Treasury Warns Homebuilding Goals at Risk, Urges Chalmers to Consider Tax Increases

CANBERRA—Treasury officials have warned Treasurer Jim Chalmers that Australia is falling short of its ambitious 1.2 million new homes target, casting doubt on the Albanese government’s housing policy credibility. In newly released internal briefings, the Department of the Treasury has recommended a review of current tax policy, including potential tax increases, to address the growing fiscal pressure and chronic housing undersupply.

The National Housing Accord, announced in 2022, aimed to build 1.2 million well-located homes over five years starting mid-2024. However, Treasury now projects that at current rates of approvals and construction, the target may be missed by over 200,000 homes. The document warns that without a significant uplift in investment—both public and private—the government’s housing commitment will be “impossible to deliver.”

Chalmers, who has remained publicly optimistic, faces mounting pressure from economists and state leaders to revise the government’s position. Critics argue that under the current Labour administration, Australia’s housing crisis has worsened due to overregulation, labor shortages, and a lack of incentives for developers. While the treasurer has floated modest adjustments to superannuation tax concessions and foreign investor levies, Treasury insiders argue these will not be sufficient to fund the scale of housing investment needed.

“The fiscal position is tightening, and we’re reaching the limit of what can be done without additional revenue,” said one Treasury official, who spoke on condition of anonymity. “If the government is serious about hitting its target, it must be willing to make difficult choices—including on tax.”

Opposition housing spokesman Senator Andrew Bragg slammed the government’s failure to deliver, calling the 1.2 million figure “a political promise, not a plan.” He reiterated calls for deregulation of planning laws and greater support for private construction firms.

Meanwhile, economists are warning of the broader implications. If supply fails to meet demand, housing affordability will deteriorate further—particularly for young families and first-home buyers already struggling with rising interest rates.

With the next budget cycle approaching, all eyes are on Chalmers to see whether he will adopt the bold policy shifts being urged—or continue down a path critics warn is fiscally unsustainable