Shadow housing minister Andrew Bragg’s pledge that a Coalition government would scrap mandatory home energy-efficiency standards is the wrong solution to the housing affordability crisis.

In a recent speech at the National Press Club, Bragg declared “it is now illegal to build a cheap house in Australia”, promising to slash the bloated 2000-page National Construction Code to 80 pages and abolish all mandatory building standards beyond those required for basic safety and structural integrity.

Bragg confirmed new homes built under his proposed Basic Australian Standard would not have mandatory energy-efficiency standards.

Asked the following morning whether “lower-income Australians would have to accept substandard housing”, he replied in the affirmative.

“We’ve got to be clear there are trade-offs here,” he said.

Bragg is certainly right that there are trade-offs. This is why his prescription – scrapping mandatory energy standards – is wrong.

An energy-inefficient home is not just hotter during summer and colder during winter – it is more expensive to run.

Putting families into homes that are hypothetically cheaper to build but definitively more expensive to run is a false economy, especially when retrofitting a poorly built home is more costly than just building it right the first time.

Bragg is not proposing to cut costs for low-income homeowners. He is proposing to load them up with larger, long-term costs tomorrow for the sake of a short-lived, hypothetical sugar hit today.

Higher electricity demand would also put greater pressure on the grid, requiring further public and private spending on upgrades and maintenance.

Bragg’s plan doesn’t cut costs, it merely kicks the can down the road.

There is a far better way to cut building costs – one that is cheaper, significantly faster and doesn’t compromise on quality or bake in higher household running costs.

Manufactured or “modular” housing, also known as “prefab” or modern methods of construction (MMC), offers up to 20 per cent cheaper building costs at scale, as much as 50 per cent faster build times, and equal-or-better build quality, without compromising energy efficiency.

Modelling by the John Curtin Research Centre in our recent report – Manufacturing Homes: A national strategy for solving Australia’s housing crisis – found that a concerted demand-side push for MMC by local, state and federal governments, delivered through smart procurement could save governments $6.1 billion over the next decade in procurement costs alone.

The key to cutting housing costs is to build smarter, not lazier.

Housing affordability requires genuinely reducing costs through higher productivity, not merely shifting them from construction to household running costs.

Productivity in housing construction, measured by dwellings per hour, has fallen by 53 per cent since 1994-95, while productivity across the overall economy has risen by 49 per cent.

Analysis of 2024-25 ABS data by Master Builders Australia found it takes 11.5 months to build a detached house – 35.8 per cent slower than a decade ago.

JCRC analysis found productivity in prefabricated wooden building manufacturing is 35.3 per cent higher than in building construction, with three-year average productivity 20.7 per cent higher than in building construction.

The key to unlocking the benefits of Australian manufactured housing is scale.

Factory-based construction has higher fixed costs than traditional on-site construction because it is more capital intensive. But the same capital intensity that delivers superior productivity and speed creates an opportunity for government as factories move towards capacity, fixed costs are spread across more homes and average costs fall.

The more manufactured social and affordable housing we build, within capacity limits, the cheaper it gets.

Our report therefore recommends a 10-year aspirational target to lift MMC’s share of new housing construction to 35 per cent by 2036-37, backed by government procurement requirements.

Governments are enormous purchasers of housing and other buildings. Using that purchasing power to provide sustained demand would give manufacturers the certainty to invest in new factories, technology and workers.

The Commonwealth should also partner with industry on a national demonstration project of 600 manufactured timber dwellings by June 2027.

“Show, don’t tell” is the best way to overcome lingering misconceptions that prefab means cheap or low quality.

Supply-side reform is equally important. Australia’s tax system can penalise the very scale and capital investment MMC requires.

Regulation remains another obstacle, with the Australian Building Codes Board’s slow progress towards a National Voluntary Certification Scheme for offsite manufacturing acting as a material handbrake on the industry.

Federal and state building ministers should fast-track an operational scheme by January 2027.

Financial and skills barriers also need attention. Standardised contracts, better access to institutional finance and government financing mechanisms could help close the industry’s estimated $800 million finance gap, while apprenticeship programs need to recognise the skills required for offsite as well as onsite construction.

None of these reforms is as simple as deleting thousands of pages from the National Construction Code. But that is the point.

Lazy building doesn’t reduce costs. Smarter building does. Australia’s housing crisis was manufactured by decades of policy failure, and it requires a manufacturing solution.

Governments should remove the roadblocks holding back a high-productivity manufactured housing industry, rather than make Australians’ homes worse.

Lachlan Kerwood-McCall is deputy director and chief economist at the John Curtin Research Centre