The second day of the Canberra productivity roundtable will reportedly debate how to reduce the backlog of development projects awaiting environmental approval.
Danielle Wood, chair of the Productivity Commission (PC), will address roundtable attendees in the morning in her session titled “Better Regulations and Approvals”. Her speech is likely to illustrate how environmental approvals slow down housing development.
Current regulations demand government clearance for new developments that are likely to disrupt culturally sensitive areas, impact the environment, or endanger vulnerable species. Once a development is referred for government approval, it is added to a backlog of 30,000 projects.
The current environmental regulations are deemed out of date, and neither the Morrison nor the Albanese governments have attempted to reform them.
Woods’ productivity session will most likely expand on her Monday Press Club speech, in which she warned about the threat of regulation to productivity, saying that “young people today believe they won’t live better lives than their parents did”.
“As chair of the Productivity Commission, I’m worried too”, she said.
The PC’s policy prescriptions are akin to fiddling while the housing market burns.
The housing industry is already operating at capacity and cannot build the homes that have already been approved for construction.
Build times have blown out, as has the pipeline of unfinished homes, which currently numbers around 250,000:
Simply increasing approvals will merely add more new projects to an already swollen pipeline and is akin to turning up the tap on a bath that is already full.
The reality is that Australia is experiencing a chronic housing shortage because its population has grown faster than virtually any other developed nation this century:
The Australian Treasury projects that strong population growth will continue indefinitely:
Source: Centre for Population (December 2024)
Population demand has simply run far ahead of supply, as confirmed by the federal government’s own advisor, the National Housing Supply and Affordability Council (NHSAC).
NHSAC warned that the federal government would miss its fantastical 1.2 million housing target by 262,000 dwellings over five years.
NHSAC forecasts that new housing supply will remain below population demand over the five-year forecast period, resulting in an additional cumulative undersupply of 79,000 homes.
The NHSAC report warned that ongoing strong immigration, combined with low rates of supply, will continue to pressure renters and result in more homelessness and overcrowding.
However, NSAC’s sensitivity analysis, buried at the back of its report, projected a surplus of around 40,000 homes after five years if population growth is just 15% lower than forecast.
NHSAC’s modeling showed that the primary solution to Australia’s housing shortage is to reduce net overseas migration to a level below the nation’s capacity to build housing and infrastructure. Otherwise, the nation’s housing crisis will forever deteriorate.
It is time for the PC, the Treasury, and the federal government to acknowledge these basic facts and stop gaslighting Australians into believing “it’s a supply issue”.
