Paul Scully on the NSW Housing Push and Where It Could Stall

In this episode, we continue a thread we've been pulling on over recent weeks, looking at how planning systems across the country are being pushed, prodded and in some cases fundamentally reshaped. We've spoken to researchers, advocates and industry voices about what's broken and what needs to change.

And this time we're taking that conversation a step further, speaking directly with someone responsible for making those changes happen. We've invited Paul Scully, New South Wales Minister for Planning and Public Spaces, along to unpack what's actually happening beneath the headlines, what's working, what's not, and where the biggest constraints are emerging.

We'll also push beyond planning itself into the broader structural setting shaping the market and ask whether the system as a whole is aligned to the scale of change that now is being attempted. Welcome to the elephant in the room.

This is the podcast where we love to talk about the big things in property that never usually get talked about. I'm Veronica Morgan, real estate agent, buyer's agent and buyer's agent mentor, co-host of Foxtel's Location, Location, Location Australia, author of Auction Ready and co-host of Your First Home Buyer Guide.

Hi, I'm Chris Bates, ex-financial planner and mortgage broker, currently ranked number three in the annual MPA Top 100 Mortgage Broker Awards. Before we get started, everything we talk about today is not personal advice, and we recommend you engage the services of a licensed and experienced professional.

Our guest today is Paul Scully, New South Wales Minister for Planning and Public Spaces, who right now is sitting at the centre of one of the most significant reform agendas currently underway.

From transport-oriented development to low- and mid-rise housing, the Patent Book and the Housing Delivery Authority, he's overseeing policies designed to unlock supply, but also dealing with the friction that comes when these policies hit the real world. We're dying to hear about all of this from his perspective. So, Paul, we welcome you today.

Thank you so much for joining us.

Thanks, Veronica. Thanks, Chris. Great to be with you. It's a really exciting time of reform in New South Wales that we're aiming to deliver more homes, more jobs in better communities.

I'm absolutely pumped for this chat. We are so thankful for you coming on. I mean, we've covered a lot of the reforms. We've had lots of different people in to talk about it from lots of different angles. So today talking about what they are and how they work, that's not really

something that our audience is probably already skilled up on. I think what we really want to unpack is why is it just so important that you've been able to do it now? Like why now? And why hasn't it happened before?

And just why is it so needed at a, you know, particularly a Sydney level to make this change?

To be honest, the men's government was elected. There was a general frustration with the fact that for years, New South Wales hasn't been building enough homes. So we've been building around six homes per thousand people. Our friends and neighbours in Queensland and Victoria have been building eight and nine homes per thousand people.

Now, what's that done, right? What's the real world effect of that? Well, Sydney ended up with the second highest property prices and housing prices on the planet. There's a silver medal that no one wants. We had become one of the least dense cities on the planet.

There's another award that we really don't want. But the worst of all was people were pulling up stumps and packing up and leaving New South Wales, particularly young people. So there's a key demographic, that 30 to 40 year old age group.

They're the parents, the entrepreneurs, the workforce, those who are willing to take risks and take things on. We were losing twice as many of them a year as we were gaining in New South Wales. Now play that out in the long term, you've potentially then got a very much older, relatively older population.

That changes your economics, that changes your labor force, that changes everything about the fundamentals of your economy. And that's the sort of thing that we just had to put a stop to.

So it's the brain drain, basically, you know, a lot of our younger talent leaving. But I mean, there's lots of issue with social housing, you know, key worker housing. You know, I think is it the competitiveness of Sydney on a global scale?

Like, you know, if you can't get somewhere to rent or live, like why would you, even if there's a job opportunity in Sydney, you know, the housing is such a key part of it.

Yep, that's exactly the point. There's a thing called the housing theory of everything that was done by a bunch of UK economists, which basically says, unless you can deal with your housing problems, you can't deal with pretty much any social or economic problem that there is. So you think about it.

If we're trying to deal with domestic violence, which as a government we are, all well and good to say, right, we're going to lock perpetrators up for longer. But if a woman and her kids are trying to flee a violent family situation, household situation, they've got to have somewhere to go.

Climate change, you can't start to address that without dealing with changes in the built environment. Because after stationary power generation, the next biggest area of change for emissions is the built environment. So you've got to change that. But you're right, it's an employment issue.

If you don't have someone to live, you can't stay in the job. And I had people coming to me

in the care sector, whether it's NDRS, aged care and the like, we're now having to find places for people, our workforce to rent, as well as places who we're caring for to stay and live. So we're doing all ends of the spectrum here on housing. So it doesn't work. It's productivity sapping.

in terms of your door, but also in the development of your urban communities.

If you don't do that right, if you don't have people connected to transport, connected to jobs, connected to services, and you keep pushing ever outwards and extending the commute of people, suddenly the people that we need to provide services in our city can't live anywhere near where they provide the services.

When I was a kid, right, when I was a kid, I grew up in Wollongong, still live in Wollongong. But near me were police officers, were teachers, were all steel workers, miners. It was every spectrum.

And now when you look at so many areas, you don't have that sort of mix of people living in the area. So you don't have people who are... teaching the kids, living near the kids. You don't have police who are keeping communities safe involved in those areas.

And in some areas, particularly in the eastern suburbs of Sydney, we were facing it where school enrollments were going backwards, while in areas in the northwest and southwest of Sydney, communities were fighting to get a school. Now, that's just not sensible oversight of a global city. And we had to do better.

I mean, that's it. We're having childless within these communities. And I think you can easily look at census data.

You can look at them walking around the streets and see the turnover rate of property and know that people have been... And we're living longer than ever and we don't want to move into sort of HK. So there's absolutely like a constriction.

But I mean, as a government felt the, you know, try to play catch up, I guess. And instead of sort of, you know, taking the councils on for sort of the ride and sort of getting them to come up with their own plans, you just sort of, hey, we've got to get going.

And... Well, we...

Previous governments tried that for years and they said, oh, look, you know, and local government said, oh, look, if you just give us a couple more years or a couple of months, you know, this sort of, you know, some would describe as a begging and pleading approach to just let us do our own thing that was never done.

So we said, well, this can't continue like this. We can't play this game all the time. where everyone's pretending to do something, but nothing's actually happening. So we came in, we did some rezonings that reset the bar.

And we haven't said to councils, no, you can't do your own strategic planning, but we're saying, this is the new bar. So unless you meet or exceed that bar, we don't really want to entertain things that will take us backwards from that.

It's not only New South Wales that's undertaking sort of drastic reform. I know that Victoria is as well, and other states will be. But we're focusing on New South Wales today. So there's some of the concepts here that anyone listening from other states will probably get something from.

But let's look at some of the core initiatives. There's four core initiatives. And if we could sort of take them one by one, that'd be quite useful, I think. So the transport-oriented development, often known as the TOD, right? It's been one of the headline reforms.

that's pretty much what 400 meters from a train station. That's been rezoned and then there's incentives for developers to get extra floors if they put in affordable housing. Is that working as intended?

I guess, where are you seeing potentially unintended consequences or resistance emerging to that particular initiative?

So the TOD is starting to work. As you guys would know and anyone involved in the property sector would understand that if you make a planning change, you don't see overnight, you don't see an immediate response.

People have got to go through land consolidation, potentially put in plans, et cetera, et cetera, et cetera. So we all expected these to take about 12 months to start to see the first initiatives come through.

I'm pleased to be able to say that in the TOD areas, so there's 45 of those from the Hunter to the Illawarra, In those Todd areas, there's more than 18,000 homes that are currently under assessment in the system. There's a little over around 2,500, give or take, that have already been approved.

So we are starting to see those come through. So they are starting to pick up a pace. And interestingly enough, this morning, I saw that the quarter one crane index came out. Not a very popular index. It's not the inflation index. It's not the producer price index, but the crane index came out.

And that showed that about half of the cranes operating in Australia are operating in New South Wales, right? So that's residential and non-residential. So I think it was about 350 cranes of the 800 that are operating in the country are operating in New South Wales. So it's showing that there's some interest.

There's some construction activity going on, which is good because that means jobs today. It means homes tomorrow and it means jobs in the future.

And what was that a year ago? Like if we say that's great, you've got 18,000 homes sort of under review, what two, 3000, I think you said were approved and you've got 350 cranes. A year ago, what was the situation?

A year ago in the transport oriented development areas, we had very few because people were still bringing forward their proposals. In fact, in one local government area, we were in court about the planning changes. We were generously taken to court. The opposition in the New South Wales Parliament tried to legislate against it.

So there'd been a bit of a chilling effect which delayed the impact. So when there was uncertainty, obviously that creates investment uncertainty. So with a piece of legislation that tried to undo it and a court case that was trying to undo it, people held back.

But we're starting to see that those proposals come through the system now. And predominantly at the moment, we're seeing them in the eastern suburbs and the northern suburbs of Sydney, as well as in Wollongong and a few less in Newcastle.

That sort of makes sense because in the east of Sydney and the north is where not a lot of building activity had been happening over about the last decade. So you would expect there's some pent up demand there.

some interest, and to be honest, some aging populations there and people who are saying, well, perhaps the larger block that I had, there's a bit too much maintenance there. I might club together with my neighbors and put this block up for sale and see what we might be able to do with that.

You could also argue though, that one of the reasons it's the East and the North Shore in particular is because of the value of those land in those areas means that developers can build a certain type of product that they can sell for a particularly high price. And so therefore it stacks up.

Oh, look, there's no doubt that's an element of it as well. And, you know, that's something that changes through time. There'll be fewer and fewer of the sites available in areas and then people will start to shift that arrangement.

But there is geographic divides across Sydney and, you know, even the Illawarra, the Hunter, they're not a single market and the land transactions are very different. But, you know, we are starting to see homes being put forward or potential homes being put forward, number under construction as a result of that change.

Yeah, I mean, the Todd, I mean, it makes a lot of sense, right? You spent billions and billions on the Metro. We won't say too much about that, but there's a lot of money, right?

And then we've still got train stations and like, we want to try to get away from a car city and, you know, like other global cities and, you know, it makes sense to build close to train stations. Like it's, that's just common sense, right? I mean, it's sort of planning 101. Yeah.

I mean, and yeah, Australians are great travelers, right? So they've seen how the rest of the world does this in so many places and they'll go overseas and come back and go, oh, geez, why are we doing stuff like that here? Well, now we are.

Do you know, it's funny you say that because last week I was in Japan and I was in first in Tokyo, then Sapporo. I went skiing up in Niseko. And when I was in Tokyo, amazing city.

I was in parliament.

Yeah. Sorry, everyone. And we went up to the bar in the Park Hyatt and looked over, and there's 36 million people or something. And I can't help myself. I'm comparing populations with geographical size, and I'm looking at how are they housing all these people and how are they moving them all around?

And there's all these sort of questions going through my head. And I'm not there long enough to really properly investigate it, but I'm observing this. That's just phenomenal, that amount of people in this amount of space. Then we go to Sapporo.

And Tokyo has areas of immense charm, I mean, as well as being congested, right?

But you go to Sapporo, Sapporo has, it's only got a population of 2 million, and you look at it, it's very dense as well, because obviously space is a premium, but it's a city where nothing, it doesn't look like any building is older than 1960s, maybe 1970s.

And it's frankly a very ugly city and not very nice to be in. And I looked at that and thought, Jesus, without good planning, this could be Sydney, you know? And I see parts of Sydney where it looks like it's going to be Sapporo. It's not an attractive city, right?

what are we going to do about that? Because this sort of wholesale rezoning and then just sort of as an ad hoc way, I guess, in a sense, it's the areas that become attractive developers to actually put forward plans and go forward with these.

And there's no sort of development cohesion. There's no sort of, and we'll get to the pattern book, we will get to that, but there's no In the high rise space, certainly there's no real cohesion in terms of development style. I know that there's an apartment pattern book or whatever you call it.

Yeah, apartment design guide. Yep.

But to be honest, I look around a lot of suburbs in Sydney. I think, well, that obviously got chucked out the window when these were approved. You know, how can we protect the city as it changes so it doesn't become a really unpleasant place to be in?

That's part of the way that you've got to do. You can't just do one thing, right? So we've said, for instance, our transport-oriented development, the accelerated precincts, these are the bigger ones that are largely around the metro stations. They're about 1.2 kilometres from the surrounding metro stations. We've said,

there's obviously there's design elements that we bring into that and there's you know often design competitions which is good the department design guy helps but we've also said in those areas we're going to make sure that there's at least one new park and not you know corner

unusable corner of a block-type park, like a proper park. And we're saying that there should be special activation precincts there, entertainment precincts rather, there, so that there's a nighttime economy part of it, where increasingly we're seeing and encouraging mixed-use developments in our rezoning.

So you've got that mix of jobs and services and amenities, so that you're not just creating

areas where people go and sleep and then go down the lift, get on a train and go somewhere else, that it becomes part of a community. Some of the stuff that we've been doing, I guess, horizontally for so many years, we're starting to do a bit more vertically.

vertically, which is part of it. And cities will grow and evolve and change.

And this is part of the growth and evolution and change that Sydney and Newcastle and Wollongong and soon other parts of New South Wales will experience as populations change, demographics change and population lifestyles change.

We'll see an increasing number of single person households as we have an aging population. The number of single person households as well will sort of match in terms of proportionate terms, the number of two adults, two children households in the next couple of decades.

And as we're seeing that change, we've got to have more homes as the average number of people per home decreases. So I think it's for an average 10% change in the number of people in the house. So it goes from say two and a half on average to 2.4.

That's about 160,000 additional homes across the country. So those demographic changes are big changes.

Do you think that the previous apartment boom of the 2010s, particularly in places like Melbourne and around the airport in Sydney and other parts of Sydney, which was driven by not just Aussie investors, overseas investors, we've been worrying about the building issues of the

fall out of that all the way back to the late 20 teens. We were very advocates of the dangers and the investment returns for the people who bought those. Do you think everyone's scarred? Hence why you got a building commission. I mean, everyone's scarred from what was built before.

And so when we're talking about density, people just don't want to see a repeat of what the last you know, high rise sort of development. And, you know, like parks is one element to it, but it's also the style and the quality. And, you know, we don't want to have these.

And I think that I feel is giving a lot of anxiety to suburbs. I mean, we're talking about the tods, but I also feel like in these low to medium, they're all like saying, well, we don't want to be turning into Rosebury.

We don't want to be, we don't want to have this high. And so how are we educating sort of the Sydney population to sort of embrace this because there's still this resistance where people are holding on to the past rather than saying, no, no, no, times have moved on.

We've got a building commissioner. We're building much better quality product. It's not going to be a repeat.

Look, the building commissioner was a response to some really, really dodgy builders who are out there doing poor quality stuff.

Now, having said that, the majority of people do do the right thing, but there was density had become in the earlier stages more of an investor class product rather than a home type product. And that's changing, right?

So we're seeing increasing numbers of three and four bedroom properties in new multi-story developments, which is important. The patent book leans into that and we'll touch on that in a minute. But we are starting to see that change because the expectations of the market is changing.

Now, if we look at just the development of Sydney generally, right? So Sydney's fantastic, great city, but it's constrained, like physically constrained. We have a national park in the north, the south and the west, right? So we've got a harbour in the middle, right? So there's very physical constraints there.

Harbour's great, but you can't build on it. And then in the northwest, you've got the Hawkesbury Nepean Valley, which is one of the largest flood plains, unmitigated flood plains in the country. That has some impacts too on the southwest. Now, the government's approach has not been all multi-story or all density everywhere.

There's still a lot of greenfield development that's going on in Western Sydney, and that will continue for some time. But the mix is what's changing. So what we've been saying is that we can't keep pushing ever westwards every other week and add a new street every other week.

That puts a strain on government services. It adds to commutes. It means that people spend more time likely in a car than at home. It reduces the time people have with family to volunteer, to do all those other things that make living in Sydney good fun.

Yeah, it's interesting because we interviewed Brendan Coates a few weeks back from the Grattan Institute and they had released a report around really, I guess, commenting on Sydney and Melbourne, well, let's say Victorian and New South Wales reforms.

And he's, you know, pointed the sort of the upshot of that report in oversimplifying it was really pointing to a missing middle ground tier here, the three-story or the more gradual upzoning. So we've just sort of gone heavy-handed.

And why is it that New South Wales has not come up with, say, a three-story option?

I don't know. Brendan's usually pretty good, but he missed the mark on a lot of that report because that stuff's happening as well. So As I said earlier, Sydney had become a city of really high towers or single dwellings, and there wasn't much in point.

And that's largely because what had happened was essentially a whole lot of stuff had been effectively banned from being put into the housing system. Take, for instance, dual occupancies, right?

In a lot of local government areas, there were only two in Sydney where they would accept a development proposal for a dual occupancy. Only two of 33 local government areas. So you go, hang on, what's going on here? So that general debt...

Out of curiosity, what were they?

They were the northern beach or part of the northern beaches in Sutherland, right? So they'd been effectively banned. But the more interesting one is take the Sydney Terrace, right? Sydney's famous for its terraces around Paddington and Surrey Hills and all that sort of stuff.

In a lot of areas, you couldn't build something like that. They just weren't accepted into the planning system. This is crazy. And then you had another little trick of restriction over time was something that had been identified as a suitable site for medium density.

Then someone had come in later on and put like a nine meter height limit on it. So you couldn't really do more than two stories. So these often politically motivated for a certain time, these restrictions came in and that distorted the way that things were done.

It meant that people then specialized in construction in either the single dwellings or the high rise towers and weren't doing a lot in between. So now we're expanding that, the low and mid rise. And the medium-sized pattern book, mid-rise pattern book, are about doing exactly that.

So the low and mid-rise reforms means that you've got four to six storeys stepping down in four to 800 metres around 171 train stations, light rail stations and town centres, again, from the Hunter through to the Illawarra, to add that missing middle, to make sure that that's Cummins-based.

But that's not three stories. That's going sort of from one and two story single dwellings to four to six story apartments.

I guess Brendan's point was there's a three story gap in the middle, which is like the sweet spot that four stories is not as profitable for developers, for example, or four stories requires the amalgamation of more sites or, you know, there's more constraints that brings in.

That's where the patent book comes into it. The mid-rise patent book, yeah, the mid-rise patent book allows for those sort of developments, allows for that mix, and allows for it in a way that's done on some of those smaller sites.

And oftentimes you find that the weird thing is not about the site itself, it's not about the design of the building, it's about something like waste services. which become really problematic.

Otherwise you get a hundred bins at the front of a building every week or you can't get because a lot of councils have only got the contract that the larger trucks, they can't get in to do the removal of the larger bins, right?

So there's these weird quirks in the system that we need to adjust through time. But there is that work that's being done on making sure that we're higher around those transport hubs and stepping down with a mix of different typologies.

And the mid-rise patent book allows that to be done where a lot of the challenges have been solved for. The government's decided to de-risk a lot of this by making sure that all of those problems, the apartment design guide,

The building code, the waste problems, the environmental and sustainability issues, the accessibility issues for people who need additional wider doorways or the like have been solved for.

The government took on that risk by producing a patent book of designs that could be used in a range of different locations, both infill and greenfield, to say, here's a way that you can do additional density and gentle density.

I mean, I love the patent book. I mean, the quality of the architects on there. I mean, that's one of Australia. We've got such high level of quality of architects in Australia. It's just unbelievable. I would not want to be an architect trying to compete with that, right?

And the quality of your patent books, I just think are outstanding personally. That is a density that I'd be willing to sort of personally, I'd love to embrace that.

Most of my mates who have seen it go, yeah, that's something I could see on my street. That would work.

Yeah, absolutely.

I think that if we talk about where the real fight is, though, where the real, I guess, communities are really upset, I guess, if you talk about the sort of the upper North Shore, you know, Roseville, you talk about the Mossman, you talk about the Rose Bay, there's kind of like this, too, the people who are living there or people who've got parents or grandparents, and that's their family generation or wealth or...

They're absolutely freaking out unless they're selling to a developer and they're combining locks, right?

And then you've got this other people who aren't in those areas that just sort of got zero empathy for the people living in those areas because they're like, oh, well, you're wealthy and you just need to put up with it.

But there's some real issues, I guess, building those communities where if you don't combine and then you get eight stories around you, then that's severely impacted your property value. And I guess there's opportunities if you do combine.

How is the sort of the government feeling about sort of, because we agree, like these are some of the most accessible, desirable, you know, great locations to be building more density, but you've also got to win over the communities to sort of, and so how is that sort of going?

And I guess, and how are the, how we go on that process?

Look, I'd have to say like anything else, it's mixed. Change can be confronting for people. I get that. The Wollongong that I live in today is very different from the Wollongong I grew up in several years ago. And that does change.

And when you haven't had a lot of change in and around your community over a long period of time, then it gets a bit confronting. But I look at it in a couple of ways, right? First off, we've got the situation where kids who grew up in an area

can't afford to stay in that area anymore, right? So there's a question that I pose to a lot of people who say, okay, how far are you willing to travel to see your grandkids in the future, right? Because sometimes now it's a choice, you know, between, you know, say, Balgala and Brisbane, right?

There's not in between because people are just leaving, going, well, if I can't live near where I grew up, where I'm familiar with, where I like, I don't really want to live in other parts of Sydney or New South Wales. I will go interstate. So that's one thing.

But then you look at other problems. So other challenges that governments have got in service delivery. So we've got an aging population. It's increasingly hard to find people for the care economy because they can't afford to live near to where they might be working in an aged care facility.

We've got challenge about bus services and the capacity to expand bus services. Why is that? Because bus drivers on the salaries they're on often can't afford to live in the areas where the buses are needed. Because why would you live an hour away from somewhere, drive in,

potentially, given the time you've got to start, drive a bus for a few hours, 12 hours a day, drive back home, when you could equally drive a bus in the community where you live in, right?

So there's all of these trade-offs and everything else that come with the associated social impacts and economic decisions that people make when it comes to that base level of housing. And that's a real challenge. I'm on a personal mission to help more people make better property decisions.

You know, most people don't realise that they can cost themselves hundreds of thousands of dollars over the medium to long term when they make property decisions without all of the information that they need.

And what I do is help people with tricky real estate problems, which often masquerade as simple questions like, should I sell my investment property because the interest repayments are hurting or should I buy before I sell or the other way around?

You can connect with me and access all of the tools that I've created to help you make better property decisions at veronicamorgan.com.au. And there you will find resources for first home buyers, details about my buyers agent mentoring program.

You can connect with my Sydney based property management and buyers agency teams, Australia wide vendor advocacy, or ask me for introduction to the small group of buyers agents that I would personally recommend across the country. That's veronicamorgan.com.au.

If you're considering a property move such as buying your first home, upgrading, renovating or investing, the team here at Alcove would love to help you think through your decision and get the finance right. Please go to alcove.com.au to reach out.

But I think the people in Mossman are saying, the kids aren't buying these places anyway, right? I'm basically building stuff that, you know, I might be living in Castle Hill. I've got a house out there. I'm an empty nester.

You know, my house is worth five mil because it's near one of your metro stations. And I want to sell that and buy, you know, a nice lock up and leave in sort of Mossman or... in Rose Bay.

And so really the people that can only afford what we're building in these suburbs is pretty much just the density and the demographic that we've already got in those areas. And I guess there's this trickle down economics, right? There is.

I mean, property is about moving on a continuum. I mean, the property may start out in living in, whether you're renting or whether you're buying as a 20-year-old is probably different to the one that you're going to raise a family is going to be different to the one you're retiring.

My parents were a case in point. So my parents recently are in their late 70s, early 80s now. They've just moved into an apartment. But that's freed up their family home, which was a five-bedroom home that they were rattling around in and it was too much for them.

But the young couple who's bought that have gone, this is where we want to bring up our family. So there is that continuum. There is that change. But this is where we've also made sure that we've integrated and we do this through our state-led rezonings. We do this through our transport-oriented developments.

arrangements where we're integrating affordable housing into the mix. We've also got the land audit going so that we're looking at where we can add social housing into new areas using government land that is no longer needed for other purposes and getting that through.

And you work through the continuum of options for people who have different housing needs, different housing requirements, different housing desires at different parts of life.

So yes, you might get some today, you might get some more expensive homes that are being built in more lucrative areas and people will downsize into that. That's fine because it frees up another home that people are able to move into.

Well, not necessarily because their house has gotten demolished to build the thing.

Well, potentially, but in other circumstances, they're not. But also in where there is a demolition, people are often adding the three and four bedroom homes, which provide a different mix of options for people to live in.

So with the affordable housing, anecdotally, I've heard stories of developers submitting plans, getting them improved, including incorporating affordable housing in order to increase the density of their site and the profitability of their site. Then going back for a resubmission because they're saying, oh, actually, I can't make it work. It's not profitable.

And being allowed to continue to build to that increased density, but with reduced affordable housing. Now this is anecdotal, I've just heard stories, right? It could be all fable, I don't know. But is that happening?

No, not as much as the anecdotal approaches I hear as well. We're very strict on that, right? So if you've signed up to use the infill affordable housing bonus, you're expected to meet that. You're contractually required to meet that.

You've got obligations to sign up a community housing provider to assist in managing those. But this is where you've got two tracks running a little bit, right? So people who have already made land transactions and done land transactions and those who haven't.

And this is where we've got to integrate affordable housing into the whole housing spectrum from the get-go. So in a lot of areas, and we're doing that in three ways. There's no, you know, we're not starting from a blank piece of paper.

So we've got to accept the reality we're in, as well as build to the reality we want to see. Okay, so three ways. First way is the infill affordable housing bonus, right? That starts to get more affordable housing in more places right the way through.

And yes, that is for a time limited period, but that is a rolling time limit. Because not everything will happen on one day, not everything's built on one day and will expire on the same day. So that starts to roll through and that is largely where there's land transaction that's already happened.

The second approach is through our state led rezonings where the state has stepped in, in nearly 70 places around New South Wales to rezone and readjust height limits and change the planning controls. We're saying, because this changes the way this is done and it changes the land values already,

we can make sure that there's a minimum affordable housing rate and some key sites that have got some additional uplift have some greater requirements. And then the third way is through making sure that we've got affordable housing baked into the system through council plans.

So through the draft Sydney plan that's just recently closed a public exhibition, we're saying that by 2027, every local government area needs to have an affordable housing contribution plan in place. Because most local government areas didn't. I think there was only about nine or 10 across Sydney that did.

So we're saying, right, you guys, everyone has to have a plan for this. So then we're integrating it right the way through. And the whole pipeline has a guide to affordable housing. We do that with an overlay of the biggest investment in social housing that's ever been done in New South Wales history.

And again, you're looking at all parts of the spectrum.

Okay, I'm glad you've mentioned social housing because I did want to get there, right? Affordable housing and social housing, two very different things. Affordable housing, in my understanding, is a proportion of the average or median rent in an existing suburb.

Or it can be tied to income as well. So it's a discounted rent or a proportion of income. Yep.

Okay, but it is sort of tied to the prices that are existing in that area, as opposed to a universal definition of affordability.

Tell us what is happening with social housing, because that has been one of the problems, one of the causes really, the governments, and this is all governments declining investment in social housing over decades. So what is happening in New South Wales around that?

So New South Wales, we've made the biggest commitment to social housing in the history of the state. We've committed $6 billion to two key elements of this. One is building 8,400 new social homes.

Half of those will be dedicated to going to people fleeing family and domestic violence because that's a key group. that go into emergency and then into social housing. And then the second part of that is the repair of 30,000 social homes.

I used to describe Homes NSW when we were in opposition as probably the biggest purchaser of plywood in the world. because you'd see... And look, my own electorate has a high proportion of social housing, so I'm very familiar with this.

But there used to be a place would not have tenants in there anymore. It'd be boarded up and then maybe they'd get to it. And the previous government... sold $3 billion worth of social housing.

They had this ridiculous situation where if Chris and Veronica, you were both in social homes, if Chris's needed repair, Veronica, they'd sell your place to get the money to repair Chris's place. But every time you do that, you're down at least one, right?

So they went backwards over the term of the last government. So we're trying to play catch up with that. But we've also done, and it added another element to this, this is through Lancom.

So the government has, the New South Wales government since 1976 has had Lancom as its own property developer, a government owned property developer. And this has helped hundreds of thousands of people get into homes.

What we've tasked them with is coming up with a build to rent product that is aimed at key workers, right? So, and this is in the first instance, we're making no apologies for the fact that this is for public sector workers. It's part of

our efforts to recruit more nurses and police officers and firefighters, right? So that's being done in a couple of locations in Sydney and it's being done on former dive sites for the Metro. So these were just big concrete pads that no one really knew what to do with.

We've taken those and said, these actually should be housing because they're in good areas. One at Annandale, another one proposed in Chatswood. So that's a new product. We're also adding a regional product through Lancome in Bombardier and Lismore and testing that out just to see whether or not this is a viable option.

So then you've got the spectrum, you've got Social housing for our most vulnerable people and the people that absolutely need. You've got affordable housing, which is those on lower to medium sort of incomes. They get an option.

Then you've got this build to rent product that allows people to get a foot in the door, get into where they work. part of the efforts of the New South Wales government to recruit more public sector workers. And then you've got your market housing on top of that.

But by far and away, 90 odd percent of housing will be delivered by the market. But we've got to make sure that we're looking at all the complete spectrum.

I mean, we've covered this plus homelessness and plus lots of elements of the people that are marginalized from the property system. And so I think it's something that we've discussed lots. And I think the waiting lists are ridiculous and issues a massive ride.

And you're right, you can only take action and try to move forward. I mean, I think obviously zoning is one thing, right? And that's probably the first thing, chicken and egg. You rezone, then it creates new feasibility for developers and then et cetera.

But is that sort of your concern, I guess, is that developers aren't a charity, right? They're there to make a profit. They've been absolutely smashed over the last five years. We've lost a lot of builders. There's global competition for our talent. Other states got Olympics and all sorts going on.

Ultimately, you know, actually the feasibility of these things stack up and developers wanting to take it on and do the projects. Are you worried you're going to see all these approvals and what actually gets commenced and actually finished isn't going to really move the needle over the next five years?

Yes, it's better than where we were, but is that sort of, I guess, the back of your mind, this feasibility thing, we've got to start to find other ways to get these moving? Is it just zoning itself not enough?

No, so there's a couple of things we're doing to assist with that as well. So you're right, we recognize that zoning and permissibility is only one part of it.

That starts to grow the size of the pipe, which you can come through, but the pipeline to get from a vacant block to a key in a door takes a lot of work in between. So what we're doing is, what used to happen is there used to be the post consent approvals.

So a number of conditions were put on things and they had to get a series of additional approvals after you got your development approval. That was a bit of the wild west, right? No one really looked after that part, right?

So the planning department in fairness and councils, planning departments in fairness, once the approval was done, that was where their legal responsibility stopped. But we found a couple of things were happening. One, it was taking too long to get some of the post-consent approvals.

So we've set up a team that's working to assist people through that process to get them moving. And we've actually had a reduction in the last quarterly stats showed a reduction in the number of homes that were approved but not commenced. So that's starting to help.

We've set up now, and it'll start fully from the 1st of July, a thing called the Development Coordination Authority, which is about making sure we get more sensible outcomes in terms of the conditions and easier and more sensible and timely outcomes in terms of getting those secondary approvals. We're used to get stuff.

Great example was one government agency would say, don't cut down a tree and touch a leaf on a tree on this particular property when you do your development. Another government agency would say clear fill the lot, then plant some new ones afterwards. Now, if you've got that approval, you can't resolve that, right?

You've got to get these two agencies to sort this out. So we've got this development coordination authority to try to stop the dumb. in terms of conditions, but improve the process going through.

The second thing we're going, and this is a world leading approach that's not really been tried before, is the pre-sale finance guarantee. So this is a guarantee where we're putting, it's no taxpayer money upfront, right, but it's a guarantee that is a bridge to commercial finance for a developer.

As you guys would know, you get a proposal, you can sell, you do a lot of pre, you get set a bar of 70, 80, 90% pre-sales before you can get the construction finance.

We're finding that people were getting to about 50% and then it was really hard graft to get that last bit. So we're saying, okay, what we'll do as a government, we'll provide a guarantee for you for the last 50% so you can go off and get your commercial finance.

and start your construction, we reckon that could shave about 12 months off it. You keep selling right while you're building. And if you get to the end, you're all built, you've got your occupancy certificate.

If you haven't sold them and you want to call on the guarantee, the government will purchase those at a discount that we can use then to either rent or social housing, whatever. or we can sell ourselves, right?

But it gets the construction moving, which is the key part, because you can't get a new key in a new door unless you build it. So, and then the third element is building the workforce. And that is a real challenge.

And as you said, Chris, there's Olympics and infrastructure projects and all that sort of stuff. It's a, you know, it's going to be attracting labor. I mean, Olympics have a fixed start date and there's a tendency to

throw money at that problem potentially if you're running a bit behind time to get it done. So we've invested $3.4 billion in building that workforce. But importantly, we're doing a lot of work on keeping apprentices in, which was the real challenges, the completions, where people would drop out in first year,

because they wouldn't know where they might be able to get help or who they should get help from if they weren't getting on really well with their boss. Or they bail out in third year because they just can't see themselves getting to the end and completing.

What we want to see is those completions increase. So we've got fee-free TAFE places along with the feds that are aimed at the construction sector. We've got a lot of help to make sure that we're keeping people in that apprentice sector so that they can

they can get through and we can have the skilled workforce that we need.

You might need to look at some fuel subsidies for those apprentices. I was reading an article about a young chippy to be, and he was talking about the cost of filling a tank of petrol and the amount of driving around he's got to do to go to different sites.

And that's a new thing I guess you hadn't thought about.

But it is a challenge. And look, that global uncertainty that's caused by the war on the Persian Gulf at the moment, is having an impact on building materials prices and impacting on the supply chain.

Now, it's not as pronounced just yet as what say COVID was and the shock, the external shock that came to supply chains on that, but it is having and will have an impact. We're starting to see some of that come through the pricing of materials.

And that along with rising interest rates, general rising inflation, those challenging global macroeconomic conditions are really going to put pressure on the construction sector. And that's something the government's working through.

Just to reassure everyone, we have more leases of fuel in Australia today than what we did in January. So in terms of the volume, we're okay. What we've got is a bit of a distribution mismatch where the fuel's in the wrong place and not getting to the right places in terms of that.

So the government is directly intervening in that at the moment. We're working with the major fuel companies as well as the bigger sectors, construction being among them, to try and better coordinate that distribution.

But in terms of price, we are subject, unfortunately, to global pricing arrangements, which is why we've seen a big increase. And the states and other places that aren't suffering shortages are still seeing that increase because there's a price impact felt most keenly out of Europe at the moment.

But the government is onto it. We're working with the feds and the other states to make sure that we're maintaining those fuel supplies.

Paul, I don't want to throw your other ministers under the bus or things that aren't public knowledge. You're probably not going to share with us anyway. But, like, there's other elements, right? You know, you're doing your role, right? I've got to get, you know, homes getting built. I've got to get them started.

I've got to come up with. But, you know, there's other issues around stamp duty, you know, with downsizes. That's stopping them. You know, there's land tax. In Victoria, we've massively increased it on second homes and investment properties.

There's other tweaks at a state level that you can impact on the property market, which can drive buyer and particularly also seller behavior, which is probably more important. So

What are some of the things, I mean, you know, that you're sort of banging the drum about internally that you think we also need to be considering to, I guess, evolve the city? Because it's not just zoning, as we sort of spoke about.

There's other elements to these decisions that the state government could influence.

Yeah, so there's a fair bit going on. And when something like housing is pushed to the priority of the government, it attracts its own internal attention and people look at how we can do things better. So we do have a housing subcommittee of cabinet.

We don't have many subcommittees of cabinet at all, but we've got one that's focused on housing. This brings all the relevant ministers together to try and solve for those problems. And this is part of the development of the biggest changes to the Planning Act that we took through last year.

But subsequent to that, we now have improvements that we're doing to the way the Building Act works and how we can do things there. We're looking at and we've got some work going on on artificial intelligence and how we can bring that into the planning system. to make the approval system even quicker.

The government has put in place some discounts for first home buyers with respect to stamp duty. So that's averaging at about $20,000 a new property on that.

We've got a lot of work going on by my colleague, Minister Jackson, in terms of making sure that the water and wastewater systems are working so that the the investment profile is matching where we'd like to see the growth in housing.

Now we looked at, when we did the rezoning, so for the Todd areas and the low and mid-rise areas, we looked at where there was already existing capacity within the water and wastewater system. So we weren't waiting for a big build to happen, so we can go ahead with that.

So that work is happening as well, where we've got some improvements to the way that we've been doing

Schools, schools are incredible. We used to get them returning to the planning system about nine times for modifications before you'd get a school built. It's crazy. It was just wasting time. We're now getting schools out of the ground in nine months. And the build is so much quicker on a minister car.

The deputy premier has done an incredible job bringing schools infrastructure along for the ride where we're now looking more closely at when we're doing major hospital redevelopments to get housing alongside it. So there's all the arms of government are pulling together. We continue to look

And we're open to any new suggestion as to how we can do things better. We've got to look at it in the biggest and broadest context of the government, of course. But this is an all shoulders to the wheel effort from the government here.

It's quite fascinating, a tiny little insight into the way government works. I've been part of a round table on the auction under quoting proposed legislation and a lot of meetings, a lot of discussions, a lot of inputs there.

So that's sort of been a little insight as an industry, as a SME, if you want to call me that. Do you have the same thing in your sector?

Because when you speak to builders and developers, they often think, oh, the government's got no idea actually how it really works out in the real world.

And I can imagine that you can put out all sorts of policy legislation and then human behavior kicks in because actually the market behaves very differently to what in an ideal world you would imagine that they would.

How actively are you consulting with the industry and the delivery partners and the other stakeholders here?

Regularly from material suppliers through to building companies and everyone in between. It's my diary is full on a regular basis. And I have a catch up regularly with a number of key developers, larger developers. and industry bodies and the like.

You're never wanting for suggestions about what you can do when you're the New South Wales planning minister.

Yeah, I'm sure. The problem is you could be, there's lobbyists, let's face it, you can be tugged in all sorts of directions.

I mean, these are sort of more of a formal arrangement where you bring all those voices to the table at the same time and they're debated out in the same time as opposed to-

It's formal and informal arrangements where, you know, where it's like, look, I mean, you know, completely fair, completely upfront. Industry bodies have got a job to do, right? They've got members. They've got to get an increasingly, you know, better deal, however you measure that, for their membership. But, you know, there's sometimes...

You know, you need to have a bit of a BS detector going to see where some people might be trying it on. And you test those out with some people in the sector that you can trust. But we've also got the great advantage.

We've got Lancom who are operating in the market as a government developer. They're under a corporatized structure. So they've still got to operate. They're still required to make a return. We do put some strictures on them, like they've got to do all electric homes and those sort of things.

So some of the outcomes, we want them to push the market forward. But that's a great test of how things are going.

And how about the Housing Delivery Authority? Because we haven't talked about that. So if you can just sort of briefly touch on, the HDA is designed to cut through delays, but what has it revealed, I guess, about where the real bottlenecks are in the system?

Look, I think there's a couple of things. So the HDA is not an approval body, but you can get through an expression of interest and it's like, let's get the good ideas up and into the system with a streamlined assessment pathway part of it. We've had...

333 projects declared as state significant under that process. So it's a lot. There's been a lot more come in. It's about a 50% success rate to get declared. Between those, around 111,000 homes of potential.

What we are seeing though, is that even though we've cut back on a lot of the stuff that is required to get the EIS, the development application in, is that we're not seeing those move through as quickly as I might like, right? We've put a time limit on people.

We've said, if you're getting declared state significant, you're getting all the resources of the state government going towards your assessment. We want you to get your plans in within nine months. And there's been a couple already approved. We're starting to see those come through.

There's been 170 odd that have got the first stage of that work done. So they're on the clock. I think we've got about 30 odd applications that are in being assessed at the moment. We've got a very tight clock on our assessment time to do that as well.

And what we're wanting to do, and this is where AI is going to come into it, we're setting up a process now where we can do a lot of that work, both checking before and the assistance in the assessment work using an AI tool, which I'm hoping that we're able to formalize

in the not too distant future and put that out there, that'll help. It won't make the final decision, but it'll help do the assessment. The final decision, a government requirement and obviously community requirements, want some faith in it, that there's gonna be a human making that final call.

But this will be able to say, okay, of the 10 things that you were supposed to submit with this, nine of them are there, one of them might be there in theory, but it's not good enough and not up to standard. So this will allow us to run those checks,

to do that assessment work in a really short space of time so we can start to get that system cranking even more.

What about a time limit on commencement, though?

There is a time limit on commencement.

So if you're successful through the HDA process, you're required to start commencement within 12 months. Deliveries in the title, deliveries in the expectation.

Yeah, I mean, the good thing is it's all online, right? Go to major projects in New South Wales. You can just track all this stuff. It's so interesting. I look at it all the time. But we all end our episodes. I know you've probably got another meeting in 60 seconds.

Have you got any property dumbos? It doesn't have to be you. It could be a friend or someone. I'm going to go with a more general one, right?

I reckon my frustrating property dumbos, anyone who's moved in near a pub, who wanted to move near the pub and then complain about it later on about the noise.

I'm with you on that one. I'm totally with you on that one. Yes.

Veronica said that one about a hundred times. She loves that one too.

It drives me nuts. People wish me, oh, it's too noisy around here. The pub's heritage listed probably has been there for a hundred years. And you got a discount buying because of it. You didn't notice it was there?

Yeah. Veronica's usually outside the pub with a glass of wine. So anyway, but thank you, Paul. It's a good chat. We really appreciate your time. I know you're a busy man and, you know, hats off for making these changes, right? Pressure cooker was going off the, you know, off the scale.

We were losing talent. You know, Sydney, we have to evolve. Every city has to evolve. We're not a fix. We're a living thing. And, you know, to stay globally competitively, Sydney just couldn't go down that path any further. So I appreciate you coming on and it was a really, really good chat.

No, thanks for your interest. I'm sure we'll talk again. If you have a question that you'd like us to answer in an upcoming Q&A episode, you can send us a voicemail or written question via the website, theelephantintheroom.com.au, or you can email us directly at questions at theelephantintheroom.com.au.

If you like what you're hearing, please share this episode with others you feel would benefit. And while you're at it, why not leave us an iTunes review? Five stars would be great.

I know that sounds a bit cringy, but we have it on good authority that every review helps make it easier for other people to find out about us and hear what our amazing guests have to say.