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Opening Statement – Housing Bills Economic Legislation Committee Inquiry

opening-statement-housing-bills-economic-legislation-committee-inquiry

Event: Housing Bills Economic Legislation Committee Inquiry
Date: Wednesday, 15 March 2023, 11.15am AEDT
Speakers: Alex Waldren, National Director Industry Policy, Master Builders Australia

E&OE

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Intro

Master Builders represents all areas of building and construction including residential, commercial and civil construction.

It includes a diverse membership of tier 1 contractors, trade contractors/subcontractors and sole trading small businesses.

Overview – funding gap

Master Builders Australia supports the Albanese Government’s package of Housing Bills.

Finding solutions to the issue of affordable housing is imperative as it poses one of the country’s biggest challenges, and we must work together to address it.

The focus of our submission has been around the scale of funding needed and comments regarding research and implementation priorities for the National Housing Supply and Affordability Council.

The Bills are a measured next step that build on the bond aggregator and formation of NHFIC, whilst we are operating in a capacity constrained market-place.

Master Builders and other industry stakeholders have identified a doubling of funding is needed to meet future demand.

Further funding opportunities

There will be further opportunities to expand avenues for funding and financing through a new Housing and Homelessness Agreement.

A contribution from all levels of government will be required through investment incentives (loans, equity, grants, tax concessions, rental subsidies); as well as better access to land, planning concessions and simplified regulatory processes to deliver the scale of housing needed.

The Housing Australia Future Fund and Housing Australia needs to catalyse and ‘crowd in’ participation of private financiers to expand the pool of funding.

The 2021 review of NHFIC identified options for this.

There needs to be sufficient flexibility in the legislation and the investment mandate to allow for this.

The Housing Australia Future Fund Bill provides a model for finance through loans and grants.

The structure favours investment partnerships with community housing providers

that bundle the combination of access to longer term finance, not for profit tax concessions and rental subsidies to offset development and operation costs.

Recommendations in the NHFIC review in regard to NHFIC investing lower down the capital stack (in mezzanine finance as opposed to senior debt) might generate more investment partners and should be an investment pathway that’s considered.

This would mean the government takes more risk but is something government should bear as part of its contribution to the housing solution.

The National Supply and Affordability Council will play a role in monitoring and improving policy in regard to land, planning and regulatory processes – a necessary part of the reform pathway that will contribute to more investment opportunities.

Its work should firstly identify where the challenges and opportunities across states and local government areas and facilitate a more consistent and coordinated response from government on key issues.

In closing, it’s critical that we address housing affordability and supply challenges ahead of us instead of prolonging action and allowing further deterioration in the market. The Bills are an opportunity for sensible reform in achieving the housing needs for the future and we implore the committee and parliament to proceed with delivering this legislation.

Summary of submission recommendations

The focus of our submission has been around the scale of funding needed and comments regarding research and implementation priorities for the National Housing Supply and Affordability Council.

In its submission, Master Builders identifies the following to enhance the size of funding available in the Housing Australia Future Fund:

  • Expanding the size of Housing Future Fund capital investment from $10 billion to $20 billion.
  • Introducing tax incentives to address the gap between risk and return for major institutional investors.
  • A commitment from all levels of government to redirect one per cent of development taxes and charges to social and affordable housing.
  • The $10 billion investment in the Housing Australia Future Fund is additional, not a replacement of existing programs.

For the National Housing Supply and Affordability Council Bill, our comments relate to implementation challenges and better collaboration. These include:

  • Recognition of practical implementation issues that will impact delivery of government housing initiatives.

Eg: cost prohibitive access to land; procurement processes where the proponent unilaterally absorbs all risk; constraints around access to labour; cost of accessing funds; access to offshore capital; and reform of state and local planning processes.

  • Reporting on matters that materially impact housing supply and affordability should include a focus on the cumulative cost impacts on construction associated with reform and economic shocks as well as reporting performance outcomes (eg. housing quality and outcomes for vulnerable groups).
  • A necessary first step of the Council will be to undertake a stocktake of the status quo – existing housing stock, committed pipeline of new housing, government incentives for investment, barriers to investment (regulatory/land/finance/sector capacity), cost impacts (economic, weather, sector transformation).
  • Establishing an industry reference group to assist the development and delivery of council work.

For the Treasury Laws Amendment Bill, Master Builders makes the following observations on these changes:

  • The word investment has been removed from Housing Australia considerations and is limited to loans and grants.  There are concerns that this approach might limit a broader suite of investments in this type of housing stock, in particular using an aggregation of finance and tax incentives to address the gap between risk adjusted investment and yield return.
  • The research function whilst removed from Housing Australia will be undertaken by the National Housing Supply and Affordability Council.  It will be important that the good work by NHFIC including its State of the Nation’s Housing report is continued in Council work. The Council needs to ensure it delivers research on the spectrum of housing required and not narrow its focus to just social and affordable housing needs.
  • Master Builders supports the expansion of Housing Australia board member expertise to include indigenous housing stakeholders.

Media contact: Dee Zegarac, National Director, Media & Public Affairs

0400 493 071 | dee.zegarac@masterbuilders.com.au

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