Event: Denita Wawn interview with Scott Wales, ABC NewsRadio
Date: Wednesday 26 October 2022, 3.15pm AEDT
Speakers: Scott Wales, host ABC NewsRadio, Denita Wawn, CEO Master Builders Australia
Topics: Budget, Housing Accord
Scott Wales, host ABC NewsRadio: Denita Wawn is the CEO of industry group Master Builders Australia. She joins me now. Denita welcome once again to ABC NewsRadio.
Denita Wawn, CEO Master Builders Australia: Thank you for having me.
Scott: I think we’ve spoken to you a lot over the last 18 months or so. But it tended to be in the context of the pandemic and Melbourne.
Denita: That’s right. We’ve been going through such a change for the whole economy and our industry has been no different to anyone else. So it’s nice that we’re back on a footing to talk about the future. But nevertheless one that still needs a great deal of attention.
Scott: Okay let’s talk about this policy unveiled as part of the Budget. This plan to build a million new homes over five years beginning in 2024. Is that realistic?
Denita: Yes it is and more importantly it’s pretty good that we do so. Master Builders Australia as well as other industry stakeholders have consistently said over a long period of time including pre-pandemic that to meet population needs of our country, we have to be consistently building at least 200,000 homes each year to meet demand. And we’ve been doing not too badly in a pre-pandemic environment, but the forecasts are quite bleak for the next four years. And that’s what has concerned the government, that we needed a circuit breaker to ensure that we’re getting to that 200,000 a year or if not exceeding it to actually meet the housing needs of all Australians.
Scott: Okay so really this plan is actually aimed at just maintaining existing construction levels and not letting them fall off. Because a million homes over five years is 200,000 homes as you’ve just suggested.
Denita: That’s right and we know we need to continue to build that number but there have been a series of impediments that are predominantly at state, territory and local government level that have been difficult for federal government involvement, but we commend the new Albanese government for taking a leadership role in this. If we’re going to achieve economic growth in this country, we need to house people. Not only people in Australia now but those who we want to come to Australia to meet all of our current labour shortages. But at the moment we can’t house them. We can’t even house the people that are here. So we’ve really got to resolve this housing crisis.
Scott: Now we know that a big issue at the moment in construction is capacity issues either with labour supply or supply of materials and those materials in fact becoming much more expensive in the last few years. How do you get around those issues with keeping this target in mind?
Denita: Well the good thing is it’s part of the reason why the Accord is not set to actually be commenced in real terms for new builds from 2024. That enables all parties to the Accord to get their act together. In simple terms, we’ve got to work with governments to resolve our labour shortages and certainly supporting vocational education and training. And also increasing migration numbers is a good start. The material prices will continue to be high while we’re currently battling high inflation. And I note that the inflation number today is the highest since 1990. And of course, the industry has been grappling with all of the problems of the pandemic and also new regulations in the building code. So, we need time to reset as an industry and get ready. But the industry was concerned that we’ve gone from fairly good, high numbers of residential building and we were forecasting significant dips of nearly around 40 odd thousand less homes over the next four years or so. This gives certainty to the businesses that they can maintain employment, that they can focus on the future of the industry with some level of certainty that there is a commitment by governments to resolve some of these supply constraints that we’ve experienced for decades that need to be resolved.
Scott: What about the pledge to deliver as part of that 10,000 affordable homes over five years? We know that there is a growing issue not just in capital cities but in regional Australia with a lack of supply not just of homes to buy but homes to rent. Is that a good initiative?
Denita: Yes, it is and I think there’s a big issue here about the government, particularly given budgetary constraints, can only do so much. And that is why they’ve brought in the involvement of large institutional investors. They still think it’s important that we have mum and dad investors in the housing market and we’ve seen an uptick in investor activity over the last three months. But nevertheless if we are going to get to the levels of new houses that we’re anticipating under this Accord, then we need more private investment. And super funds have historically looked elsewhere in this space. By and large simply because the returns are not there and if you talk to some of them, they indicate that they are willing to invest if we see some of the high costs of development and investment actually reduced. And a lot of that is not necessarily needing cash injection by governments but rather changes in planning and zoning, changes in how we look at developer charges and the sharing of developer charges, the significant delays that are experienced in respect to development applications and the list goes on. They all add to the costs of building and in fact when we look at the historical data pre-COVID. The cost implications of housing was not because of construction costs but rather because of land costs and that’s what we need to focus our attention on.
Scott: So you are supportive of the idea of say super funds for example, who already as we know are big investors of infrastructure, moving in to the social housing sector if they can work out a decent yield then that as an asset should be no different to a road or any other sort of infrastructure? Don’t you think though, wouldn’t some of your members see that as being big super funds essentially operating in their space? That’s more competition for land, more competition for workers, that kind of thing?
Denita: Well we represent builders as opposed to developers. But nevertheless, builders want to be builder regardless of who is investing in it. I should declare that I am a director of a super fund, and we see, as the director of the super fund, the opportunity to look at housing. But as you quite rightly say we have an obligation to members of super funds to get the returns that we expect on their behalf. And at the moment, certainly there’s been some foray by some super funds into housing but not the extent that they are keen to do so. And as such we need to look at those returns to ensure that they are meeting the expectations of the super funds, rather than simply doing it for altruistic sake. That is certainly not the case. But we acknowledge that it’s not just the super funds. We need to ensure that we are having a system where we are encouraging private investment whether it’s from the mum and dad investors right through to the large institutional investors.
Scott: Alright Denita, there’s a long way to go in this story as you say it’s 2024 before any of this one million homes, under this policy announcement, construction would actually start. Let’s see what happens over the next couple of years because the inflation story and a whole lot of other issues around labour supply of course and material supply as we’ve discussed are also going to have to play out before the landscape is a bit clearer. Much appreciate your time today.
Denita: Pleasure as always. Thank you so much.
National Director, Media & Public Affairs
0400 493 071