Labor wants to build 1 million new houses. Is that possible?

It’s good to finally have a government serious about housing — albeit not serious enough to fix the structural problems that have locked so many Australians out of owning a home and, increasingly, renting one.

This week’s budget contains multiple housing initiatives — some the implementation of election commitments, others, like the National Housing Accord, entirely new. They’re all in the service of an “aspirational target of 1 million new, well-located homes over five years from 2024”.

That target isn’t impossible — we’ve been building 200,000-plus dwellings a year at various points in recent years — but it’s roughly what we’ll need to keep up with projected demand, and maybe not enough if we let immigration rip again like the government proposes to do and business desperately wants.

More concrete is the actual commitment to a Housing Australia Future Fund that will build 30,000 — not 1 million — social and affordable homes over five years. That’s along with another 10,000 affordable homes under the Housing Accord, plus another 10,000 the states and territories have committed to — an important commitment given the history of state governments, especially state Labor governments, throttling back social housing spending when the Commonwealth steps up.

State, territory and local governments have also agreed to “expedite zoning, planning and land release to deliver on a joint commitment to improve the availability of social and affordable housing in well-located areas, including looking for immediate opportunities to free up well-located state land”.

That’s been promised many times before, without apparent success. With cities like Sydney mired in nimby wars designed to thwart medium-density housing, affordable dwellings in well-located areas look something of a pipedream.

Wisely, the government is in effect restoring the National Housing Supply and Affordability Council, a body similar to the advisory body abolished by the Abbott government because it was too prone to arriving at independent conclusions (like negative gearing being one of the biggest impediments to good housing policy in the country).

It’s also establishing a bespoke policy home for housing, ending the problem of housing — which is the intersection of so many other policy issues — being fragmented across the bureaucracy.

All good things, and a huge change from the Coalition, which treats housing policy as a challenge to see how best it can funnel the money of low-income and young people to its baby boomer membership.

The accord also talks vaguely about tapping into superannuation funds for funding home construction. But that can only happen if governments guarantee strong returns, either via guaranteed funding streams to cover the gap between affordable and market rents, or guaranteeing loans — or, likely, both. Otherwise participating super funds are open to the criticism of not pursuing their members’ best financial interests.

These deals will generate complex financial engineering — with ticket clippers and advisers profiting off that complexity — that essentially covers the fact that governments are subsidising the private sector to do what the government itself could be doing more cheaply: borrowing money at triple-A rated interest rates and building housing itself.

It also amounts to a truly massive intervention in the construction industry, which is still struggling with the consequences of the pandemic and the HomeBuilder scheme. HomeBuilder was that rare government beast — especially rare under Scott Morrison — of a policy that worked too well, pumping so much stimulus into construction, which was facing a massive crisis in late 2020, that already parlous industry conditions like supply problems and labour shortages were significantly worsened. That helped drive up costs and delays, leading to state governments slowing their civil engineering infrastructure investment.

No wonder the Property Council and the Master Builders Association loved the Housing Accord. It’s like HomeBuilder but over a much longer period — all the way to 2029, with tens of thousands of extra homes being built directly by governments, state governments looking for land supply to unlock, and super funds hunting for guaranteed return investments.

Where will the workers come from? Immigration, most likely — the budget assumes migration of 235,000 people a year over the forward estimates.

Of course, higher immigration means we need more housing, but let’s not go there. If the budget is to be believed, there’s a housing boom coming, and it’s going to be big.

This article was first published by Crikey.