Australia’s goal to build 1.2 million new homes over five years is under doubt after Treasury accidentally released its own damning advice to the government suggesting the target wouldn’t be met.
Internal Treasury notes – including doubts about Labor's housing target and advice to pursue tax reform – were published by the ABC on Monday after government officials accidentally shared them with the national broadcaster.
The notes were prepared by Treasury officials after Labor’s re-election this year and warned the incoming government that its signature pledge to build 1.2 million new homes over five years to address the housing crisis would “not be met".
It comes just two weeks after the Housing Accord’s first anniversary on 1 July, with experts urging the government to pull out all the stops to achieve the target by the mid-2029 deadline.
Under the target, Australia needs to build at least 240,000 new homes a year, however just 168,050 homes started construction nationally in the 2024 calendar year, according to the latest figures from the Australian Bureau of Statistics (ABS).
Treasurer Jim Chalmers defended the bungle on Monday and said more needed to be done to reach the Housing Accord target.
“The point that the incoming government brief makes is the same point that I have been making, [Housing Minister] Clare O'Neil and others have been making, is that we will need more effort to reach that substantial ambitious housing target," he said.
Treasurer Jim Chalmers said more needed to be done to reach the Housing Accord's 1.2 million new home target by mid-2029. Picture: NewsWire / Nadir Kinani
“We’re investing tens of billions of dollars, we’re working well with the states and territories and local governments, we’re engaging with the industry.
“We’re trying to get the capital flowing, I’ve changed the tax arrangements for build-to-rent, there are a whole range of things that we’re doing and that Clare is doing to make an important contribution to achieving that target, but we will need to do better and we will need to do more and the advice just reflects that.”
REA Group senior economist Anne Flaherty said there were a range of issues that governments could fix to improve the chances of reaching the 1.2 million target.
“There's a lot of things governments need to do and governments are addressing some of these things, but there's always more that can be done,” she said.
Australia needs to build at least 240,000 new homes a year to reach the Housing Accord's target. Picture: Getty
“The fundamental issue is making sure that planning and approval processes are improved because some states take significantly longer to secure building approvals than others.”
She said greater infrastructure investment, construction productivity, further incentives for trade apprentices, lower taxes on home building, and other changes would also help boost new home building.
“I think it is important to have a target and from the government's perspective, holding themselves accountable to that target is hopefully going to drive them to put forward more policy that will enable it to happen,” she said.
“Once you set the target, it's a goal post to work towards, and even if you don't achieve it, you're likely to achieve a lot more than if you didn't have that target in the first place.”
Other property experts have shared the same sentiment and urged the government to stick to the target.
Property Council chief executive Mike Zorbas said the five-year national housing target had already been a success on two fronts despite its slow start.
“Recent widespread state planning reforms have only happened because the targets and incentives exist, and boosting housing supply is now ‘top of mind’ for all Australians,” Mr Zorbas said.
He said the current situation could have been even worse without the reforms and incentives introduced.
Last year, 168,050 homes commenced construction across the country. Picture: Getty
Mr Zorbas said the target would also help Australians understand which states delivered enough homes by 2029 and how they did it.
The labor government's flagship Housing Accord 1.2 million new homes target was launched on 1 July 2024 and will run for five years until mid-2029.
The goal was set to rapidly build enough homes for the country’s growing population – which the ABS said grew by 1.7% or 445,900 people in 2024 – following record population growth in the years since the pandemic.
The country’s home building industry has struggled in recent years due to higher building costs, tight labour markets and a dip in buyer demand, however experts believe the sector is recovering.
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