“The NCC performs multiple functions beyond minimum safety standards. It is also a mechanism through which industry transformation can occur ….”

This is an important statement from an insightful paper by Andrea Sharman (School of Property, Construction and Property Management RMIT), the summary of which is reproduced below.

As an industry representative on the Building Codes Committee for over 15 years, I was privileged to work with many experienced dedicated building and regulatory professionals.

The #NCC is a modern progressive performance based regulation. We need to continue the #quantification of performance requirements, a process that will see the promotion of #innovation and reduction of litigation.

For more information visit https://RodJohnston.com.au

Read #QueensPawnToD4 by #RodJohnston

Productivity Commission’s Inquiry into Housing supply regulation ignores construction constraints

Andrea Sharam

School of Property, Construction and Property Management RMIT

August 6, 2026

This submission was prepared by: Andrea Sharam, Ali Zolghadr, Louise Dorignon & Ron Wakefield, RMIT University and draws on research (see 1 below)

Executive summary

This submission draws on findings from AHURI Final Report No. 461, Overcoming Construction Constraints for the Supply of New Detached and High-Rise Housing and associated reports.

The Productivity Commission’s Interim Report identifies land-use regulation, approval processes and infrastructure planning as key determinants of housing supply. While these factors are important, the AHURI Inquiry found that Australia faces a deeper challenge: the housing construction system itself lacks the capacity, stability and productivity necessary to deliver sustained increases in housing supply.

The Inquiry found that housing output is constrained not principally by planning regulations but by systemic problems within housing production, including market volatility, fragmented industry structures, workforce instability, supply-chain disruption, poor quality management and cyclical losses of productive capacity.

Importantly, the AHURI Inquiry challenges a central assumption that appears throughout the PC’s Interim Report: namely, that planning regulation functions as a constraint on housing supply, as does building regulation. AHURI’s findings suggest that this assumption is often incorrect.

In many instances, weak regulation or poor enforcement creates inefficiencies that reduce productivity and housing supply. Poor quality construction, defects and rework represent significant forms of production waste. These costs arise not from excessive regulation but from insufficient compliance, weak enforcement and industry structures that incentivise cost minimisation over quality improvement.

The AHURI Inquiry therefore suggests that some forms of regulation, particularly building regulation, should be viewed as productivity-enhancing rather than productivity-reducing.

This is particularly relevant given concurrent discussions about streamlining and modernising the National Construction Code (NCC). The evidence gathered through the AHURI Inquiry suggests that reducing regulatory standards may undermine productivity if it results in increased defects, remediation and market failure. A more productive approach would focus on regulatory consistency, effective enforcement and industry capability-building.

The AHURI Inquiry’s principal findings are:

• That the combination of volatility and capacity constraint is the most significant issue for housing construction productivity and supply responsiveness.

• Increasing development opportunities does not automatically increase housing completions where construction systems remain capacity constrained.

• Builder insolvencies, labour shortages, supply-chain disruptions and quality failures are largely symptoms of a highly volatile production environment.

• Defects and rework constitute substantial but often overlooked productivity losses.

• The fragmented structure of the industry limits investment in innovation, training, supervision and quality assurance.

• Effective building regulation can improve productivity by reducing defects and encouraging greater investment in workforce capability and construction management systems.

• Achieving the National Housing Accord target requires policy settings that support stable, continuous housing production rather than recurring boom-bust cycles.

Accordingly, the Commission’s final report should broaden its conception of housing supply regulation.

A best-practice housing regulatory system should not be judged solely on how quickly it permits development. It should also be assessed according to whether it supports a housing construction system capable of delivering high-quality housing efficiently, at scale and over the long term.

This submission therefore proposes a fifth principle be added to the Commission’s best-practice framework: Build long-term construction system capability.

Regulatory and policy settings should support stable production, workforce retention, innovation, quality assurance and productivity growth across the housing construction sector. Without addressing construction system performance, planning reforms alone are unlikely to deliver the scale of housing supply uplift contemplated by the National Housing Accord.