Federal Budget 2023: Housing shortage recognised, but future budgets must go further

Key points

• Budget wins: further investment in the National Housing Finance and Investment Corporation,Build-To-Rent Development incentives, and Commonwealth Rent Assistance expansion
• “The housing-focused measures in the budget are solid,” says YIMBY Melbourne’s Jonathan O’Brien. “But with the housing crisis front and centre in the national media, it would have been great to see commitment to broader reforms around housing affordability.”

Full Release

YIMBY Melbourne applauds the federal government for acknowledging within this year’s Budget the critical importance of building more housing. 

The steps made in this second budget from the Albanese Labor government demonstrate an admirable commitment to housing security for allAustralians. But in order to address the housing crisis, and to serve the 640,000 Australian households currently experiencing housing stress or homelessness, future budgets will need to go further. Governments at all levels must commit to housing abundance.

Investments in the National Housing Finance and Investment Corporation (NHFIC) to create more social housing is a budget win. In the NHFIC’s own State of the Nation report released last month they said that the “supply of new housing continues to be impeded by a range of factors including… ongoing community opposition to development and long lead times for new supply”. The NHFIC in the same report projected a short fall of 106,300 homes by 2027 and 377,600 households in housing need across Australia.

Further incentives for new Build-To-Rent Developments will help to address the current housing deficit, although the relatively low projected cost of $25.7 million over the next five years suggests that the overall impact maybe limited. Further incentives such as these would be welcomed.

The government’s decision to boost Commonwealth Rent Assistance(CRA) in the face of ballooning rents is another highlight within the budget.The CRA has not kept pace with rapidly increasing rents and this policy, as recommended by the ProductivityCommission, will see thousands of Australians better off starting this financial year.

The expansion of programs that enable the purchase of housing can only be effective when paired with programs that meaningfully increase the amount of housing available. Programs like the CRA and First Home Guarantee (FHG) are important in supporting Australians currently in need, but on their own only prolong the housing crisis, without offering a solution. In order to make housing in this country truly affordable, policies like these must be paired with the creation of more housing supply where it is most needed.

As such, YIMBY Melbourne hopes that the announced $687.4 millionNational Approach for Sustainable Urban Development will engage state and local governments to create a cohesive approach to densification of urban centres, including Melbourne. The Productivity Commission recently stated that “zoning and planning policies have significant impacts on housing supply” and that “all levels of government will need to coordinate efforts” in order for us to see change.

Federal funding of states should be linked to commitments to zoning and planning reform, and to meeting targets for home constructions. The federal government should oversee nationwide planning reforms to enable more medium density developments, similar to the successful reform undertaken in 2021 by New Zealand through their Resource Management Act. Additionally, the Housing AustraliaFuture Fund should be doubled to $20 billion to double the amount of construction that it will enable, as advised by the Grattan Institute.

This budget includes some good initiatives on housing affordability, and avoids the blunders of previous policies that created the current housing crisis. The government has made small steps toward increasing housing supply—but more still needs to be done to unlock more land in high demand areas and to enable the provision of more, high-quality homes in the places people want to live.