Labor adds billions to state deals on housing

Australians will be promised $12.3 billion in new housing programs in a federal budget pitch to ease fears of chronic shortages that force up rents and prices, with new support for women and children who need shelter after fleeing domestic violence.

Prime Minister Anthony Albanese struck a deal with state and territory leaders on Friday afternoon to inject more cash into construction, including a five-year agreement on social housing that will repair homes and expand crisis support.

Prime Minister Anthony Albanese said the new spending would encourage states to kickstart housing projects.Credit: Gaye Gerard

A key element of the deal is a $1 billion payment to the states and territories to build roads and other infrastructure needed to support new housing developments, answering calls for more facilities for homes in the suburbs.

Albanese said the new spending would encourage states to kickstart housing projects and would be combined with other policies to increase the number of construction workers.

“This isn’t about one suburb or one city or one state. It’s a challenge facing Australians everywhere and it needs action from every level of government,” he said after the meeting.

The $12.3 billion will be spent over five years and includes $1 billion for emergency accommodation for women and children, the $1 billion to the states and territories for roads and other facilities, and a new $9.3 billion national agreement on social housing.

With voters worried that the increase in the migration intake has made the housing shortage worse, the government will also promise a new agreement with the higher education sector to require universities to add more accommodation for overseas students.

Separately, the government is preparing a new law to set a cap on the number of international student places the universities can offer each year.

While it has not named the level it wants, the draft law will give Education Minister Jason Clare the power to impose the maximum figure after consultations with universities.

The budget papers are expected to reveal new budget forecasts showing the net migration intake will fall from 518,000 last year to about 260,000 next year, a key issue amid a political argument about the number of arrivals since border controls eased after the pandemic.

The new spending follows a national cabinet agreement last August that set a target to build 1.2 million homes over the next five years, with the promise of $3 billion in federal incentives for states and territories that helped meet the goal.

The federal government also agreed last August to pay $500 million for essential services such as basic amenities in new housing projects in a competitive fund that aims to encourage states and territories to quicken the pace of building approvals and housing construction.

An earlier plan, called the Social Housing Accelerator, was unveiled last June to give the states and territories $2 billion for public housing projects.

The government also set up a $10 billion Housing Australia Future Fund last year after a dispute with the Greens, who wanted much bigger spending on public housing to ease the pressure on rents.

Treasurer Jim Chalmers acknowledged the pressure on housing supply and vowed to act on the problem when asked in an exclusive podcast and video interview with this masthead on Thursday.

Chalmers said supplying enough houses for a growing population would be a key issue in next week’s budget.

“That’s because we don’t have enough homes, we need to build more homes for more people, and that requires a bunch of things,” he said.

“It requires more Commonwealth investment, we will do our bit. It requires the states and territories to do their bit, and I’m confident that they will.”

While the government’s goal of getting 1.2 million well-located homes built in five years starts on July 1, experts are warning they are yet to see a meaningful increase in building approvals to start moving on that target.

CoreLogic research director Tim Lawless said last week that 12,850 homes were approved for construction in January, about 25 per cent below the decade average.

Lawless said this was “well below” the 20,000 average monthly run rate of approvals required to build 1.2 million homes in five years.

“At the same time, the residential construction sector continues to run up against shortages in labour, high material costs and depressed profit margins,” he said.

“With overseas migration having peaked in the first quarter of last year, we should see the rate of population growth easing.

“However, without a catch-up in supply, Australian housing markets are likely to be navigating an undersupply for a few years yet.”

With households feeling the pressure from rising rents, the Reserve Bank warned in its latest statement on monetary policy that advertised rents had grown by nearly 10 per cent over the past year.

“Tight rental market conditions across the capital cities will likely contribute to ongoing high advertised rent growth,” it said.

“New supply has been hampered by ongoing capacity constraints, particularly for finishing trades, and increases in construction costs.

“Demand, on the other hand, has been supported by strong population growth.”

Greens housing spokesman Max Chandler-Mather last week blamed the government for doing too little to fix what he called a broken housing system, given a report from the National Housing Supply and Affordability Council that showed housing affordability was growing worse.

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