Was your house freezing over winter? A bit more 'red tape' could have kept you warm

 

One of the few outcomes of the Economic Reform Roundtable was the Treasurer announcing the Government would “see where we can reduce complexity and red tape in the National Construction Code”. The Housing Minister has previously said regulations are partly to blame for the housing crisis by making it “uneconomic to build the kind of housing that our country needs most”, stating “builders face a ridiculous thicket of red tape that is preventing them building the homes we need.” But making “over-regulation” the villain in the housing crisis fails to recognise how underregulated much of the housing market is.

To be clear, regulations are the guard rails we put on society, they are not inherently bad. For example, in the housing space, a well-resourced planning agency that can make well-considered and swift decisions could increase the pace of housing construction. Likewise, having regulations such as the National Construction Code, which are simple to understand and implement, while maintaining standards, is great if possible. But “cutting red tape” is too often code for watering down laws that keep Australians safe from businesses that abuse their power. There are parts of the housing industry where the problem is not too much regulation, but too little.

Take building standards, for example. In 2005, the Productivity Commission issued a report warning against overregulating energy efficiency in housing. In one notable section, the report claimed that building standards mandating or encouraging certain designs, building materials or methods (such as, increased insulation on walls and windows) could distort the market and “stifle” innovation in new designs. Australia was saved from such draconian regulation.

Now, 20 years later, most Australian dwellings remain energy inefficient and built to an internationally poor standard. Insulation is particularly woeful. In summer, up to 87% of heat gain occurs through windows, while in winter up to 40% of heat loss is through windows. Barely any Australian dwellings have “high-performance windows” which effectively insulate the house from the heat and cold. Roughly one in ten new residential houses have high-performance windows in Australia, whereas more than three-quarters of all houses have these windows in New Zealand and the United Kingdom.

Australian dwellings are either too cold in winter and too hot in summer, or reliant on air conditioning and heating systems, adding to bills for Australians and making the climate transition more difficult.

This is unsurprising; minimum energy efficiency standards have only recently increased from 6 to 7 stars following stalling from industry. Meanwhile, compliance and enforcement in the sector is often lacklustre. The ABC recently reported that NSW’s Building Commission has not fined a single developer for defying defect orders and at least 60% of work rectification orders have not been fully complied.

It looks like the industry’s complaints have finally borne fruit. The Government’s main housing policy announcement from the Roundtable has been freezing (an appropriate word given the state of Australian housing) the National Construction Code until mid-2029. Ironically, this freeze will mean the Code cannot be simplified during these four years, nor can any innovations be incorporated.

Instead of blaming regulations for the housing crisis, the Australian Government could look to tax concessions for property investors, which cost over $10 billion a year, make inequality worse and help landlords outbid first-home buyers. The Government could tackle the housing crisis by cracking down on these giveaways and directly building any additional housing Australia might need, all while regulating to make sure properties are energy efficient, safe, and durable.