Australia Allocates $105.9 Million for AI Tool to Speed Housing Approvals

The federal budget will be handed down on Tuesday evening and will include a $105.9 million commitment over four years to develop an artificial intelligence tool. The tool is designed to guide project proponents and share environmental data to accelerate the assessment process for housing and energy developments awaiting environmental approval.

The measure forms part of a half-billion-dollar package to implement environmental reforms passed last year. That package also includes about $250 million to establish the National Environmental Protection Agency. Officials said the AI assistance would help bring on more housing supply.

A strike team established by the government has already approved more than 20,000 homes since August last year and is on track to meet a target of 26,000 approvals by July. Yesterday officials announced a $2 billion commitment to support construction of a further 65,000 homes by funding roads, water, power and sewage connections for new housing lots.

Tax changes to be confirmed in the budget will alter two major tax breaks used by housing investors. These include the discount applied to taxes on capital gains from property sales and the income tax deduction for investors known as negative gearing.

Officials stated that since the introduction of the 50 per cent capital gains tax discount two decades ago, house prices had become decoupled from wages. One official said the housing market is not working for young people and is locking out too many Australians while not building enough homes.

The government had focused its recent election campaign almost exclusively on increasing housing supply. Following the election, officials indicated they would make changes to the housing market and tax system to make them fairer. The forthcoming adjustments to negative gearing and the capital gains tax discount represent a shift from positions taken during the election campaign.

Both policies had formed part of the government's agenda at the 2019 election before being set aside after that poll. Since the COVID-19 pandemic, house prices rose, migration increased after borders reopened, and housing construction slowed due to supply chain issues, tightening the market further.