Earlier this week I responded to a media FactCheck query prompted by the recent pre-election housing policy debate. How reasonable, I was asked, are claims that the government’s Housing Australia Future Fund has failed to make an impact during this Parliamentary term?

Given the likelihood that few HAFF-funded social and affordable housing dwellings will have been built by the end of this parliament, does this represent an embarrassment for the current government?

Considering that the HAFF legislation was delayed in the Senate until late 2023 no reasonable person should be surprised that the program has yet to generate any newly constructed and completed homes. It should of course be borne in mind that housing construction is a complex process that can often take 1-2 years to complete, even once building works have begun, let alone allowing for the lead in time required to acquire sites, design structures and secure planning approval.

Any judgement on the timescale for new construction under the HAFF also needs to factor in an appreciation that the mechanism for allocating associated funds needed to be designed, established and put into practice during 2024.

As the responsible government agency, it would be expected that Housing Australia will have placed a high priority on ensuring a systematic and robust process for the disbursement of the public funds involved. And, as is typical for government programs of this kind, the first round of funding approvals is liable to be especially administratively demanding, as the initial design of assessment processes is understandably shaped by a stance of maximum risk aversion on the part of the responsible government agency.

In other words, procedures involved in the first round of any such program are likely to be seen, with hindsight, as ‘over-engineered’. Only as programs bed down over time with subsequent rounds of funding assessments and approvals can it be expected that systems will be fine-tuned to minimise necessary transaction costs and elapsed time involved.

The argument for distributing such funds through a competitive process of this kind is that this ultimately helps to ensure best value for money. The validity of that claim is a much bigger question, but it is a logical argument. And if such an approach is adopted, it necessarily incurs significant transaction costs and elapsed time.

To what extent can the time lag in delivering newly constructed homes under the HAFF program be attributed to a prevalence of apartment buildings rather than freestanding houses?

The time involved in housing construction does of course vary a lot according to the built form involved. Large and complex apartment buildings naturally take longer to construct than detached houses. But Australian governments have agreed, under the National Housing Accord, that the 1.2 million homes intended for construction by 2029 will be ‘well-located’. Since this implies infill rather than greenfield housing, it also infers a preference for apartments and townhouses rather than detached dwellings. Moreover, given the priority on minimising unit cost for HAFF construction, it would also be expected that HAFF-funded projects will disproportionately involve apartments rather than houses.

However, having said all that, it will be clear from preceding commentary that it would be far-fetched to imagine that HAFF-funded schemes could, by early 2025, have generated newly completed dwellings even for schemes involving detached houses on greenfield sites.