that Australians want to live.

There are a couple of things that both of those reports consider that I think are big changes from the status quo, but I think are reasonable for us to talk about when we're thinking about the housing affordability challenges that Australians have.

The first of those is going to that concept of transport-oriented development, saying that where there are places where we have good existing infrastructure, where there's often high demand for people to want to move in, we're sitting here in a place like Collingwood, which I think is a great example of an area that has had pretty good transport infrastructure.

We could always make it better.

I'm a big fan of running more trains and trams along existing corridors because I live along one.

That's a way of getting more housing near the kinds of places that people want to live.

And so both our report and the Productivity Commission's report talk about allowing that kind of what we'd probably call mid-rise.

Matt, what else happens when cities adopt rules like a three-story residential building height?

Is buying a house with a friend a sure way to end up not being friends?

I mean, again, yeah, I think that's a definite challenge, right? And I think, you know, more seriously, when we've got a housing market where people can't choose the choices they'd like to make, whether that be live by themselves or live with their partner or not live with their partner, when they're making choices on the basis of trying to avoid paying high house prices, then often they're not making the best choices for them.

And I think that is a challenge that governments need to think about.

Mm-hmm.

Well, I think it depends on which side of the property market you're on.

And certainly Melbourne's property market hasn't seen particularly strong price growth recently.

But I think we have seen in Melbourne strong price growth over a long period of time.

And what we're seeing now, I think, is ultimately the consequence of Melbourne doing pretty well at building a lot of homes.

Do you agree with that, uh, forecast from Treasury?

Well, I think it's just being honest, frankly, about what the impact of lower prices is in the housing market.

You know, when developers are looking at whether a project stacks up or whether a greenfield development stacks up, they've got to look at all of their costs, obviously, or the cost of the land, the cost of the construction materials and labor, but they're also looking at the price they can sell the, the ultimate, the home for at the end of it.

And when home prices go down, that does mean that it, it makes some of those projects a little bit harder to stack up.

And so those kinds of estimates that Treasury's put out about, say, a, a 35,000, I think, reduction in housing supply over a decade, that's relatively consistent with what we've previously estimated for the kind of tax changes that we recommended.

And so that, that doesn't strike me as, as too surprising.

I guess as you say, the big question is these other policies in the budget i- including that local infrastructure fund, can they really get at the major barrier to, to housing supply in our cities, which are these, these planning barriers, these restrictions that states put particularly on apartments and townhouses in established suburbs that have made a lot of those suburbs far too expensive for particularly first home buyers.

Mm

Is this sequencing that, that, that you're seeing, do you think it's predominantly a, a political calculation, or is it sort of the inevitable response to just how chaotic, um, the, uh, mixture of kind of balancing and figuring out Australia's structural deficiencies in the budget and also responding to sort of three large macroeconomic shocks in half a decade?

Yeah, I mean, look, I, I think part of the, the sequencing question here is just around, like, what's actually Australia's budget issue? Like, what, what is the issue that, that is, like, causing people to be concerned, you know, experts to be concerned about fiscal sustainability in Australia? Because ultimately, we do have relatively low levels of debt compared to most similar kind of countries.

Certainly, you know, the, the debt to GDP that we have at the moment is not anywhere near the sort of 100%-plus debt to GDP that you see in Europe and, and see in the US.

Um, our fiscal trajectory is, is much better than, say, say the US's, for instance.

Um, so really, there's a question of, well, why do we care about fiscal sustainability? And I think from, from our research and, and from kind of seeing the budget over a couple of years now, I think the big answer to that is just that the long-term expenditure challenges that we face are significant.

Like, we do have this, this aging population.

We can see it coming, uh, in a way that, that is, is happening across the world, um, but is probably hitting Australia a little bit later.

Um, what, what, what do you think of those restraints?