Productivity Commission report drives push to boost housing supply
The Productivity Commission’s interim report has prompted calls from major industry groups for urgent reforms to Australia’s regulatory and tax systems, highlighting concerns over the growing burden on the housing building and construction sector.
The Housing Industry Association (HIA) and Master Builders Australia both responded to the report, which found that increasing regulatory complexity and outdated tax settings are hampering productivity and growth in the industry.
“The interim report from the Productivity Commission overwhelmingly backs what HIA has long been saying – that the regulatory burden on businesses is getting worse in this country and there is need for a major overhaul on the approach to regulation,” said Jocelyn Martin (pictured left), HIA managing director. “These finding must be a wakeup call for all government policy makers and standards setting bodies.”
The commission’s findings point to a rise in the volume and complexity of regulations affecting the housing sector, with rules imposed by all levels of government influencing where and how homes are built. While safety and quality standards are important, the report questioned whether the costs of compliance now outweigh the benefits, as businesses spend increasing time on regulatory matters rather than construction.
Martin noted that the commission recognised the cumulative impact of regulations, rather than just their individual effects. “The Productivity Commission recommends an immediate review of the thicket regulation in the construction sector, including their cumulative impact and alignment across regulators,” she said. “The publication of this report is timely ahead of the Economic Reform Roundtable, and it provides a clear agenda on the need for a whole of government commitment to a set of immediate reforms that will at once reduce regulatory burdens on business.”
Master Builders Australia also welcomed the report’s recommendations, particularly proposals to lower the company tax rate for businesses with revenue under $1 billion and introduce a new Net Cashflow Tax to allow immediate deduction of capital expenditure.
“While Master Builders strongly supports the proposed company tax cut, further work will be required to assess the short, medium and long-term implications of pivoting to a combined company income and cashflow tax system for the building and construction industry,” said Denita Wawn (pictured right), chief executive of Master Builders Australia.
“We will continue to work through the detail of the proposed cashflow tax to ensure it delivers real benefits for builders and supports investment in construction projects, while not increasing regulatory burden and the effective tax rate on business.”
Wawn said the recommendations are a step towards broader tax reform, which is needed to help Australia meet its Housing Accord targets. “Reducing tax and cutting red tape will help builders keep costs down, speed up delivery, and unlock new housing supply,” she said. “Boosting business investment and productivity in construction is critical if we are to meet Housing Accord targets and put downward pressure on rents and home prices.
“The commission is right to call for a fundamental shift in how regulation is designed and applied. By cutting taxes, reducing red tape and supporting investment in construction, these reforms will help tackle the housing crisis head-on. They provide a pathway to build more homes, faster and at a lower cost, ensuring more Australians can access affordable housing.”
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