A new Productivity Commission report into the construction industry has called for urgent reforms to fix Australia’s housing affordability crisis.

Housing construction productivity: Can we fix it? said the sheer volume of regulation has a deadening effect on productivity in the industry.

It’s called for urgent measures to stop the rot, they include:

• governments establishing coordination bodies to speed up the development and construction process and address delays,
• independent review of building regulations,
• removal of barriers to the development and uptake of new building techniques (such as modular housing) and,
• a national approach to occupational licensing to boost workforce mobility.

The report estimates the decline in physical productivity in housing construction has seen half as many homes completed per hour worked compared to 1995.

A more comprehensive measure that takes into account quality improvements and increases in the size of housing shows productivity has decreased by 12 per cent.

In contrast, labour productivity in the broader economy has increased by 49% over the same period.

To put this ‘productivity gap’ in perspective, had labour productivity in the broader economy moved in line with the housing construction sector then average incomes in Australia would be about 41 per cent lower than they are now.

Productivity Commission Chair Danielle Wood said too many Australians, particularly younger Australians, are struggling to afford a home in which to live.

“Governments are rightly focused on changing planning rules to boost the supply of new homes, but the speed and cost of new builds also matters,” Ms Wood said.

“Lifting the productivity of homebuilding will deliver more homes, regardless of what is happening with the workforce, interest rates or costs.”

“There is no single thing to blame for this poor productivity performance.

“But there are steps governments could take to remove or ease regulatory bottlenecks and encourage innovation in an industry where the way we build homes has barely changed.”

What do you think?

Do you agree with the Productivity Commission report that building productivity has declined in recent decades?

Do you think its suggested fixes are the right way to go? Or do you have better ways to get more houses built faster?

Author: Richard O'Leary

Experienced writer, commentator and political advisor, Richard held a raft of journalism and editorial roles before taking executive communication roles for multiple Premiers, Chief Ministers and even NBN Co. He grew up in his father’s construction business and joins The Good Builder as its founding Editor.