Why Labor’s super-housing push will fail


In last month’s federal budget, Treasurer Jim Chalmers announced a “new housing accord” that would aspire to “build one million new, well located homes over five years from 2024”.

As soon as I read this plan, I was immediately reminded of the New Zealand Ardern Government’s failed “Kiwibuild” policy, which aimed to build 100,000 ‘affordable’ homes, but after four years has only delivered 1,366.

The key reason why the Albanese Government’s “one million homes” target will fail is because “a key aim would be to find “creative” ways to bring in institutional investments into the sector while delivering good returns to investors“.

Getting good returns for investors is the exact opposite of getting cheaper housing.


This view was supported this week by comments from the chief of Australia’s biggest pension fund AustralianSuper, Paul Schroder, who told the AFR Super & Wealth Summit in Sydney that the dynamics of risk and reward on social housing did not often match up from an investment perspective:

“Do we do something on affordable housing? Yes, we do. Does it normally stack up? No, it doesn’t. Usually the risks are too high and the returns are too low”.

“So that’s been the history of affordable housing. That’s why most people don’t do much of it”.

Schroder went on to say that AustralianSuper was “not going to take anything less” than between expected returns of 6% and 11% and in a not-so-subtle plea to the government said “somebody’s got to make up the difference or reduce the risk or reduce the costs”.


All of which poses the question: if expected returns of between 6% and 11% are required to make housing profitable to superannuation funds, and the federal government would need to subsidise said funds, then why doesn’t the federal government just borrow at the long-term bond rate and build the homes itself? Surely this would be cheaper and more effective?

I suspect Labor will just try to take credit for what would have been built anyway, while funneling financial kickbacks to its mates in the superannuation industry.

But just in case the “one million” extra homes doesn’t happen, how about reducing immigration from the absurd (yet understated) levels projected in the federal budget, which forecasts nearly one million net arrivals over the next four years?

Net overseas migration forecast

That would genuinely alleviate Australia’s housing shortage.

Of course, Labor would never do that. It would rather con us with unfunded, oxymoronic, wishy-washy housing announcements.

About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.