Officials claim Labor’s first-term policies failed to improve supply and potentially raised prices
Reserve Bank officials judged Labour’s early housing agenda to have done little to improve supply and was likely to raise prices, directly linking immigration to affordability as Labor struggled to prove the budget would increase housing availability.
Internal memos, which the bank initially tried to keep secret, described Labour’s first three years of housing policies as “relatively modest”. The documents, obtained under freedom of information laws, were prepared for a meeting of RBA board members in May last year, the same month as the federal election.
Banking documents show policy experts have criticized policies such as Labour’s initiative to help buy shares and the expansion of a scheme that allows people to buy homes with a 5 per cent deposit.
“Many policies providing subsidies in recent years [first home buyers] – are only demand-side measures, withdraw forward purchases; “Many are of the view that this simply translates into higher prices,” they wrote. “It is characterized as a demand-side measure to bridge the gap until supply comes online.”
Finance Minister Jim Chalmers moved on Monday to dispel doubts about whether removing investors’ concessions would increase supply, issuing a forecast suggesting $25 billion spent on investment could be diverted to new homes, which could still be negatively affected.
Central to Labour’s budget claim on housing affordability was the claim that its policies, including a $2 billion fund for housing infrastructure, would offset the projected reduction of 35,000 new homes with an extra 65,000 homes.
Bank officials say the key levers at the government’s disposal are “the main line.” [government] It was ‘unchanged’ affecting housing as a result of Labour’s early housing agenda.
These areas include “immigration policy,” according to internal talking points. The analysis comes from a meeting on policy issues, usually held 10 days before a board meeting so members can discuss economic conditions.
The extent to which immigration rates in Australia are exacerbating the housing crisis has become a high-profile political issue. Under pressure from One Nation, the Coalition committed to explicitly linking the rate of immigration to construction rates.
Net migration reached record levels last term as people re-entered the country following the pandemic. It has fallen significantly since then.
Other ways the government could change the housing equation, according to topics discussed at the meeting, include regulations that contribute to undersupply, such as zoning and land use laws and tax settings.
This term, Labor moved to overhaul negative gearing and the generous CGT relief; many believe this drives investment into established properties rather than new homes and growing businesses, outbids first home buyers and reduces productivity.
Following the bank’s analysis, the Labor Party also overhauled environmental regulations that disrupted housing projects in the second term.
Housing was the central theme of last month’s Labor budget, described by Chalmers as the boldest yet, and was marked sharply down in the polls. The complex debate over replacing the 50 per cent CGT discount with an inflation-adjusted model not just for investment properties but also for private firms and shares has muddied the government’s messaging on housing.
But Labor ministers are hopeful that a few weeks of bitterness will give way to a more direct debate about Labor providing support for first home buyers in the months and years to come. The tax changes will be passed by parliament later this month.
Asked about the RBA documents, a spokesman for Housing Minister Clare O’Neil said the government had “supported” 420,000 new homes through its policies to increase supply, halving immigration levels from post-Covid highs and helping first home buyers. O’Neil announced last week that the Productivity Commission was conducting a review of housing supply.
“Rather than sitting on our hands for a decade without a housing minister, this Labor government is the most ambitious government on housing in 70 years and is making an already ambitious agenda even more ambitious with the latest budget,” he said.
Labor has been applauded by many economists and housing experts for setting an ambitious target of 1.2 million new homes by the end of the decade. A combination of construction restrictions, high interest rates and other factors mean it has fallen short so far.
“I think we need to be careful about supporting 1.2 million homes because it’s really just a target, but we might add some considerations to take into account policy changes/regulation changes,” an RBA official wrote.
Central Bank governor Michele Bullock said in September that governments were trying to take action on housing supply but did not expect major progress for a few years.
Commenting on the bank’s analysis, Peter Tulip, chief economist at the right-leaning Center for Independent Studies, said the RBA was right to say that these fundamental factors “have not changed significantly”.
Tulip said the government had done “very little” on supply, which he claimed was by far the biggest factor in the housing crisis. Procurement was largely the domain of state governments, but he argued that the federal government could do much more through incentives to the states. Labor has promised to donate $3.5 billion to states to support construction.
“Immigration has a pretty significant impact on housing affordability. Maybe not as important as interest rates, but more important than tax settings,” Tulip said, noting that reducing immigration triggers economic trade-offs.
Coalition housing spokesman Andrew Bragg had to fight authorities to obtain a copy of the bank documents, arguing it was another reflection of the Albanian government’s record on transparency. Labor accuses Bragg of clogging the FOI system with abusive practices.
“The RBA documents show Labor is missing big opportunities: better aligning immigration, actually reducing the regulations that would drive the economic proposition of housebuilding,” he said.
“The workers’ fear budget will make poor housing even worse. We will end up with 35,000 fewer homes as a deliberate design feature, which is insane.”
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Paul Sakkal is the Chief Political Correspondent. He has previously covered Victorian politics and won the Walkley award as well as the 2025 Press Gallery Journalist of the Year award. Contact him securely on Signal @paulsakkal.14.Connect with: X or email.
