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Event: Denita Wawn interview with Stephen Cenatiempo, 2CC
Date: Friday, 4 March 2023, 7.10 am AEDT
Speakers: Stephen Cenatiempo, host 2CC; Denita Wawn, CEO Master Builders Australia
Topics: inflation, interest rates, housing, supply, skills, migration
E&OE
Stephen Cenatiempo, host 2CC: Well, we touched on this yesterday, but there’s increasing concern around meeting Australia’s housing and infrastructure needs, with new home building approvals dropping to their lowest monthly figure in over a decade. Which sort of brings into stark focus the government’s Housing Accord and some of the policies that they took to the last election. Denita Wawn is chief executive officer of Master Builders Australia, and she says despite the intention from government and industry to reach a target of one million homes under the Housing Accord, more needs to be done. She’s on the line with us. Denita, good morning.
Denita Wawn, CEO Master Builders Australia: Good morning.
Stephen: I think you and I might have spoken when this policy was first announced and suggested that this was very, very ambitious. It’s getting more and more ambitious by the day.
Denita: Yeah, it is, but we’ve got to reach it because we need it. Because we need to house all Australians, and we need more people to come into this country to meet the skill needs of the industry, including ours. And they’re going to need homes. So, we need to get onto this pronto. It requires the ambition not only for the federal government but more so the state and territory governments. The vast majority of the constraints around building more homes in this country in the long term is around state and territory decision-making. Inflation and interest rates at the moment are driving building approvals down. We’re not only seeing that in building approval figures but also simply a significant reduction in foot traffic in our display homes and in sales. But obviously, this will hopefully be fixed within six to 12 months. But the bigger issue is around supply constraints – land releases, planning and charges of land development. We’ve got to really get a hold on that.
Stephen: Well, see, and that is the problem here is the federal government promised us this accord where local, state and territory governments were all going to come together with the federal government and solve this. And I look to the example here in the ACT. The territory government here is hell-bent on refusing to release any more land. So there’s no way that we can possibly meet our targets here in the ACT under any circumstances.
Denita: Well, I understand discussions are on foot at a territory level, but nevertheless, it’s got to be better. And it’s not just here. This is being replicated around the country, where there is a lot of talk, but we need action, and we need action now. We are forecasting that we will fall significantly short of the 200,000 homes that we’ll need for this financial year and the one thereafter. And we won’t hit the target of 200,000 homes until about 2026-27. That is simply not good enough. That’s the figure for the whole of Australia. We’re simply not good enough, and we need to get our skates on. And if the lack of sales is anything to go by at the moment, we’re concerned that we’re going to fall well short of our targets for 2024, which means that we could even go below 100,000 homes for that financial year.
Stephen: Denita, are the supply chain issues improving at all? Because that has been a massive handbrake on your industry for quite some time. Are you starting to see any easing in that?
Denita: Well, in terms of building products, supply is good, but prices are still bad. And we saw that with the inflation figures this week that building homes is an expensive process, and we’re the highest in terms of ongoing increases in building homes. That is being exacerbated by skills shortages. The issue that is really affecting our industry at the moment is not so much the building products but it is skill shortages which means we can’t quickly and easily build homes like we used to, and it’s far more costly. So those two factors together are seeing significant increases in building homes. We know it’s now reached around anywhere between a 15-25 per cent increase in building a home. That is simply not acceptable when we are trying to build more homes. So the focus at the moment is very much on understanding what the RBA is doing to decrease inflation. And the federal government has got a perfect opportunity in this budget to try and use simple levers to resolve that. But it comes back to the original premise, Steve, we’ve got to look at supply constraints. That is the overseeing of state and territory governments who have now got to come to the table with some action, not just words.
Stephen: Yeah, is there an opportunity here, maybe with the federal government, to release…because I know here in the ACT, there is Commonwealth land that the previous government was talking about releasing. Can the federal government bypass the state and territories to an extent?
Denita: They can in terms of Commonwealth land. There is not a huge amount. Certainly, there is in the ACT. But nevertheless, you’re still dealing with state and territory laws, development charges, and so it’s not that simplistic. You then, of course, have got to have enough people then to make that title ready. That doesn’t happen overnight, either. So we’ve got to recognise that this needs action now because otherwise we’re simply not going to have more people. And, of course, we’re calling for migration numbers to increase to fill all the skill shortages not just in our industry but other industries. And that’s just going to exacerbate the housing shortage issue.
Stephen: Yeah, and there’s the other issue. We need to look at a longer-term approach that means we don’t have to import the skills. But that’s a debate for another day. Denita, really good to talk to you. Appreciate your time.
Denita: Pleasure, thanks Steve.
Media contact:
Dee Zegarac
National Director, Media & Public Affairs
0400 493 071
dee.zegarac@masterbuilders.com.au