‘Too hard to build’: Albanese government slams local councils over housing shortfall

The Albanese government has taken aim at local councils and top-heavy universities as being responsible for the nation’s housing crisis and a drain on Australians’ stagnating standard of living respectively, even as Labor struggles to meet its home-building targets.

In one of his first speeches since being appointed assistant minister for productivity, Andrew Leigh will argue on Tuesday that a “thicket of regulation” is holding back housing, infrastructure and research.

Andrew Leigh, newly appointed assistant minister for productivity, argues key institutional processes are holding back Australians’ standard of living.Credit: Alex Ellinghausen

Leigh’s speech at the Chifley Research Centre in Melbourne comes just weeks after the government’s own independent housing sector adviser, the National Housing Supply and Affordability Council, warned that the Labor government’s National Housing Accord was set to fall 262,000 short of its 1.2 million target for new homes by the end of the decade.

Leigh will put the heat on local government, singling out North Sydney Council, which has been scrambling to repair its budget after the pricing regulator rejected a proposed 87 per cent rate rise, as a prime example of a slow-mover.

“After an applicant files an application for development approval, councils are supposed to do the initial checks and lodge it in their system within 14 days,” he will say. “In the current financial year, just one in three development applications to North Sydney Council have been approved in that time. The average lag is 41 days.”

North Sydney Council was contacted for comment.

Leigh will note the council also has a low approval rate, approving just 44 new homes in the seven months to February this year, “barely 6 per cent of its pro rata target of 787 homes under the National Housing Accord”.

The accord has linked funding to a target – agreed to by federal, state and local governments as well as institutional investors and the construction sector – of building 1 million well-located homes over five years from mid-2024.

Treasurer Jim Chalmers, following Labor’s thumping election victory, marked a turning point in the government’s priorities, telling the ABC’s Insiders program in May that Labor’s “first term was primarily inflation without forgetting productivity. The second term will be primarily productivity without forgetting inflation.”

Between 2022-23 and 2023-24, productivity – a key determinant of economic growth, living standards and how well the country uses its resources – grew by a sluggish 0.1 per cent. National accounts data due on Wednesday is predicted to show continued poor productivity growth.

Leigh will argue that the construction sector, in which productivity has fallen 12 per cent over the past three decades, needs structural reform.

“We’ve designed a housing system where it is simply too hard to build,” he will say. “Approvals drag on. Rules multiply. Outcomes are inconsistent. Too often, the planning process is built for avoidance, not delivery. Zoning schemes reward conformity over quality.”

Leigh will also note Australians have been slow to adopt modern construction methods.

“Uptake remains low due to regulatory uncertainty, financing challenges, and entrenched habits in the industry,” he will say.

Leigh, a former economics professor, will also argue universities must lift their game.

While Australian universities generate more highly cited academic work than universities in almost any other country, he will say they are too often falling short when turning ideas into outcomes.

Leigh will argue that universities have become too skewed towards management. Their ranks of senior and middle managers more than tripled between 1997 and 2017.

“Many academics now report spending more time on grant administration than on experiments, more time on paperwork than on partnerships” he will say, calling for changes such as streamlined intellectual property processes.

“Translating discoveries into new technologies, treatments, or policies is harder than it should be – not because the ideas aren’t strong, but because the systems around them are slow, opaque and risk-averse.”

Leigh will say programs such as the Australian Economic Accelerator are a step in the right direction, helping researchers bridge the messy middle between grant funding and private capital, but they need to be accompanied by well-functioning public institutions such as universities, hospitals and public labs that know how to partner, share and deliver.

While Leigh’s speech takes shots at various groups and councils, he will say the point is not about blaming individuals.

“It’s about recognising that institutional cultures matter,” he will say. “Fewer homes means longer commutes and higher rents. Slower infrastructure means delayed access to new jobs and markets. More friction in the research system means fewer ideas translated into commercial or public benefit. Delay isn’t just frustrating. It’s costly.”

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