The federal government promised 40,000 new social and affordable homes by June 2029.
We’re two years in and only 2% of that has actually been completed, with three years remaining.
Is that scheme failing or was it never commercially viable?
What is the Housing Australia Future Fund?
The Housing Australia Future Fund was a $10 billion housing fund announced in late 2023. Its goal was to build 40,000 affordable and social homes for Australia.
The government is providing grants and incentives, and lending to private industry to build these projects, but there’s a lot of requirements around it. For example, there’s rental caps because it needs to be affordable housing.
They’re two years in, almost halfway through, and we’re at 2% of the houses built.
And I mean, it’s sort of misleading the fact that they said they’re going to deliver 40,000 homes, they’re actually not delivering them. It’s developers who are delivering them.
So instead of going out there and supplying them to the market like they said they were going to, they’re actually just buying them off developers once they’ve incentivised the developers to supply them.
When was the last time the federal government built affordable housing in Australia?
A federal government has not physically built affordable housing in decades.
The last time that an investment was put into it was Kevin Rudd in 2009 and they built 20,000 homes. Nothing has happened since.
I think there’s no denying that something needs to happen, but is this the right thing? Is this the best model for it? Should they be building themselves?
And that’s the thing. Why aren’t they? Like they’re providing all of these incentives to developers but they’re still not being developed. So the incentives aren’t that incentivising.
Wait lists for social housing are just ridiculous, like you’re waiting years. There’s a homelessness problem in Australia. There’s a cost of living crisis and not enough is being done.
They’re saying they want 40,000 homes but we’re only 2% in.
Why are we so far behind the schedule?
The fact that they’re not sharing detailed reports makes it hard to see the full picture, but some of the key reasons we’re so far behind schedule are that the government is outsourcing the work but not incentivising people properly.
Lack of proper incentivisation
Private industry is running this which means it has to have a benefit for them. Why would you go and buy a big block of land somewhere and then go down this road if it’s going to make a fraction of the profit as if you just went and did your own and built some townhouses and sold them at a profit?
At the moment there’s rent caps because they need to make it affordable. So that puts pressure on the developer.
There’s a lot of compliance and reporting which everyone knows how fun that is.
Why would you bother?
There’s long-term regulation and no one’s really explained what happens after that 20- or 25-year period.
You’re expected to pay back the government loan because they’re offering interest-free loans.
But you know: thin margins, high cost, highly regulated.
So in my opinion it’s not really appealing enough for developers. That’s why they’re not going ahead.
Internal governance issues
There’s a lot of internal issues in this department.
It’s an internal department. There’s been resignations on the board. There’s been infighting. Lots of arguing.
There’s been internal investigations and the reports were provided fully redacted. So basically there are all these secrets about what’s actually going on in this department.
They then got Deloitte to audit it again. The report came back as requested by the government fully redacted.
So it’s a useless report.
The latest response was that they’re committed to building 3,000 homes in 2026, which is another 8%.
What? So that gets us 90% away from completion.