Red tape and silver bullets: tough task for housing fix

Jacob Shteyman | June 28, 2025

Where do you start in cutting back the “thickets of red tape” strangling Australia’s construction sector and putting the nation’s housing supply targets beyond reach?

Brimming with a new-found supply-side progressive zeal, the federal government has put over-bearing regulation in its crosshairs as it pushes the states and local councils to get a move on with building new homes.

Over decades, governments of both persuasions have made it harder to build by piling layer upon layer of well-meaning regulations, argue Housing Minister Clare O’Neil and Assistant Minister for Productivity Andrew Leigh.

In 1967, a development application, or DA, for a three-storey apartment block in Sydney was 12 pages long.

Today, the same building requires hundreds if not thousands of pages of documentation to get approved, the Committee for Economic Development of Australia found.

As red tape has increased, productivity in the sector has cratered.

Since the 1970s, the amount of dwellings built per construction worker has halved.

State governments across the country have vowed to simplify processes but the issues facing the sector are complex and policy-makers hoping for a silver bullet will be disappointed, warns Ben Hendriks, founder of planning consultancy Mecone.

Mr Hendriks, who has advised the NSW government on streamlining planning laws, says a good place to start would be making it easier for smaller projects to get approved through a code-based assessment process, also known as complying development.

That would limit the need to submit a burdensome DA.

The average time for a DA approval in NSW ballooned to 114 days in 2024 from 75 in 2021, despite the number of applications lodged falling almost a third.

He says that’s in part because councils devote too many scarce resources assessing low-impact projects, which could be as minor as adding a deck or pergola to a house.

These projects won’t solve the housing crisis but account for a large proportion of DAs, with 63 per cent of applications in NSW valued at less than $500,000.

If councils waved more minor additions or alterations through, assuming they complied with criteria, they could work harder on fast-tracking higher-end projects.

Mr Hendriks says code-based assessments could be expanded to include small and low-rise housing types and even small apartment blocks that adhere to local planning guides but the way they are enforced would also need to be liberalised.

“Part of the problem with code-assessable is that you have to slavishly adhere to every single numeric provision. And even if you slightly fall outside of those numeric provisions, you have to go back through a DA process,” he tells AAP.

Mr Hendriks says there is a broader cultural issue in which assessors obsess over procedure at the expense of outcomes.

In a scorecard of states and territories prepared by Mecone for a Business Council of Australia report in December, NSW was rated the slowest jurisdiction for turnaround times.

The average time for a residential approval in NSW was almost the same as resources applications like those used for mines, even though the two types of development differ greatly in the potential risks they pose to the environment and community.

“We’re sweating all the small stuff and really not focusing enough on the larger stuff,” Mr Hendriks says.

The problem isn’t unique to NSW.

Xavier Duffy, who owns a building company in the Canberra region, says approval times for even a pergola have blown out from about four weeks in 2021 to anywhere up to 20 weeks today.

That’s partly because the documentation required has blown out from three pages to 10 but Mr Duffy is concerned about a deeper, cultural issue among approval authorities.

“There’s not an attitude within the construction industry to get things approved. It’s always looking for reasons why something can’t be approved,” he says.

Mr Duffy says he aims his designs to fit within complying development requirements to avoid the need for a DA but finds himself getting knocked back all too often for minor issues.

“It’s not a fast-track at all anymore because you get constantly held up,” he says.

He finds applications are often declined by utility providers who delay projects to locate their own assets like water pipes on the site, even if they are not impacted by the project.

ACT Planning Minister Chris Steel is working with industry on removing burdensome regulation, spurred by grants from the federal government’s $900 million national productivity fund.

What he’s found is a morass of minor issues that altogether add up to a big entanglement of red tape.

One change he’s looking at is getting the territory’s water utility to provide a standardised depth for deck piling, so builders can get on with developments without the utility needing to come out and inspect each site individually.

While Mr Duffy says he is yet to see any improvement in approval times, the ACT is paving the way with reforms to zoning laws, allowing medium housing densities across large parts of the capital.

“We’re allowing homes that were never permitted before in residential zones in Canberra and that is going to make a massive difference in terms of enabling more housing,” Mr Steel says.

A research paper by Reserve Bank economists Ross Kendall and Peter Tulip found exclusionary zoning contributes to about 42 per cent of the price of an average house in Sydney, 41 per cent in Melbourne and 29 per cent in Brisbane.

Dr Tulip, now at think tank the Centre for Independent Studies, says NSW and Victoria are leading the way with ambitious rezoning policies, which have greatly upped the number of apartments able to be built around town centres and transport hubs.

But the next challenge is ensuring councils meet their targets amid local NIMBY opposition.

“It remains to be seen whether state governments have the stomach for a fight,” Dr Tulip says.

“Past history gives us reason for worry that when local councils start saying no and start digging in their heels, state governments are going to lack the courage to take them on.”

Despite concerns over skills shortages, planning roadblocks are the main thing standing in the way of the industry meeting its target of 1.2 million new homes over five years, Mr Duffy says.

“Are the housing targets achievable? Absolutely, they are. But it has to start with building approvals.”