Jason Janssen: Politically popular grants are exacerbating housing crisis

When will governments realise the housing crisis is a supply problem, not a demand problem?

It was groundhog day when Federal and State governments announced new, massive injections of funding for housing when, in WA, home builders are stretched beyond capacity to build the homes already on their books. Many are knocking back work and every one of them is picking the eyes out of the profitable jobs.

It’s almost as though no one understands that a big part of the present problem is the stimulus grants that were well intentioned but wrong-headed efforts to stimulate the building industry post-COVID.

These grants have caused massive price escalations due to an enormous supply/demand imbalance and after three years of losing money, builders are now making up for the losses they have endured during this period.

Our failure to learn from the past guarantees that we’ll repeat the mistakes that have left our community confronting record homelessness, scarce rentals and sky rocketing rents, massive price increases and building times stretching into years.

While it may be politically attractive to announce new grants with an emphasis on public or social housing, the truth is that the grants have made home ownership more difficult for most families.

Instead of making the problem worse by repeating past mistakes, government should move quickly to:

• Review and up date the Home Building Contracts Actthat regulates the industry. The Act is outdated and not fit for purpose. It should be amended to streamline approvals and to recognise that preventing justified price increases to be passed on hurts, not helps families whose homes are turned into loss-makers for builders who then concentrate on profitable jobs;

• Completely overhaul and revamp training programs to quickly and dramatically increase the number of trades people;

• Make changes that reduce training times to produce more narrowly based skilled workers and include new, generous programs for employers to employ and train young people;

• See WA in the vanguard of recruiting tradespeople from other States and countries;

• Provide incentives for home builders to complete jobs on time and on budget;

• Ensure the speedy availability of residential land in different areas and on a scale that ensure competition subdues prices; and

• Importantly, understand that assistance programs need to be easily understood and quickly implemented. The No Interest Loans Scheme is a perfect example. Announced in the first week of January, it was more that six months before the first loans were made available, by which time there were more builders in distress.

If the Government insists on subsidising families it should introduce assistance for those paying rent and mortgage payments on homes that should have been completed many months ago.

And, along the way, much more effective action is required when disasters like Niche Living occur.

The Government’s answer to the Niche Living problem was to remove the company’s building licence because it thought that would trigger access to the Home Indemnity Insurance Scheme.

Well, how did that work?

Niche Living successfully challenged the Government and now 230 homes are left in unfinished limbo at the mercy of an ongoing legal wrangle that looks likely to stretch into next year. Some Niche clients will wait five years for their homes to be finished.

The first priority must be to complete the unfinished homes, and the solution lies in an agreement that sees:

• Niche surrender its building licence to allow its clients to access insurance;
• The Government accept the role it played in provoking the problem and contribute to its solution;
• Niche contribute reflecting its central role in the problem; and a
• Panel of builders prepared to complete the Niche homes as cost effectively as possible.

At the end of the day, the proof of the pudding is in the eating and no matter how often and how loudly the Government tells us what it is doing, the evidence of policy failure is clear for everyone to see.

Jason Janssen is the chairman of the Home Builders Action Group