Builders and developers warn delays and regulatory overlap are constraining supply and lifting costs
Australia’s peak construction and housing bodies have urged the Senate’s productivity inquiry to prioritise planning and regulatory reform, arguing that weaker building efficiency is feeding into housing costs and limiting the flow of new stock.
At a hearing of the Senate Select Committee on Productivity, Master Builders Australia told senators that construction productivity has fallen for seven consecutive years and is now materially below earlier levels.
In a prepared opening statement, Melissa Byrne (pictured top left), national director for policy and legal at Master Builders Australia, pointed to a steep decline in productivity over the past decade and cited estimates that compliance requirements can add substantial costs to new homes.
“The rules that our industry must obey are onerous and inflexible,” Bryne said. “They make it more expensive to perform work, in addition to slowing it down. Current workplace relations settings are riddled with productivity impediments.”
Shane Garrett, chief economist at Master Builders Australia, told the committee that longer build times are now a defining feature of the apartment sector. He said a new apartment project can take 33 months to complete, compared with 21 months a decade earlier, with knock-on effects for financing and feasibility.
“There are many cases where unfavourable productivity torpedoes the financial viability of prospective housing developments,” Garrett stated. “This deprives us of many of the new homes that Australians needs.”
Master Builders warned against policy changes that, in its view, would add uncertainty to the pipeline without improving on-site outcomes. It also raised concerns about measures that would increase housing-related taxation, including changes to negative gearing or the capital gains tax discount.
In its evidence, Master Builders advocated a broad package aimed at reducing what it described as avoidable friction in the system. It backed a reduction in regulation, pressed for faster work to streamline the National Construction Code, and called for settings that lift the appeal of investment in new supply, including tax treatment for capital works and adjustments to the Instant Asset Write Off. It also urged that regulated Australian Standards be made available without charge, arguing that easier access would support compliance and consistency.
The organisation also argued that supply chain pressures remain a constraint, and called for policies that lower input costs while keeping the flow of compliant building materials into the market. It supported the establishment of an independent regulator with investigatory and enforcement powers to oversee industrial conduct in construction, and urged steps to expand the skilled workforce through training and skilled migration. On industrial relations, it argued for changes to bargaining and completion laws, and for limits on enterprise agreement clauses it said reduce productivity.
The Housing Industry Association (HIA) took a similar line in its opening statement, telling the committee that housing affordability cannot be separated from productivity.
“Evidence before this Committee shows that housing construction productivity has declined materially over the past 10 years,” said Jocelyn Martin (pictured top centre), managing director at the Housing Industry Association. “These outcomes are not a reflection of lower skills or effort in the industry, but of the systems and policy settings within which the industry is required to operate.”
HIA stressed that multiple layers of regulation across local, state and federal systems are imposing cost, delay and uncertainty, citing planning and zoning, environmental approvals and frequent changes to the National Construction Code. It called for simpler and more consistent rules across jurisdictions, faster and more predictable approvals, a stable and buildable code, and stronger support for innovation, digitisation and modern construction methods. It said the objective should be a smarter regulatory system rather than lower standards.
Beyond rule changes, HIA urged a long-term national settlement strategy that aligns population policy, infrastructure delivery, land supply and housing supply over multiple decades. It argued that high population concentration in major cities is intensifying pressure on housing markets and infrastructure, and that a coordinated approach could relieve constraints by identifying growth corridors and regional centres earlier, sequencing infrastructure before development, and clarifying responsibilities across levels of government.
Meanwhile, the Urban Taskforce told senators that housing supply should be treated as a driver of productivity rather than a downstream consequence. Its chief executive, Tom Forrest (pictured top right), said the development and construction sector reflected broader economic problems and was being held back at a time when governments are seeking to meet the National Housing Accord target of 1.2 million new homes by July 2029.
Citing analysis referenced by the Productivity Commission, the Urban Taskforce said dwellings completed per hour worked have fallen sharply since the mid-1990s. It attributed the deterioration to slow approvals, fragmented regulation, limited uptake of innovation, skills shortages and an industry structure dominated by small firms.
The taskforce also argued that infrastructure investment has not kept pace with housing ambitions, and said some costs have been shifted to new buyers through charges and fees, affecting feasibility. It told the inquiry that, while some planning changes have begun to lift approvals, further reform is needed in building regulation, licensing consistency and workforce mobility. It also flagged that higher interest rates and building costs are weighing on commencements, and warned that global uncertainty is adding to supply risks.
“Red tape, skyrocketing input prices, under investment in housing enabling infrastructure, along with a lack of innovative solutions to housing supply are all combining to stymie housing supply and productivity,” Forrest said.
“The ongoing uncertainty in the Middle East meant that the industry was facing its second supply shock this decade. The cause for reform was stronger than ever.”
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