When it comes to the housing crisis, you’d be hard pressed to find someone with their finger on the pulse quite like Alan Kohler.
Known as the “ABC finance guy”, he has had a storied career in journalism and has spent decades explaining big picture economic issues to the everyday Aussie.
Now he has sat down for an unconventional hour-long podcast interview with his son Chris Kohler — in which he broke down the many layers of the nation’s most pressing economic failure.
His son, a finance journalist in his own right, presented him with a custom crossword listing the major forces shaping the crisis — supply, demand, density, auctions, incentives, transport and rentals — prompting the veteran journalist to talk about each issue.
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Many of them have been talked about extensively before. Kohler said the “massive blowout in immigration” that led to a million people entering the nation over two years led to a “massive housing shortage”.
He said the government’s 1.2-million-home target was an unachievable “political round number” and that tax settings have fuelled artificial demand — namely the capital gains tax discount and negative gearing.
He also argued that pushing high-rise density around train stations is a flawed fix compared to investing in fast regional transport to take pressure off major cities.
‘Absolute nightmare’: Main issue causing the housing crisis
However, Kohler said the biggest issue fuelling the crisis is one that we don’t hear a lot about.
He was shown a graph from the Grattan Institute that showed the number of dwellings per 1,000 people across dozens of nations in 2000 and again in 2021.
It showed Australia is one of only five nations around the world that is going backwards in terms of housing supply.
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Kohler said there were two main reasons. One is zoning issues, with not enough houses being approved by councils.
But the second, less talked about, issue is a shortage of construction workers that Kohler said the CFMEU is “very happy about” and the government blames on “technocrats”.
He said there is a shortage of 115,000 workers in residential construction, which is making housing supply targets impossible to meet.
“One of the things I’ve been looking into is the difference between now and the ‘50s and ‘60s when there was a massive increase in supply of construction labour, which was deliberate on the part of the government at the time,” he said.
“There was the immigration minister, Arthur Calwell, and the housing minister at the time whose name was Nelson Lemmon, who doesn’t get anywhere near the credit he deserves.”
Kohler said the government at the time decided to increase the number of construction workers in Australia because they knew they needed to build a lot of houses.
“And they basically went around, the government set up offices around Europe and recruited construction workers,” he said, adding the drive led to the creation of the Ten Pound Pom scheme.
“English people could come out here for £10 and that was largely to get construction workers into Australia. So, it was also part of a broad program to increase Australia’s population.
“But it was specifically aimed at construction, but also the Snowy Mountains Scheme which was being built at the time and they actually were trying to get workers for that as well.”
He said it led to a construction boom as Australia’s population grew massively.
“They needed a huge number of houses to be built so they were very focused on getting the right number of construction workers,” he said. “If you look now at the Australian immigration system now, it’s an absolute nightmare.
“The number of construction workers coming in is minimal. And the reason for that is because they have this tiered system. So they have tier 1, 2, 3, 4 for skilled migration and that determines how many people can come in under each profession, right?
“And construction is on tier three, which means that the number of construction workers coming in is minimal. Now the Master Builders Association and the Housing Industry Association are saying, well we need to get construction up to tier one so you get more construction workers coming in.”
Kohler said the government likes to say it has “nothing to do with us”.
“They say it’s all to do with this organisation called Jobs and Skills Australia which determines where things go,” he said. “So there’s these technocrats who make these decisions and it’s not a political decision.”
He also said it’s “quite clear” that a big part of the reason we have very solid limits on construction workers coming in through migration is the CFMEU – which “doesn’t want it”.
“They have been campaigning against a lot of construction migration into Australia and that’s been quite successful,” he said. “They don’t want a lot of construction workers coming in because it would lead to lower wages and give them less power.”
His son joked that he got a “cold chill”, adding he was “worried that we’re going to get beat up” over the talk of a major union being blamed.
It’s understood the CFMEU is not against bringing in migrants to work in construction, but it has raised concerns with various levels of government about exploitation and quality of builds, standards and safety being potentially impacted by workers not trained to Australian standards.
Wrapping up the interview, Chris said it appeared that every layer of the housing crisis he discussed with Kohler appeared to be in “crisis”, to which his guest agreed.
Kohler said the stark reality was that the house price-to-income ratio had doubled over the last 25 years (jumping from three or four to between eight and ten) — leaving young Australians completely locked out unless they receive an early inheritance.
Despite the issues he talked about, he said he was cautiously optimistic about what the future holds.
He warned against the desire from some for a market crash, explaining that a 50 per cent drop in house prices — the amount mathematically required to restore historical affordability —would trigger a catastrophic economic depression.
Instead, he argued that the only viable path forward is for house prices to remain completely stagnant for 20 years, allowing wage growth to slowly catch up.
He suggested we could be entering exactly that kind of zero-growth period and that hope for future generations would rely entirely on government intervention.
However, he said that if the biggest issue — the tradie shortage — is not addressed, then house prices will spike again before we know it.
Just 3 per cent of migrants building homes
Housing industry peak bodies have strongly backed Kohler’s warning over the crippling tradie shortage, saying Australia has zero chance of hitting its national housing targets without an immediate influx of foreign tradespeople.
While the government points to recent administrative tweaks — such as Ministerial Direction 119 elevating construction visa processing to Category 3 alongside teaching and healthcare — industry insiders say the system remains structurally broken.
Despite construction being formally recognised as experiencing severe labour shortages, it is understood just 3 per cent of temporary skilled visa holders are actually working in home-building trades.
However, it is also understood that many migrants working in construction are paid cash in hand and would thus not be recorded in official statistics.
Housing Industry Association (HIA) Chief Executive of Industry and Policy Simon Croft said workforce shortages across key residential trades remain one of the single biggest roadblocks to building homes.
“Australia cannot build more homes without more skilled tradespeople,” Mr Croft said.
“Meeting Australia’s housing targets requires an ‘all hands on deck’ approach. We need to train more local apprentices and attract more people into construction, but we also need to make better use of skilled migration to address immediate shortages in critical trades such as bricklaying, concreting, plastering and tiling, where local supply is simply not keeping pace with demand.”
The HIA estimates the residential building industry urgently requires more than 83,000 additional skilled tradespeople across key trades if the nation is to achieve its housing ambitions.
Mr Croft said bringing in skilled migrants was not about undercutting local workers, but keeping construction sites moving.
“Skilled migration is not a substitute for training Australians, it is a necessary complement,” he said.
“When builders cannot find the carpenters, bricklayers, plumbers and other skilled trades needed to deliver homes, projects are delayed, costs increase and housing supply falls further behind demand.”
‘Expensive, slow and ineffective’
Master Builders Australia (MBA) Chief Executive Denita Wawn warned the broader construction sector is currently hundreds of thousands of workers short.
She called for tradies to be given immediate top-tier priority in the nation’s immigration settings.
“The construction workforce is hundreds of thousands short, and it is imperative that builders and tradies are a priority within the skilled migration system, especially in a housing crisis,” Ms Wawn said.
“Our analysis shows that over a 30-year career, a skilled migrant can potentially contribute to 21 detached houses.”
However, Ms Wawn blasted the current migration architecture, saying it was completely unfit for purpose for everyday builders trying to bring in workers.
“The entire skilled migration system also needs to be fixed because, at the moment, it is expensive, slow and ineffective, and does not deliver what the community expects,” she said.
News.com.au has reached out to the CFMEU and Home Affairs for comment.
You can watch the full interview with Alan Kohler on YouTube.
Read related topics:Immigration