Australia: October 2022 federal budget: Supplying one million homes

What are the opportunities to work with all three levels of government to increase the supply of housing?

In brief

In its October 2022 Budget, the Australian Federal Government announced its plan for the construction of one million new homes over five years to boost housing supply by greater coordination between all three levels of government and by leveraging returns in investment from superannuation funds, banks and global asset managers. The Budget Papers outline a multi-pronged approach to reach its goal, relevantly involving the Housing Australia Future Fund, administered by the existing National Housing Finance and Investment Corporation (NHFIC), the National Housing Infrastructure Facility (NHIF) and the Housing Accord made between Federal, State and Territory Governments.


At this early stage, identifiable private sector opportunities are limited. Presently, opportunities exist for private entities that enter into joint ventures with the Federal, State, Territory and Local Governments to develop critical housing-enabling infrastructure to seek funding from the NHIF and the Housing Australia Future Fund through the NHFIC. Additional opportunities for private sector involvement are likely to arise from Treasurer's Investor Roundtable to be held in November. The Roundtable will seek to establish appetite for private investment in the program and the pipeline of future funding that may be available for housing construction projects.

The Federal Government's objective currently appears aspirational, with details regarding implementation yet to be released. Further details on these programs is set out below in the 'in depth' section of this alert.

We will continue to monitor developments in this area and propose to provide a further update following the November Treasurer's Investor Roundtable. For further information on opportunities, please contact the Baker McKenzie Construction team.

Key takeaways

  • The Federal Government is encouraging institutional investment in the construction of housing through the Housing Australia Future Fund.
  • Funding may be available for infrastructure projects under the NHIF and NHFIC for eligible entities in joint ventures with government entities established for the purpose of housing construction.
  • The Federal Government has committed to encouraging the building of 30,000 energy efficient affordable homes. More information remains to be released outlining any incentives offered for companies that can construct energy efficient homes.
  • Future opportunities may also arise from the Treasurer's Investor Roundtable -  a forum intended to encourage investment from the major superannuation funds, banks and global asset managers under Housing Australia Future Fund.

In depth

The existing National Housing Infrastructure Facility (NHIF) provides finance for Eligible Projects by way of concessional loans, grants and, in some circumstances, equity finance. The facility is funded by the Federal Government. The remit of the NHIF will be broadened to disburse the AUD 575 million allocated under the Budget Papers. Funding was allocated for the purpose of securing social and affordable housing and accelerating housing supply. Eligible Applicants (see further below) can seek access to the funding if the project's purpose is to accelerate housing supply.

Loans from the NHIF can be used to finance:

  • Electricity and gas infrastructure
  • Transportation, including roads
  • Water, sewerage and storm water facilities
  • Telecommunications
  • Site remediation
  • Onsite and linking infrastructure

Eligible Applicants include Australian State and Territory Governments, Local Government bodies, Local Government owed investment corporations, a State Government owned utility provider that forms part of the State or is a State corporation engaged in substantial financial or trading activities, a Territory Government-owned utility provider, a registered community housing provider or an entity that is a special purpose vehicle.

Special purpose vehicles are entities that can seek funding so long as a member of the vehicle is an Eligible Applicant. The purpose of the entity must be to undertake housing-enabling infrastructure. Members of the vehicle must be either incorporated entities engaging in substantial trading or financial activities or a partnership or joint venture where all members are incorporated entities engaging in substantial trading or financial activities. For more information on eligibility criteria and special purpose vehicles, click here.

Eligible Projects must be for critical infrastructure purposes to support housing development and accelerate affordable housing supply. Applicants must demonstrate that without funding from the NHIF the project would be unlikely to proceed or is likely to proceed at a later date.

There is scope for the criteria for Eligible Applicants or Eligible Projects to expand, with more updates to be provided by the Federal government about the expanded remit of NHIF.  

The Housing Australia Future Fund is a AUD 10 billion statutory fund, funded by equity  contributed by State and Territory Governments and private investment. The Fund will be governed by the NHFIC and returns from investment is intended to provide funding for the construction of 20,000 social and affordable homes over the next five years. The Fund will use the first five years' of investment returns to commit:

  • AUD 200 million for the repair, maintenance and improvements of housing in remote Indigenous communities
  • AUD 100 million for crisis and transitional housing options for women and children fleeing domestic and family violence and older women on low incomes who are at risk of homelessness
  • AUD 30 million to build more housing and fund specialist services for veterans who are experiencing homelessness or are at-risk of homelessness

Legislation will be tabled before Parliament in the coming months to establish the Fund. As such, the nature of the projects that will be funded by NHFIC investment returns is yet to be disclosed. Further information regarding opportunities for private entities to access grants funded by returns is yet to be determined by the Federal Government and the NHFIC.

The National Housing Accord ("Accord") is an aspirational agreement between State and Federal Governments and commercial entities that is intended to increase housing supply. The  Federal Government has committed under the Accord to:

  • Provide availability payments and innovative financing techniques and seek institutional capital investment in social and affordable housing.
  • Provide AUD 350 million over five years from 2024–25 to support the funding of an additional 10,000 affordable homes with energy efficient ratings in projects involving State and Territory Governments and other key stakeholders such as industry peak bodies.

Funding for these commitments will be made available under the NHFIC.

State and Territory Governments have committed to fast track by 2024:

  • Reforms to zoning, planning and land release for social and affordable housing
  • The delivery of additional 20,000 affordable homes

In response to the Accords, the New South Wales government has committed to seeking to free up State landholdings for the construction of affordable housing.

The Housing Accord also includes a commitment by the National Supply and Affordability Council to review economic and planning barriers to institutional investment, finance and innovation in housing - including considering the creation of a Federal Government build to rent program.

Michela Castiglia, Graduate in our Construction team, is thanked for her contribution to this alert.

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