently renegotiating the homelessness and housing affordability agreement where significant funds go to state and territory governments. That provides them the opportunity of being more specific about what they need to ensure that we meet these targets.
Cassie: Okay. So, you’re really saying that there was going to be a shortfall anyway and this goes towards addressing it. And we know we have the twin issues of recovery from disasters, floods and even still fires from a couple of years ago. There’s still this drag on new builds because of that. We don’t have the people power that we need, that’s an issue. And also the cost of goods as well and building costs have gone up. How is this going to make housing more affordable, this new Accord?
Denita: Well, I think the key issue is about land. In many instances, despite the recent increase in construction because of labour shortages and material costs, longer term, the reason why housing has not been affordable is because of the cost of land. And that relates to those issues that I outlined earlier – the lack of land being released, the lack of brownfield sites being available in big cities, the delays with developer charges and so forth. The investment in housing just doesn’t stack up at the moment because of those costs. So, the big issue is can we get those supply side state, territory, local government impediments removed or at least reduced so it becomes an attractive investment option. We hear from the superfunds all the time that they would like to be investing more in that middle range housing but simply the numbers do not stack up. And so we need to work with state and territory governments and local government to actually resolve those impediments.
Cassie: I see. Okay so this is what’s been, in your view, holding up the system to some degree. And I guess, what about that shortfall of people. How are we going to build all these new homes?
Denita: Well, the important thing is that this Accord doesn’t effectively start until 2024 and hopefully that’s going to give us some time to resolve all the existing capacity constraints in the industry. Obviously labour shortages is massive. The investment in VET is important from last night’s budget, so too is the increase in the migration cap. We need more people. Obviously, we are continuously concerned about inflation and its impact on those material costs, that continues. But we’re also mindful that new regulation has hit the industry with major changes to the national construction code and we’ve got to help builders manage all those changes as well. So we need to be focussing on our capacity to deliver at the same time governments remove those constraints.
Cassie: Look I just want to put the counter argument to you. This is from our text line. Kerri says: “your building representative, [that’s you Denita Wawn] is pushing the supply argument for housing again. But developers already drip feed their stock in order to keep prices high and protect maximum profits. Developers have a fundamental conflict of interest in making housing more affordable.” How do you answer that one?
Denita: Well first of all we don’t represent developers, we represent builders. But this comes to the issue that I’ve said about not sufficient land. And when we talk about not sufficient land, that’s not just governments releasing land but it’s also developers. And I know, for example, there’s some provisions in some jurisdictions already that incentivise or disincentivise people sitting on land for too long. That’s got to be part of this discussion as well.
Cassie: Denita Wawn, thank you very much for filling us on the beginning of what is a huge project. Thank you for that.
Denita: Pleasure. Absolutely enjoyed talking to you, cheers.
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