Housing Minister Defends Target Despite Warnings Government Will Miss 1.2M Home Goal
Housing Minister Clare O'Neil defended the government's ambitious target to build 1.2 million homes by 2029 despite fresh warnings from property experts and Treasury that the goal will not be met.
Property research firm Cotality became the latest industry voice to warn the current approach is insufficient, following earlier Treasury advice that the target is unattainable under present construction rates. The warnings come as Australia grapples with a housing crisis that has locked a generation out of the property market.
"We've got a housing crisis in our country because we have a housing shortage," O'Neil told ABC RN Breakfast Friday. "So for 40 years our country has not been building enough homes, and whatever debate there may be about housing policy, we know one thing – and that is the best way to alleviate the pressure on Australians is to build more homes more quickly."
The government faces mounting pressure over its housing strategy as construction completion times blow out dramatically. Detached homes now take 10 months to complete compared to seven months previously, while unit blocks require two years instead of 18 months. Approval processes can stretch beyond four years.
O'Neil acknowledged the scale of the challenge but insisted the bold target was necessary to drive systemic change across all levels of government and the private sector.
"This is a really bold and ambitious target, and it's designed to be," she said. "What we are trying to use this target to do is drive change to our national housing system so that we don't continuously confront the kind of affordability challenges that we're dealing with at the moment."
Approximately 500,000 homes have been constructed in Australia since the government took office, though O'Neil clarified these represent total national construction rather than government-built housing specifically. The minister said data for the first year of the five-year target period remains incomplete.
The government's direct housing commitments include 55,000 social and affordable homes over five years and 100,000 homes for first-time buyers built in partnership with state governments. These targets form part of a $43 billion housing agenda that O'Neil described as the most ambitious since World War II.
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Progress on the social and affordable housing target has been modest, with only 2,000 homes completed from the 55,000 target. However, 28,000 homes are currently in planning or construction phases, according to the minister.
"We've completed more than 2,000 of those homes and 28,000 are in planning and construction right now," O'Neil said, defending the pace as construction projects by nature require significant lead times.
The minister blamed delays on parliamentary obstacles, noting the Housing Australia Future Fund faced more than a year of delays in the previous parliament. She contrasted current efforts with the previous Coalition government's record of building 373 homes over nine years.
"For the first 2 terms of their government they didn't build a single social and affordable home in our country," O'Neil said. "We are taking the Commonwealth from basically having totally tapped out of this problem to being the most bold and ambitious Australian Government on housing since the Second World War."
Construction productivity has emerged as a critical bottleneck in meeting housing targets. The Productivity Commission identified a roughly 50 percent decline in residential construction productivity over 20 years, meaning homes are being built more slowly than two decades ago.
O'Neil outlined three primary factors constraining construction: excessive red tape and regulation, lack of innovation in building methods, and skills shortages across the trades.
"You would not believe what builders have to confront before they've even laid a brick in this country, and that's holding us back," she said. "We've got real issues with innovation. So we're building homes much the same way that we were 40 years ago."
The minister said an upcoming Economic Reform Roundtable would focus on addressing these three areas through collaboration between government levels and industry.
Housing policy has attracted renewed attention as Australia's peak welfare body and trade union movement push for negative gearing reforms. Australian Council of Trade Unions Secretary Sally McManus called for limiting negative gearing tax breaks to one property, a position supported by the Australian Council of Social Service.
O'Neil declined to commit to tax changes, saying the government's position remains focused on tax cuts for all Australian taxpayers and the $43 billion housing construction package.
"Our tax policy as a government is really clear – we're giving a tax cut to every single Australian taxpayer," she said. "Our policy is pretty clear too. We've got a $43 billion package which is principally focused on addressing the main game here – and that is that our country is not building enough homes."
The minister emphasized that until Australia significantly increases housing construction, no policy intervention will provide meaningful relief to Australians facing affordability pressures.
"Until we make a difference to that problem, we are not going to see any tangible difference to this massive challenge in the lives of Australians," O'Neil said.
The 1.2 million home target represents a national aspiration rather than a federal government commitment alone, requiring coordination across state, territory and local governments alongside private sector investment. O'Neil said the target's ambitious nature was deliberate to galvanize unprecedented cooperation.
"It's not just the Commonwealth that's involved in housing; all 3 levels of government have controls here," she said. "The private sector and the investment community are very important too. What we are trying to do is use this 1.2 million to galvanize change to housing in our country."
The minister acknowledged various factors beyond federal control would influence target achievement, including state government actions and interest rate movements. However, she maintained confidence in the approach despite external warnings.
"I'm doing every single thing that I can as Housing Minister federally to make sure that we meet the target or get as close to it as we can," O'Neil said.
Industry experts and Treasury officials have expressed skepticism about the timeline, particularly given current construction constraints and approval processes. The warnings suggest even accelerated building approvals may prove insufficient to reach the ambitious target.
Construction delays have become endemic across the sector, with projects facing extended timelines from initial planning through completion. These delays compound housing supply shortages and contribute to affordability pressures in major cities.
The government's housing strategy represents a significant policy shift after years of reduced federal involvement in direct construction. O'Neil repeatedly emphasized the scale of current commitments compared to previous governments, though critics question whether the targets remain realistic given practical constraints.
Skills shortages in construction trades present another significant challenge to meeting housing targets. The industry faces ongoing difficulties recruiting and retaining workers across multiple specialties required for residential construction.
Innovation in construction methods remains limited, with traditional building approaches dominating despite technological advances available in other sectors. The minister identified this as a key area for potential productivity improvements.
Red tape reduction has become a central focus for government efforts to accelerate construction. Multiple approval processes across different government levels create significant delays before construction can begin.
The upcoming Economic Reform Roundtable represents a key opportunity for government to advance housing reforms with industry and other stakeholders. O'Neil expressed optimism about potential consensus on addressing productivity constraints.
"There's actually really good consensus about why this is such a problem," she said, referring to the Productivity Commission findings on construction sector challenges.
The housing crisis affects multiple demographics, with young Australians particularly impacted by affordability constraints. Rising property prices have pushed homeownership beyond reach for many first-time buyers, creating generational tensions around housing access.
Government efforts focus primarily on supply-side interventions through increased construction rather than demand-side measures like tax reforms. This approach reflects a belief that fundamental supply shortages drive affordability problems.
The 40-year timeline O'Neil cited for housing shortages suggests the crisis predates current political circumstances, requiring sustained long-term effort to resolve. The minister emphasized this historical context in defending current policy approaches.
Whether Australia can achieve the 1.2 million home target by 2029 remains uncertain given current construction rates and productivity constraints. The government maintains optimism while industry experts express growing skepticism about timeline feasibility.
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