The 30-year policy collision behind Australia's housing crunch

A big part of the problem with housing in Australia, and the rest of the economy, is a slow-moving collision that began under the Howard government between the regulation of housing and the effective deregulation of migration in the early 2000s.

Migration was deregulated to address the aging of Australia's population as well as skills shortages while also being left to the market — largely demand-driven and with no targets on the overall level, only permanent migration. At the same time, construction was much more heavily regulated.

As a result, net migration increased while housing construction did the opposite. The two sets of policies compounded on each other over 30 years and created the housing affordability crisis we have today.

These policies were introduced by different Labor and Coalition governments, but all presumably went through various PM's offices and cabinets for approval. The result is a classic set of unintended consequences and, with housing, a crisis.

From 1995, the Keating and Howard governments streamlined temporary migration by progressively making it demand-driven rather than based on quotas or policy targets.

Likewise, with the steady growth in the size and complexity of Australian building codes, and then the National Construction Code.

Let's start with migration reforms, in which July 1, 2001 and 2022, were key dates.

The first is important because of student visa reforms, and the second because the Coalition government had stomped on the immigration accelerator in its final years, leading to a blow-out in 2022-24.

Many argue the new Labor government has taken too long to start putting on the brakes.

But the first step was with 457 visas, introduced in August 1996, as the Temporary Business (Long Stay) visa. In March 2018, the 457 visa was abolished and replaced by the Temporary Skill Shortage visa, 482.

The Howard Coalition government created 457 visas following the recommendations of the 1995 Roach Report. The inquiry was commissioned by the Keating Labor government and headed by Neville Roach, a former executive with IBM and Fujitsu, to streamline business migration.

The 457 program ended up at the laissez-faire end of temporary labour migration schemes globally, with a total absence of quotas, caps, or labour market testing. In 2013, they were revamped slightly along with the name change to 482 visas, which suggested the reforms were greater than they were.

But the system was fatally undermined by setting the minimum salary at $53,000 and then leaving it for a decade with no indexation.

The result was that when the labour market tightened in 2022 after the pandemic, the number of 482 visas exploded as businesses went for cheap labour.