Housing affordability and productivity inseparable, Senate committee report confirms

The Housing Industry Association (HIA) has welcomed a landmark Senate Select Committee interim report that links Australia’s housing crisis directly to the nation’s productivity performance, saying it confirms what the industry has long argued: housing supply and affordability are now central economic challenges, not merely policy concerns.

The Senate Select Committee on Productivity in Australia’s interim report found that housing affordability is a structural determinant of productivity performance — a conclusion the HIA says reflects a reality that governments can no longer afford to ignore.

HIA Managing Director Jocelyn Martin said the findings marked a significant shift in how policymakers are framing the housing challenge.

“The committee has recognised a reality that has become impossible to ignore: you can’t fix housing affordability without fixing productivity, and you can’t fix productivity without fixing regulation,” Ms Martin said.

“Housing affordability and supply are fundamentally productivity challenges and must be viewed through that prism.”

The report’s scope is broad, with recommendations spanning housing finance, macroprudential regulation, National Construction Code reform, pattern books, planning and environmental approvals, infrastructure delivery, Environment Protection and Biodiversity Conservation (EPBC) approvals, and workplace health and safety accreditation. The HIA said these recommendations collectively acknowledge that regulatory barriers — not industry capability — are the primary constraint on housing supply.

Ms Martin pointed to data from the Productivity Commission to illustrate the scale of the problem.

“The Productivity Commission has found that the number of homes completed per hour worked has fallen by 53 per cent. That should concern every government in Australia because we are delivering fewer homes relative to the resources being committed,” she said.

“The question is not whether the industry is less capable, but where effort is being directed.”

According to Ms Martin, a growing share of industry resources is being absorbed by compliance rather than construction.

“An increasing share of industry resources was being absorbed by regulatory compliance rather than housing delivery,” she said.

“Resources are increasingly consumed by approvals processes, changing codes, specialist reports and navigating multiple layers of government requirements. Too much effort is being directed towards administering process rather than delivering outcomes.”

The HIA said the cumulative weight of overlapping regulatory systems was pushing up costs and constraining the industry’s ability to respond to demand. Ms Martin said housing delivery depends not on any single approval but on the interaction of multiple systems that are rarely designed to work together.

“Housing delivery is not determined by any one approval. It depends on how effectively planning systems, environmental approvals, infrastructure provision, finance settings and building regulations work together,” she said.

“The cumulative effect of these systems is increasing housing costs and reducing the industry’s capacity to meet demand.”

The association also welcomed the committee’s recognition that housing’s effects extend well beyond shelter, shaping labour mobility, workforce participation, business investment and national competitiveness. Ms Martin described Australia’s housing shortage as a persistent macroeconomic constraint rather than a short-term, sector-specific problem.

On the committee’s support for practical reforms — including pattern books, National Construction Code amendments and improved EPBC approval access — Ms Martin was careful to distinguish between cutting red tape and cutting corners.

“Improving productivity does not mean lowering standards. It means ensuring regulation is proportionate, coordinated, evidence-based and focused on delivering genuine public value,” she said.

The HIA said the next step was converting the committee’s recognition of the housing-productivity link into concrete reform. Ms Martin called on all levels of government to act on the findings, warning that duplication and poor coordination across approval systems were imposing unnecessary costs on every new housing project.

“Every additional approval, assessment and compliance requirement adds cost, delay and uncertainty to new housing,” Ms Martin said.

The Senate Select Committee on Productivity in Australia’s interim report is available for public review, with the HIA indicating it will continue to engage with the process as the committee moves toward its final recommendations.