Interview with Andy Park, RN Drive

Event: Interview with Andy Park, RN Drive
Date: Thursday, 17 August 2023, 5:15pm AEST
Speakers: Andy Park, host RN Drive; Denita Wawn, CEO Master Builders Australia
Topics: National Cabinet, housing supply
E&OE

Andy Park, RN Drive: Denita Wawn is the CEO of Master Builders Australia. Welcome to you.

Denita Wawn, chief executive Master Builders of Australia: Good afternoon.

Andy: 1.2 million homes is an ambitious target. Your industry has been plagued with supply chain issues, you’ve got cost of materials, not to mention inflation. How realistic is that goal?

Denita: Well, we think it is realistic because the industry is going through a significant downturn. Building approvals are down. Builders are telling us around the country that their forward books are not looking good, very light on. So, the timing is right now for the government to really focus on what our supply constraints are and how we can resolve those. The industry is ready. We know we need to build at least 200,000 homes each year just to meet current population trends. But the incentive to build more is critical if we are going to get the fundamentals right in housing all Australians around this country.

Andy: Just to be clear, that’s an extra 769 homes a week. How many homes are we currently building a week?

Denita: Well, at this stage we’ve been unfortunately building in the last 12 months only around about 150,000 per year and we need to building that 200,000. So we have fallen short, unfortunately, around I think, it works out to be about 500-odd homes a week. So, we’re falling short but we also know that there is capacity in the industry. And more importantly, if we do not get that 200,000 figure each and every year for the next five years, the housing crisis is going to get worse. So we have to have ambitious plans and the only way in which those ambitious plans are going to be met is the state and territory governments actually resolving for once and for all those supply constraints around planning, land availability, and also developer charges.

Andy: That’s a point I want to pick up on. There’s been a lot of commentary around at the moment around the failures of local government to zone or release sites for homes. How much work is left to do on that front?

Denita: A huge amount. We’re seeing nearly a doubling, if not tripling of the time it takes for building approvals and occupancy certificates and so forth. And that means a loss of investments and a higher risk for development. Likewise, we have not got enough flexibility. The community needs to have a debate about going up as just as much as going out when it comes to building our future homes. And that means that we’ve got to reduce delays, reduce disputes, and have greater flexibility in medium-density and high-rise housing. It doesn’t mean to say we discount environmental factors and also community factors but equally, there’s got to be a fairer balance than what there is now.

Andy: Adam from Katoomba in News South Wales has texted me. He says the ALP have been promising to build 30,000 apartments in a five-year period based on five times $500 million i.e. $2.5 billion investment return. This equates to about $83,000 per apartment which is a very low figure. He wants to know if this is commercially feasible.

Denita: Well, it’s not. But that is because that figure is about investment in new homes to supplement existing funding not direct investment as the only vehicle. That listener is talking about the Housing Australia Future Fund which is funding that will go towards community housing. It is there to provide a yield gap investment by institutional investors and community housing providers and so forth and is a critical piece of the puzzle when it comes to resolving our housing shortages in Australia.

Andy: Of course, supply is one issue, equity is another. I mean, how do you make sure new homes go to the people who need them most?

Denita: Well, I think the important thing about the 200-odd thousand plus per year is that has to ensure that it is across the whole housing spectrum. It’s got to be about affordable housing. It’s about first home buyers. It’s about social housing and community housing. And I think the really important thing that we need to address as governments and so forth is looking at how best we get investors into the market whoever they may be whether it’s first home buyers right through to institutional investors or mum and dad investors in terms of rental properties. We’ve got to fill all the gaps and that’s why it’s so critically important that we’re looking at housing solutions that are not so expensive as detached homes and that means more medium-density and more high-rise which makes it more affordable. And certainly, we know that if you have mixed dwellings of community housing as well as owner-occupiers, then there is a greater community unity as well as affordability.

Andy: I mean the Greens also argue that Labor is passing on the solution of the housing crisis to the developers who, well they say, created the problem in the first place. What do you make of those comments?

Denita: Well we would disagree. This is not about developers in terms of the issues of supply. The issues of supply have fallen well and truly on the responsibility of state and territory governments and local governments that have meant that it is simply too high risk to invest in greater housing needs in this country. We have been saying now for seven years since we released our supply report in 2017 that we needed to look at supply constraints. Ken Henry’s tax paper in 2008/2009 also said we must resolve supply constraints and that has been the responsibility of the states and territories and local government and that is why we commend the Albanese Government in leaning forward into an area that is traditionally not their responsibility.

Andy: Denita Wawn is the CEO of the Master Builders Australia. Thanks for your time this afternoon.

Media contact:
Dee Zegarac
National Director, Media & Public Affairs
0400 493 071 | dee.zegarac@masterbuilders.com.au