Is red tape affecting Australia’s capacity to build new houses?

The Housing Conundrum: Why It Takes Longer to Build in Australia

Australia is grappling with a severe housing shortage, with the government aiming to build 1.2 million homes in the next five years. However, the current construction pace is falling short, lagging by a quarter of a million homes.

While several factors contribute to this shortfall, one especially egregious issue is the increasing time it takes to build new homes. According to a recent report by the Productivity Commission, it now takes an average of 10 months to build a standalone house, a important increase from six months a decade ago. Townhouses now take three months longer to build, and apartments take four months longer, highlighting the widespread impact of these delays.

Red Tape: A Major Obstacle to Progress

The Productivity Commission identifies red tape as the primary culprit behind these prolonged construction times. Liquas Paling,a licensed builder, describes the constant back-and-forth with authorities and the complexities of navigating a shifting regulatory landscape: “Compliance and all of the paperwork that is associated with it,it just slows things down.

“The more back and forth we need to have and the more sort of open ended questions we have as we move from one area to another, it’s, yeah, it can definitely slow things down.”

Danielle Wood, the Productivity Commission Chair, echoes this sentiment. “In every stage of the building process, we’ve added to the regulatory burden, and so time taken to get the various approvals actually takes up a lot longer than it used to, and indeed, most of the time to build houses is now spent getting approvals.”

From Streamlined Systems to Bureaucratic Jungle

Experienced architect David Springett, with 50 years in the field, vividly contrasts the past with the present. “Most of the building at that time, back in the ‘70s and ‘80s, was only a building submission. A building application was something that you lodged over a counter, and it got stamped, it was done.” Now, the process is a bureaucratic labyrinth, leading to significant delays.

“We’ve got 20 odd jobs on the drawing board. Half of them are waiting for council, and then once council comes back to us, then we’ve got to process it and then put it back to council, and then we wait again.the whole thing’s a waiting game. Why? What happened to that clerk at Botany Council who stamped it? Can we have him back again, please?”

Construction’s Slow Pace: A Symptom of Deeper Challenges

Beyond the regulatory hurdles, the construction industry faces other challenges, including a lack of innovation and slow adoption of digital technologies that could expedite processes. Furthermore, the workforce is struggling to attract and retain skilled tradespeople, further exacerbating the problem.

“We still largely build houses the same way we did 100 years ago, and the sector also faces some pretty ample workforce challenges, getting and retaining the skilled trades that are needed to build,” Wood observed. ” So those factors together have led to, you know, what’s a pretty poor productivity outcome for the sector.”

Bridging the Skills Gap: A Call to Action

Denita Wawn, CEO of Master Builders Australia, emphasizes the urgent need to address the skills shortage within the construction industry. “We estimate there are hundreds of thousands of people we need to enter into the industry. And that doesn’t even count the uplift we will need if we’re really going to build that 1.2 million target the governments have set themselves. until such time as schools and careers advisors treat trades as a good pathway, as an equal pathway, other than just university, then we are going to continually to be in this problem.”

She urges both major political parties to prioritize trades education and skilled migration to address this critical issue. “We are strongly urging both major parties to consider, give trades a chance, stop them being treated as second class citizens.”

Reforming the System: Prioritizing Affordable Housing

Danielle Wood stresses the importance of recognizing the financial implications of the current regulatory burden. “If we want to turn that around, we need to look at the set of regulations with that in mind and constantly focus on this question of how do we make sure that we have the supply that we need so that all Australians can access affordable housing.”

the challenges facing Australia’s housing sector are complex and multifaceted. Addressing the regulatory burden, investing in skills growth, and embracing innovation are crucial steps towards easing the housing crisis and ensuring that affordable homes are accessible to all Australians.

How can we ensure all Australians have access to affordable housing while streamlining the regulatory process without compromising safety adn quality standards?

The Housing Conundrum: interviewed – Jane Bradley, Productivity Commission Researcher

Jane, the slowing pace of construction in Australia is a critical issue. What’s your take on the current situation?

Jane Bradley (JB): Thank you for having me. It’s indeed a pressing concern. The average time to build a standalone house has increased to 10 months, up from six months a decade ago. This is alarming, especially given our housing shortage.

Red tape has been identified as a major culprit. How is excessive regulation hindering progress?

JB: Red tape has substantially slowed down the construction process. From planning approvals to building permits, each stage is bogged down with complex regulations and paperwork. Liquas Paling, a builder, mentioned the constant back-and-forth with authorities, and David Springett, an architect, lamented the loss of streamlined systems.

What other factors are contributing to these delays besides regulatory hurdles?

JB: Beyond red tape, the industry lacks innovation and digital adoption, leaving many processes manual and time-consuming. The workforce is also struggling with a skills shortage. Denita Wawn,CEO of Master Builders Australia,estimates we need hundreds of thousands more tradespeople to meet our housing targets.

Addressing the skills shortage seems crucial. What steps should we take to attract more people into the trades?

JB: we need to treat trades as an equal and viable career path. Both major parties should prioritize trades education and skilled migration. Until schools and careers advisors see trades as a good pathway, we’ll continue to face this problem.

In an ideal scenario,how can we streamline the regulatory process without compromising safety and quality standards?

JB: We can achieve this by constantly reviewing and updating regulations to ensure thay’re fit-for-purpose. We should focus on preventing hazards rather than prescribing myriad design details. Moreover, digitizing processes can significantly reduce delays and improve accessibility.

Final thoughts? what motivations should drive our approach to this housing crisis?

JB: At the core, we’re dealing with a social issue. We should be driven by the goal of ensuring all Australians have access to affordable housing. The financial implications of our current regulatory burden are critically importent, and reform is essential.