Event: Denita Wawn interview with Thomas Oriti, ABC NewsRadio
Date: Tuesday, 12 September 2023
Speakers: Thomas Oriti, host ABC Radio; Denita Wawn, CEO Master Builders Australia
Topics: Housing Australia Future Fund; Master Builders Industry Forecast; Housing Accord; Industrial Relations
Thomas Oriti, host ABC NewsRadio: The Prime Minister now confident to take his $10 billion Housing Fund will go at least some of the way to easing some of the pressures with housing we’ve been discussing so much in recent times. The Government’s signature housing bill now likely to pass Parliament this week after the Greens announced that they would support the Bill through the Senate securing some extra money there, an extra billion dollars towards social and affordable housing. Still attracting some criticism, though, renters are not particularly happy about it. Of course, the Greens were pushing for a rent freeze as well, leading to this divide between what some people wanted to see at a federal level as opposed to what was a state responsibility. But needless to say, that’s been put on hold for now. You may want to take a look at the state of Australia’s construction sector this morning though and we’ve been told it’s been propped up with non-residential and civil builds according to an industry forecast which has just so happened to drop today. Master Builders Association, the Master Builders Association has updated its building and construction sector forecast for the next five years revealing a slow residential sector hindered by bottlenecks in both supply chains and policies. But we are being told it’s going to get better that’s according to the CEO of Master Builders Australia Denita Wawn. And Denita joins us now. Good morning, thanks very much for your time.
Denita Wawn, chief executive Master Builders Australia: Good morning, Thomas.
Tom: First can I ask you about the Government’s housing package. So, just to secure the support of the Greens, an extra billion dollars for social and affordable housing on the way. And that actually brings the total immediate funding I should say to $3 billion. Looking likely to go through Parliament this week after those tense negotiations. But how is the sector prepared to deliver on this? Do those constraints on the sector remain when it comes to actually getting those projects underway?
Denita: They do to a little bit but generally as our forecasts indicate today that we will have a significant dip this year and next year because we’ve brought demand over COVID that the economic uncertainty has meant that a lot of private investment whether it’s owner-occupier or for rental properties has significantly curtailed. We are seeing a decline in building approvals. So, this is a good opportunity for that immediate $3 billion to be put into the market at a time where we were seeing significant declines in numbers. And then it gives us some breathing space to prepare for the increases that we are forecasting from 2025-26 onwards.
Tom: Yeah, because it does look, I’m looking at your forecasts and it seems as though as I said in the introduction that it’s non-residential builds, civil builds that are carrying that growth that you are seeing in the sector at the moment and new home building is actually declining which is not the direction that the Government wants to see it going. Can you just put that in perspective for us? I mean, how quickly is it dropping and how far is it below what we actually need to match population growth? Because the Opposition this morning is saying hey even if Labor meets its targets with this Bill, with migration intake it’s not going to be anywhere near enough even if it matches the targets.
Denita: Well, that’s a really important issue and I commend Minister Collins. We have been saying to the Government over the last 18 months that we were not going to meet that magical 200,000 homes per year to meet population increases and that there was an opportunity to fund social and community housing to meet that short fall. And so, that $3 billion enables us to do so while we ensure that the industry is prepared for that next uptick cycle from 2025-26 onwards. That will be over that magical 200,000. We certainly believe that the one million of the Housing Accord is doable. In our forecasts we are saying that the one million can occur over a period of five years but nevertheless if we’re going to go for the 1.2 stretch we need to see some critical work being done at the state and territories and local government on resolving those supply bottlenecks in terms of zoning, in terms of costs, in terms of delays on approvals.
Tom: Yeah, I wanted to ask you about that and we will look at some more on the forecasting soon but yeah look apart from the obvious cost of living issues and the choice by people not to build a new home, you mentioned there those bottlenecks. Just tell us more about why it has been so slow up unto this point?
Denita: Well, it’s interesting in that we have been seeing over the last at least 20-30 years ongoing supply constraints because of bottlenecks at a state and territory level. Those are really three key things: delays in land release and that’s not just on greenfields but it’s also on brownfield sites in our inner cities, it’s around significant delays in planning approvals, in building approvals, and occupancy approvals as well. That then deters investors into the market. We also see restrictions in planning and zoning and we believe we need a national conversation around going up just as much as going out. So, that higher density is critical and we’ve already seen the ACT Government make some significant changes in relation to that. Also the cost of development, getting sites ready. We know particularly upgrades in utilities is slow and expensive and that again deters investment. So, we’ve all got to work collaboratively at all levels of Government to resolve some of those key supply issues.
Tom: It makes me want to ask then, even with news that this agreement on the Government’s housing bill, could it actually change those projections and as you say that ultimate target of 1.2 million homes over five years from 2024? I mean, if those impediments still exist at a state and territory level, don’t they need to be lifted for us to achieve some sort of progress here regardless of the amount of money that they Commonwealth wants to throw at the issue?
Denita: Well, we’ve been saying that we have been, we should be able to get to that one million but the Government put an incentive on the table with the National Cabinet the other week and that is to pursue that 1.2 million over five years with a stretched target only on the basis that money will be given to states and territories if they really concentrate on those supply efforts. It is not the responsibility of the Federal Government to do so but they have leaned in. We commend the Prime Minister and the Treasurer in pursuing that policy because it’s the only way, we think, we’re going to get a significant impediment to house building and all it’s related infrastructure resolved in this country.
Tom: Yeah, because as you say a bit of incentivising the states and territories to act now. You do forecast an increase in new home builds from 2026 that’s part of the forecasts I’m reading this morning. So, what do you think is going to happen then with that incentive from the Commonwealth? What are the bottlenecks that you are expecting to be loosened by that time?
Denita: Well, it’s all of those supply constraints I spoke about earlier. We particularly think planning and flexibility in planning is critical. The other big issue is around slowness of getting approvals. It creates significant risk in investment and this is not an issue in some jurisdictions, it’s all jurisdictions. When I go around the country the biggest complaint that we have is the slowness of approvals whether it’s DA or BA or occupancy certificate, they continue to ensure that investment is constrained. So, we want to work with Government to resolving those supply constraints. That is a big issue to ensure that we focus on that 1.2. But equally, the Government’s got to recognise that any policy that impacts building and construction may have an impact on these targets and that of course includes our opposition to the industrial relations legislation.
Tom: Denita, thank you very much for joining us. I appreciate your time.
Denita: Pleasure, thank you.
Tom: Denita Wawn is the CEO of Master Builders Australia.
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