[+] Fly in Ointment for Housing Australia Future Fund Pipeline

A penny saved is a penny earned. And while this may be true for the many community housing providers, the funds and developers looking to tap the $10-billion Housing Australia Future Fund (HAFF) are still waiting for the proverbial penny to drop. Housing Australia is sifting through applications for thousands of shovel-ready social and affordable homes and there is no denying the demand. There are reportedly more than 175,000 households on the social housing waiting list nationally, and with increasing housing affordability issues, the focus on prioritising ready-to-go developments for its first funding round is probably a prudent one for Housing Australia. The independent national housing authority is expecting to make funding decisions in the third quarter of 2024, with announcements on successful projects to follow. The Housing Australia Future Fund and the National Housing Accord are Federal Government initiatives to financially support the delivery of 20,000 new social and 20,000 new affordable homes over a five-year period. But there is a fly in the ointment. In order to be eligible for federally funded construction jobs, builders must achieve a Federal Safety Commissioner (FSC) accreditation. ▲ Not-for-profits and capital partners are collaborating on affordable housing projects such as this one in North Sydney by Link Wentworth and Landcom. There are about 570 entities registered with the workplace health and safety accreditation scheme. The scheme was established under the Federal Safety Commissioner Act 2022, which compels government agencies to only fund building work that is carried out by an accredited builder. According to FSC advice, the Australian Government “will be unable to make funds available to you should an unaccredited builder be engaged”. While the scale and size of HAFF projects will vary, most will be in the $40-million to $8-million bracket, in Tier 2 builders’ hitting zone. Tier 2 builders in Queensland are already working on some of the Sunshine State’s affordable housing construction work under the $2-billion Housing Investment Fund. But the federally funded HAFF projects will be off the table for many of those construction firms without FSC accreditation. Australia’s $230-billion infrastructure pipeline is absorbing building capacity, particularly within the Tier 1 space, and residential developers are increasingly leaning on Tier 2 and 3 builders to get projects out of the ground. There are about six Tier 2 construction companies with FSC accreditation in Queensland on the national register—about half of these do not work on residential projects. It’s a very shallow pool for a large rollout or projects, in concert with big infrastructure builds and the delivery of the 2032 Brisbane Olympic and Paralympic Games. ▲ Bluebird Property managing director Riye Arai-Coupe speaking at The Urban Developer Brisbane Residential Development Summit on April 18. Many in the industry are advocating for a common-sense approach to fix the looming bottleneck. “The preference is that contractors be permitted to deliver Commonwealth projects based on the performance and merits of their safety and quality systems rather than compliance with FSC requirements,” a builder, who did not want to be named, told The Urban Developer . “This would put the onus on the government to review performance rather than contractors proving compliance.” Bluebird Property’s Riye Arai-Coupe agrees. “The perspective from a lot of the industry is, ‘This is not my problem’, but the reality is it’s everyone’s responsibility to address housing affordability,” she says. “The accreditation requirements certainly challenge the construction market’s ability to deliver these projects and there is currently a very small pool of contractors who qualify in Queensland. “Some relaxations would be very helpful in supporting a larger number of contractors to qualify in the already highly constrained market. This is particularly important for Queensland and the regions. “I’m sure Housing Australia is making arrangements to ensure that there is a suitable number of contractors available to deliver the large number of HAFF applications that have been made.” Housing Australia was approached for comment but was bound by probity conditions through the evaluation phase of projects and could not provide a response. The Urban Developer believes that there is work being done behind the scenes to address this issue with support from industry. ▲ Master Builders Australia chief executive Denita Wawn says they would like to see more smaller builders able to absorb HAFF work. In a recent Budget submission, the HIA said that in order for Australia to meet the Federal Government’s target of building 1.2 million homes over the next five years, more needed to be done to attract skilled construction workers to Australia and encourage trade apprenticeships. Master Builders Australia chief executive Denita Wawn also supports reducing the barriers to entry for HAFF construction jobs. “We are working with the Federal Government to ensure that safety standards under the FSC scheme are maintained to facilitate the rollout of HAFF while being applied in a way that supports smaller builders who require accreditation,” Wawn says. It will take concerted effort to digest the volume of work that will flow through the pipeline, but it’s time to eat the elephant. One bite at a time. You are currently experiencing The Urban Developer Plus (TUD+), our premium membership for property professionals. Click here to learn more.

[+] Fly in Ointment for Housing Australia Future Fund Pipeline

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