Labor’s “one million homes” and “net zero” are incompatible

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Prime Minister Anthony Albanese on Wednesday flagged that he would use the upcoming national cabinet meeting in Brisbane to get the states to commit to planning laws that would make it easier to build one million homes over five years from 2024, as announced in the federal budget.

At the same time as Labor is seeking to boost housing construction, it continues to push on with its election commitment to lower Australia’s carbon emissions by 43% by 2030 relative to 2005 as part of a transition to “net zero” emissions by 2050.

One has to ask: how can Australia realistically lower its carbon emissions by 43% when the federal government plans to grow Australia’s population by around 3 million people by 2030 and build more than one million homes?

Concrete – an essential input into housing and other construction – accounts for around 8% of the world’s carbon emissions.

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It is said that if concrete were a nation, it would be the world’s third-largest emitter behind China and the United States.

Building construction, operation, and maintenance are estimated to account for roughly one-quarter of Australia’s glasshouse gas emissions.

Thus, how can Australia realistically meet its “net zero” emissions reduction target when the federal government continues to grow the nation’s population like a science experiment, which will require the construction of millions more homes and infrastructure, alongside energy-guzzling water desalination plants?

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The 2021 Intergenerational Report (IGR) projected that Australia would add 13.1 million people (a 50% increase) over the next 40 years, driven by net overseas migration of 235,000 people per year:

Australia's forecast population level

Source: 2021 Intergenerational Report

The 2023 federal budget then increased the net overseas migration projection to a record high 400,000 in 2022-23, 315,000 in 2023-24, and then 260,000 from 2024-25 – i.e. 25,000 higher than the IGR projected:

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Net overseas migration

Accordingly, Australia’s population is now set to grow even faster than the 13.1 million increase projected in the 2021 IGR.

Australia has little hope of meeting its carbon reduction targets if it continues to grow its population at such a furious pace.

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The additional 13.1 million people predicted by the IGR (let alone the higher numbers from the federal budget) would demand the construction of around 5 million additional dwellings as well as considerable new infrastructure.

This construction would drive up Australia’s carbon emissions, as would the extra 13.1 million energy users and consumers.

The total environmental impact is equal to the population times the quantity of consumption units. It’s not difficult to understand.

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When the Albanese Government touts “net zero” while also working to massively increase the number of energy users, it clearly speaks with a forked tongue.

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.