James O’Doherty: NSW has to look at curbing immigration as well as building new homes

Housing targets that NSW signed up to last year were, the Premier concedes now, too ambitious. But even then they wouldn’t have solved this state’s housing crisis, writes James O’Doherty.

If you plan to achieve something, it is probably a good idea to set targets that will get you to your goal.

National cabinet leaders probably missed that fact when they agreed to ambitious housing targets last year, because — at least in NSW — the goal we signed up to will go nowhere close to building enough homes to house our increasing population.

To make it even worse, we are not even building enough houses for the people that are already here.

Comparing the increase in NSW’s population last financial year with the amount of new homes we completed paints a pretty depressing picture.

Net overseas migration boosted the NSW population by 172,600 people in the year to June. In that same time frame, only 44,500 new dwellings were added to our state’s housing stock.

The Australian Bureau of Statistics says that the average number of people living in a single dwelling is 2.6.

So, using some (very) generous assumptions, NSW added enough new homes in 2022-23 to support 115,700 people. That leaves almost 57,000 people in the lurch.

Premier Chris Minns has already conceded NSW will miss its target for new housing. Picture: Nikki Short

And while immigration is forecast to drop from record rates in the years ahead, leaders need to confront the glaring problem of how to house a growing population.

The Albanese government has moved to cut total numbers, somewhat, but some argue its not nearly enough to fix the housing crisis.

Leith van Onselen, chief economist at macrobusiness.com.au, says focusing on supply alone is a furphy.

“It’s a complete distraction and the problem is immigration,” he argues.

“Australia is running an immigration program that is well beyond the nation’s capacity to build homes and infrastructure.”

Former premiers Bob Carr and Dominic Perrottet speaking at a Property Council of Australia lunch. Picture: Supplied

Premier Chris Minns has already conceded that NSW will not meet its target of building 75,000 new homes this year and, as the deficit continues, the problem is only set to get worse.

Dwelling approvals in NSW ticked up in December, by 3.2 per cent. But we are still lagging behind Victoria, the state Minns wants to beat when it comes to building new homes.

Immigration, Van Onselen argues, should be drastically constrained to around 100,000 people per year so we have a chance of keeping up.

We can’t solve the housing crisis “any time soon or in any realistic manner” by focusing only on supply, not demand, he says.

But drastic migration reform won’t happen because that is exactly what is underpinning Australia’s economic growth.

Former Premier Dominic Perrottet belled the cat on Friday when he emerged from the obscurity of the backbench to label migration-driven growth as a “Ponzi scheme, just adding people rather than driving productivity”.

“Ultimately, it’s just lazy economics.”

Fairfield Mayor Frank Carbone. Picture: Richard Dobson

In a rare policy intervention since losing the election, Perrottet told a Property Council lunch that while Canberra benefits from migration to drive up revenue, it is the states that are left with the bill.

“I believe the federal government should be providing more infrastructure investment to the states,” he said.

They say that you should never get between a (former) premier and a bucket of money, but Perrottet makes a good point.

Minns needs all the help he can get to win over local councils in his housing fight and the extra cash would only help.

Minns has set aside $520 million for “enabling infrastructure” to support higher density in eight areas around Sydney.

As I revealed on Wednesday, Canterbury-Bankstown council now wants 26 per cent of that cash to be spent in Bankstown City Centre. The council argues that stalled plans for the city could deliver 12,500 new houses if approved (26 per cent of the 47,800 extra high-density homes forecast by the Transport Oriented Development scheme).

Mayor Bilal El-Hayek launched a salvo against planning changes on Wednesday, arguing they would allow duplexes on blocks that are too small, leading to “congested” streets.

Fairfield Mayor Frank Carbone suggested that increasing density would “kill off backyard cricket” and “turn Western Sydney into Kolkata”.

The reason Minns’ fight with councils over density exploded into all-out war this week is simple: looming local council elections.

Mayors, councillors and even some of Minns’ own MPs are pushing back against plans to build more apartments in their area, to soothe concerns from their electors.

But former Premier Bob Carr, who joined Perrottet at the Property Council Outlook event on Friday, thinks the mood has shifted.

Anti-development mayors, he said, are “out of touch” with public opinion.

“Their own residents would find nothing objectionable about more tower development around major transport arteries,” he said.

Carr pointed to his own Labor branch as an example. Last year, it unanimously adopted a motion to support high-rise development in its own area, in line with the Premier’s rezoning plans.

Minns will need to win over a hell of a lot more people than just the Labor Party’s Maroubra branch if he has any hope of being successful.

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