The rules governing surplus federal land currently default to open market sale at full market value with no housing obligation attached. A private senator’s bill would change that default, and it is worth reading rather than reading about.
The Department of Finance is currently leading the divestment of 46 owned surplus properties and 12 leased properties, spread across every state and territory in Australia.
They are former Defence sites. Some are large, urban and well serviced. Under the policy that governs them today, the default is that they go to the open market at full market value, and nothing obliges whoever buys them to build a single affordable home.
A bill now before the Senate would change that default. It has not passed and probably will not. It is still the most useful document a builder can read on where surplus government land is heading, because it puts numbers and mechanisms on a question that has been argued in generalities for a decade.
What the bill actually says
ACT Independent Senator David Pocock introduced the Commonwealth Land (Affordable Housing) Bill 2026 in the Senate on 2 July 2026. It was read a first time, he moved the second reading and had his speech incorporated into Hansard, and debate was adjourned.
Section 10 is the core of it. A Commonwealth entity disposing of Commonwealth land must ensure the contract or instrument of disposal includes an affordable housing condition, unless the disposal is exempt.
Section 12(3) sets the required proportion at 30 per cent, with power for regulations to prescribe a different figure. That is 30 per cent of dwellings constructed on the land, not 30 per cent of floor space, which is a different and generally more demanding measure than the inclusionary zoning proposals that have run in New South Wales.
Section 14 sets the rent. An affordable housing dwelling must be let at the lesser of 75 per cent of weekly market rent, or 30 per cent of the household’s gross annual income divided by 52. Section 15 restricts allocation to households under an income threshold set by regulation with regard to median household income for the area, and tests eligibility only at the start of the tenancy. There is no continuing eligibility requirement.
Section 12(1)(b) requires each affordable dwelling to be managed by a registered not-for-profit community housing provider, which the bill defines as one registered under state or territory law and registered with the Australian Charities and Not-for-profits Commission.
The mechanics builders and developers would actually feel
Four provisions do the practical work.
Section 11 requires a recognised housing instrument, meaning a covenant, easement or equivalent created under the relevant state or territory land law, to be executed and registered, or capable of immediate registration, before completion. Section 17 then prohibits a Commonwealth entity completing the disposal until that is done. In plain terms, settlement does not happen until the affordable housing obligation is on the title.
Section 12(1)(e) provides that the obligations continue for as long as the recognised housing instrument provides, including in perpetuity where the local land law permits. This is not a ten year affordability period that lapses.
Section 20 creates a civil penalty of 10,000 penalty units for a material contravention by a purchaser, transferee or lessee. The explanatory memorandum puts that at approximately $3.3 million in 2025-26. It is enforceable under the Regulatory Powers (Standard Provisions) Act 2014 in the Federal Court or the Federal Circuit and Family Court.
Sections 10(3) and 20(7) provide that a disposal is not invalid merely because of a contravention, which preserves certainty in the transaction itself. The whole Act would commence the day after Royal Assent, with no phase-in.
Settlement does not happen until the affordable housing obligation is on the title.
One definition that matters more than it looks
Section 7 defines disposal as either the sale or transfer of a freehold interest, or the grant of a lease of 50 years or more including any option to renew. The explanatory memorandum is explicit that long leases are included to stop the scheme being avoided by the Commonwealth retaining freehold and granting a long leasehold instead. That matters everywhere build-to-rent and ground lease structures are in play, and it matters especially in Canberra, where who actually controls the developable land is a question with an unusual answer.
When the scheme would not apply
| Exemption | Trigger |
|---|---|
| Small sites | Land under 1 hectare, or another area prescribed by regulation |
| Contaminated sites | Secretary determines remediation cost is significant against expected post-remediation development value |
| Remote and low-demand markets | Areas prescribed by regulation |
| Certain Northern Territory land | Land connected with Part 4 of the Northern Territory National Emergency Response Act 2007 |
| Land unsuitable for residential development | Categories prescribed by regulation, by reference to physical, planning, operational or security characteristics |
Source: Commonwealth Land (Affordable Housing) Bill 2026, Part 4.
How far the scheme reaches
The bill package contains two descriptions of how far the scheme would reach, and they are worth setting out side by side, because most coverage has followed one of them.
The explanatory memorandum opens by describing the bill as creating an obligation to require affordable housing within residential developments on Commonwealth land disposed of to private entities by sale or long lease. The statement of compatibility with human rights uses the same phrase. So does the second reading speech.
The operative clauses are drafted differently. Section 10(1) applies to a Commonwealth entity that disposes of Commonwealth land, and section 10(2) switches the obligation off only for an exempt disposal. Section 7 defines an exempt disposal as one to which Part 4 applies. The five Part 4 exemptions are set out in the table above, and each of them is keyed to a characteristic of the land: its area, its contamination status, the market it sits in, its connection to the Northern Territory Emergency Response measures, or a prescribed unsuitability for residential development. None of them refers to the identity of the buyer.
Section 5 sits separately from all of that. It provides that the Act binds the Crown in right of the Commonwealth, but not the Crown in right of a State, of the Australian Capital Territory or of the Northern Territory.
The bill has not progressed past the second reading. It has not been through the committee stage or the amendment process where wording of this kind is ordinarily examined, and the second reading speech closed with leave sought to continue remarks later.
The explanatory material describes a scheme aimed at private buyers. The clauses that would do the work are written more broadly than that.
The policy it would override
The rules for surplus federal property today are set out in the Commonwealth Property Disposal Policy, administered by Finance. It applies nationally, to every Commonwealth entity, in every state.
The default is that Commonwealth property with no alternative efficient government use must be sold on the open market at full market value, unless the Finance Minister agrees otherwise. Defence’s own property disposal page states the general policy in the same terms.
But the policy already carves out two other routes. An off-market sale allows the Commonwealth to sell directly to a state, territory or local government, usually at market valuation, where that would optimise broader government outcomes. The policy names increasing housing supply as one of those outcomes. A concessional sale goes further, being an off-market sale below market value, permitted with the agreement of the relevant portfolio minister and carrying security of purpose arrangements that lock in the land use justifying the discount. Standard contract clauses to impose those conditions already exist and can be obtained from Finance.
The levers exist. What does not exist is any default expectation that they get pulled.
What is the Commonwealth Property Disposal Policy?
The Commonwealth Property Disposal Policy is the Department of Finance policy governing how the Australian Government sells or transfers real property it no longer needs. It applies to all Commonwealth entities in all states and territories. It sets open market sale at full market value as the default, permits off-market sale to another level of government where that supports broader government outcomes such as housing supply, and permits concessional sale below market value with ministerial approval and conditions locking in the land use.
Three routes for surplus Commonwealth land
| Route | Price | Who signs off |
|---|---|---|
| Open market sale | Full market value | The default position under the policy |
| Off-market sale to a government | Usually market valuation | Finance Minister |
| Concessional sale | Below market value | Portfolio minister, plus Finance Minister approval, with security of purpose conditions |
Source: Commonwealth Property Disposal Policy, Department of Finance.
There is one more step, and it sits ahead of all three. Before surplus property leaves the Commonwealth it goes to the Property Disposal Clearing House, where it is listed for up to 10 business days so other Commonwealth entities can propose an alternative use. Only after that does it reach the market.
The pipeline this would apply to
The Defence Estate Audit was commissioned after the 2023 Defence Strategic Review and delivered to Government in December 2023. Its two independent co-leads visited 70 Defence locations.
It identified 68 surplus properties for divestment. A Finance estimates brief prepared for Additional Estimates in February 2026 records that three had been divested, six were under divestment by Defence, and one required retention because there was no alternative site where its current functions could be performed.
The Defence Estate Audit divestment program
| Measure | Figure |
|---|---|
| Surplus properties identified by the Audit | 68 |
| Owned surplus properties Finance is divesting | 46 |
| Leased properties Finance is divesting | 12 |
| Jurisdictions covered | All states and territories |
| Estimated sales revenue | Around $3 billion |
| Estimated relocation, remediation and heritage costs | Around $1.2 billion |
Sources: Department of Finance Defence Estate Audit page and February 2026 estimates brief; revenue and cost estimates from the Defence Estate Audit.
The Audit estimated the program could generate around $3 billion in sales revenue, with most of that coming from roughly 26 large metropolitan sites valued at $2.2 billion to $2.4 billion, offset by around $1.2 billion in relocation, remediation, heritage and administration costs.
Critically for anyone in residential construction, the Audit itself noted that some surplus sites have potential to be developed for housing, consistent with the National Housing Accord. Builders have already seen a state level version of this play out with surplus government land being activated for housing.
That is the point of tension. The Commonwealth has identified the housing potential, has committed under the Accord to identifying surplus federal land for housing, and is disposing of the land under a policy whose default is full market value with no housing condition attached.
Where this gets sharpest
The ACT is the extreme version of the same question, which is part of why an ACT senator brought the bill.
Under the Australian Capital Territory (Planning and Land Management) Act 1988, land in the territory is either National Land, declared by the Commonwealth minister under section 27 where it is used or intended to be used by or on behalf of the Commonwealth, or Territory Land, which section 28 defines simply as everything else. Section 29 gives the ACT Executive responsibility for managing Territory Land and the power to grant, dispose of and acquire estates in it, but expressly on behalf of the Commonwealth.
Canberra runs on leasehold. There is no freehold. The Crown that grants the lease is federal.
In July the ACT Government paid the Commonwealth $385 million including GST for 243 hectares of the former CSIRO Ginninderra experiment station, land expected to carry more than 3,000 homes with around 15 per cent affordable, community and public housing. Divide the price by the homes and the raw acquisition cost lands near $128,000 a dwelling before a service is laid. That deal closed after a decade of negotiation, and CSIRO first raised the prospect of selling the station in August 2015.
The bill is not law and would commence the day after Royal Assent, so nothing about the completed Ginninderra East sale changes either way. What is still ahead is the western portion of the site, which has not been sold and remains under assessment by CSIRO. On the figures already public, that land is well above the one hectare threshold and is not in a remote or low-demand market.
The party motion, and the older argument behind it
On Saturday 29 August, ACT Labor members meet at the QT Hotel in Civic Square for the party’s annual conference.
The Canberra Times reported on 23 August that a senior adviser to ACT Treasurer Chris Steel has moved a motion that would add a general resolution to the party platform, calling on the federal government to continuously review surplus land held by it and its agencies in the territory and to transfer excess land at no cost to the territory government for housing supply. An ACT Labor spokesman told the paper the draft motion is not an endorsed government position and is not the Treasurer’s position.
A platform resolution binds nobody. But it is a second push on the same question inside two months, from a different direction. The bill asks the Commonwealth to attach conditions to land it sells. The motion asks it to stop charging for the land at all.
Both rhyme with a much older argument. The ACT still owes the Commonwealth a housing debt dating to the transfer of the territory’s housing portfolio at self government in 1989, with the loan period running to 2042. A 2023 government response tabled in the ACT Legislative Assembly sets out the history and records that Tasmania and South Australia received full or partial waivers of comparable debts. The Canberra Times has reported the outstanding balance at $64.9 million as at December 2025.
The number that complicates the story
None of this means the ACT is failing.
The National Housing Supply and Affordability Council’s State of the Housing System 2026 report puts the territory’s population implied share of the National Housing Accord target at 21,000 homes across the five years to 2028-29, and estimates it will deliver around 22,000. That is 103 per cent of its share, and one of only two jurisdictions the Council expects to reach its share by June 2029, which sits alongside the Council’s wider findings on supply and affordability.
But the same table carries a figure that is easy to miss. In the five years before the Accord, the ACT delivered 24,000 homes. The territory clears its target while building fewer homes than it did beforehand. Victoria, Tasmania and the ACT are the only three jurisdictions the Council forecasts below their pre-Accord output.
The target is being met because the target is modest against what was already being produced, not because delivery accelerated.
The counterargument
It deserves stating properly, because it is not weak, and the bill’s own explanatory memorandum concedes most of it.
The memorandum accepts that a condition of this kind is borne by land value, which moderates the government’s sale receipt. That is the honest description. Commonwealth property is a public asset, Defence proceeds are earmarked for Defence priorities, and CSIRO is directing the Ginninderra money into research infrastructure. Attaching a condition that reduces what a developer will pay is a transfer between taxpayers rather than free money, and the value comes out of the sale price.
There is also a feasibility question the bill only partly answers. The contamination exemption turns on a Secretary’s determination made on application by the disposing entity, which introduces a discretionary step and a timing risk into a transaction. And a 30 per cent requirement measured against dwellings constructed, holding in perpetuity, is a significant encumbrance on a residual land value calculation. On a marginal site that can be the difference between a project proceeding and not, which produces no homes of any kind.
The Good Builder Take
A large tranche of federal land is moving to market. The policy governing it defaults to full market value with no housing obligation. And there are now separate pushes, from a Senate crossbencher, from a territory branch of the governing party, and implicitly from the Accord commitment itself, to attach conditions to that land before it goes.
For builders, the practical read is about what appears in a feasibility, not about who wins the argument. If a condition of this kind becomes standard on ex-Commonwealth land, the sites still get developed. What changes is the product mix, the delivery structure, the near certainty of a registered community housing provider as a partner rather than an afterthought, and the price the land sells for in the first place.
The settlement mechanism is the detail worth carrying forward. Under this drafting, the affordable housing instrument has to be on the title before completion. That is a due diligence and programming item, not a post-approval negotiation, and it would sit on the critical path of every deal it touched.
Sites of this kind also tend to reward builders who can work with contamination, heritage constraints and staged delivery, because that is what a decommissioned barracks or depot brings with it.
The bigger pattern is the familiar one. Land identified is not land released. Land released is not lots serviced. The Defence Audit landed in December 2023 and expressions of interest are being taken now. Ginninderra was first raised in 2015 and sold in 2026.
The window between a government identifying land and a builder standing on it is measured in years, and the conditions attached to that land get decided somewhere in the middle. That is the part currently in play, and it is worth watching alongside how land supply and housing delivery are tracking across the country.
Frequently asked questions
It is a private senator’s bill introduced by ACT Independent Senator David Pocock on 2 July 2026. It would require an affordable housing condition on disposals of Commonwealth land by Commonwealth entities, backed by a covenant or equivalent registered under state or territory land law before settlement. Debate was adjourned after the second reading and the bill has not passed.
Section 12(3) sets the required proportion at 30 per cent, with power for regulations to prescribe a different figure. It is measured against dwellings constructed on the land rather than floor space. Rent would be capped at the lesser of 75 per cent of weekly market rent or 30 per cent of the household’s gross annual income divided by 52.
Part 4 exempts sites under one hectare, significantly contaminated sites where the Secretary determines remediation costs are significant against post-remediation development value, land in areas prescribed as remote or low-demand, certain land connected with the Northern Territory National Emergency Response Act 2007, and land prescribed by regulation as unsuitable for residential development.
The explanatory memorandum, the statement of compatibility and the second reading speech all describe the scheme as applying to Commonwealth land disposed of to private entities. In the clauses themselves, section 10 applies to a Commonwealth entity that disposes of Commonwealth land, with the obligation switched off only for an exempt disposal, and each of the five Part 4 exemptions is keyed to a characteristic of the land rather than the buyer. Section 5 separately provides that the Act binds the Crown in right of the Commonwealth but not the Crown in right of a State, the ACT or the Northern Territory. The bill has not progressed past the second reading.
The Defence Estate Audit identified 68 surplus properties. The Department of Finance is leading the divestment of 46 owned surplus properties and 12 leased properties located across all states and territories. A Finance estimates brief from February 2026 records that three had already been divested, six were under divestment by Defence, and one required retention.
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General information only. This article covers a bill that has not passed and a policy debate that is still live. Positions, figures and timelines may change. Builders should seek independent advice relevant to their own circumstances.
Last updated: 25 August 2026
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