Australia's housing crisis cannot be solved unless governments fundamentally rethink the way they regulate housing development, according to a major new Productivity Commission report that has implications for fast-growing regions such as the Hawkesbury.
The Commission's interim report, Housing Supply Regulation, concludes that Australia is not building enough homes where people want to live and that planning and regulatory systems have become a significant obstacle to increasing supply.
The report argues that while planning controls remain essential for protecting public safety, the environment and community amenity, governments have gradually introduced layers of regulation that have slowed housing approvals, increased costs and reduced the number of homes being built.
It warns that housing affordability has deteriorated sharply over the past two decades. The Commission estimates it now takes the average Australian household around 11 years to save a 20 per cent deposit for a typical home, compared with eight years in 2005.
A 'build mindset'
Rather than asking whether development should proceed, the Productivity Commission argues governments should adopt what it calls a "build mindset" starting from the principle that more housing is needed while still protecting legitimate environmental, heritage and safety values.
Among the reforms being considered are:
- simplifying planning rules;
- reducing duplicated approval processes;
- expanding fast-track approvals for straightforward developments;
- encouraging more medium-density housing;
- reviewing minimum lot sizes and parking requirements; and
- improving coordination between housing development and infrastructure.
The Commission stresses that it is not advocating removing important safety protections, but instead wants governments to ensure regulations are proportionate and evidence-based.
Hawkesbury relevance
The report arrives as Hawkesbury continues to debate some of the most significant planning reforms in its history.
The introduction of a 46.6-metre Australian Height Datum (AHD) Flood Planning Level for North Richmond has raised concerns as this decision by Council makes the North Richmond CBD and surrounds up to Colo High School flood-prone land. Council argues the changes are necessary to improve community safety.
Although the Productivity Commission does not specifically refer to Hawkesbury or flood planning policies, its report raises broader questions about whether planning systems across Australia have become overly complex and whether some regulatory requirements unnecessarily restrict new housing.
For Hawkesbury residents, those questions are particularly relevant as the region balances competing priorities including flood risk, agricultural land protection, environmental conservation, infrastructure capacity and population growth.
The Commission recognises that regulations designed to protect communities from natural hazards remain essential, but says governments should continually review planning systems to ensure they do not create unnecessary barriers to housing supply.
Infrastructure must keep pace
The report also argues that increasing housing supply is about more than planning approvals.
It says governments must ensure roads, water, sewerage, schools and public transport are delivered alongside new development, warning that delays in infrastructure provision frequently become another barrier to new housing.
That finding echoes long-standing concerns in Western Sydney, where population growth has often outpaced investment in transport and community infrastructure.
An opportunity for debate
The Productivity Commission's report is an interim discussion paper rather than government policy.
Public submissions will be accepted until September before the Commission delivers its final report to the Federal Government in early 2027.
Whether its recommendations are ultimately adopted remains uncertain, but they are likely to influence national discussions about housing affordability, planning reform and economic productivity for years to come.
For Hawkesbury, the report provides an important backdrop to local debates over flood planning, zoning and future growth.
