Submission to the Productivity Commission Housing supply regulation interim report

The Business Council of Australia has been a strong proponent of measures to promote housing supply. Our members are the CEOs of Australia’s leading companies from across the economy. One of the six major challenges we have identified to pull Australia into the top ten countries for global investment is tackling the housing crisis. We recognise that for Australia to be a successful and prosperous society, people need housing that they can afford, that is close to job opportunities, community amenities, and their family and friends.

Over the last few years, we have released policy reports that have examined this issue in detail. Housing Australia’s Talent (2023) made the point that without reasonably priced and suitable housing, the nation risks driving away the best talent, limiting our economic growth, and ultimately putting the nation’s future prosperity at risk. The subsequent It’s time to say yes to housing (2024) laid out 29 recommendations for governments to advance the housing supply agenda. Annually, the BCA has been tracking the performance of the nation’s planning systems at state and territory level through our Regulation Rumble rankings.

We back many of the measures being undertaken by Federal and state governments directed at delivering new supply. That includes the National Housing Accord target of 1.2 million homes, and reforms to planning systems that aim to increase zoned capacity and drive improved planning system performance.

The BCA fundamentally agrees with the Productivity Commission’s interim report, and we back every reform direction proposed by the Commission:

• Allow up to 3-storey developments across most residential land.
• Allow mid-rise or high-rise apartments in high-demand areas.
• Reduce or remove minimum lot size requirements.
• Allow residential development in commercial zones, unless there is a clear rationale for excluding it.
• Review, reduce and remove land-use controls that reduce commercial feasibility and do not adhere to best practice principles.
• Relax or remove built-form controls that limit flexibility and choice for households.
• Consider infrastructure requirements and trade-offs associated with development early through strategic planning.
• Expand the use of fast-track pathways to assess simple developments.
• Use state-significant pathways to approve developments with a clear need for state-led assessment.
• Improve housing approval assessments with better coordination of referrals, improved use of technology including AI, and transparent reporting.
• Coordinate strategic planning for infrastructure with housing objectives.
• Improve infrastructure sequencing with housing development.
• Ensure developer contributions reflect the accurate cost of providing infrastructure.
• Enhance design of developer contribution frameworks towards best practice.

Governments should adopt every one of these as a priority to advance the delivery of new housing supply.

Key recommendations

1. Adopt the proposed reform directions from the interim report in full.
2. With no one state having a perfect planning system, best practice approaches from across Australia should be adopted by each state and territory.
3. Planning systems should use consistent statewide zones, definitions and assessment requirements. There should also be a state-determined proponent-led rezoning pathway in every jurisdiction that can proceed in parallel with development assessment where appropriate.
4. While development applications are an important component, the efficiency of the full approval process, from rezoning through to occupation certificate, should be examined and transparently reported against.
5. Where statutory approval timeframes are exceeded, proponents should be able to trigger a decision, obtain deemed approval for suitable code-assessable development, or transfer the matter to another decision-maker.
6. Community consultation should focus on material, evidence-based impacts and be proportionate to development risk. Code-compliant development should not be subject to merits objections, and decision-makers should consider the interests of future residents and the benefits of additional housing.
7. Approval and certification systems should be construction-method-neutral and recognise national certification of prefabricated and modular components, avoiding repeated assessment across jurisdictions.
8. The Federal Government should expand and double down on funding via the National Productivity Fund, linked to independently verified regulatory reforms and housing outcomes. State governments should reward strong council performance and intervene where councils persistently fail to meet their statutory responsibilities.
9. The Federal Government should amend the New Home Bonus incentive program to link it to interim milestones to allow funding to flow to states and territories for investment in infrastructure during the Accord period, rather than at the back end of the program. This would better align funding with infrastructure need.
10. The reforms to the EPBC Act should be supported by transparent and comprehensive reporting by the National EPA and Federal Government, to confirm whether they are achieving intended outcomes.
    Housing supply regulation: Interim report – submission 3
11. The Productivity Commission should encourage the finalisation of bilateral assessment and decision agreements between the Federal Government and states and territories to remove the duplication between the EPBC Act and state environment laws.
12. Coordinated strategic infrastructure and land use planning should be best practice. However, the lack of proper planning should not be an excuse to delay or defer decision making on new housing approvals.
13. The combined impact of developer contributions and related costs should be considered, rather than individual charges. The interim report’s proposed approach around nexus and timing of contributions is supported.
14. Mandatory affordable housing requirements should be avoided for private developments. Voluntary schemes that provide a clear and predictable development benefit sufficient to offset the requirement should instead be encouraged.

Read our full submission here.