Labor platform adopts JCRC recommendation on modern methods of construction

Part one of a two-part series.

A recommendation from the John Curtin Research Centre’s recent Manufacturing Homes report has already found its way into the Australian Labor Party’s National Platform after delegates at the ALP National Conference, held from 23–25 July 2026, adopted an amendment recognising the role modern methods of construction (MMC) can play in increasing housing supply and supporting Australian manufacturing.

The amendment states that “Labor recognises that modern methods of construction can help build more homes faster, improve productivity and create strong Australian jobs.” It also commits the party to ensuring that a share of future investment in social housing is used to encourage the uptake of MMC, including prefabricated components, fabricated steel and engineered wood products.

In a conversation with Built Offsite, report lead author and John Curtin Research Centre Deputy Director and Chief Economist Lachlan Kerwood-McCall said the amendment was directly inspired by recommendations contained in the report, which argues Australia’s housing shortage presents an opportunity not only to increase housing supply, but also to strengthen domestic manufacturing capability through more strategic procurement policy.

For Kerwood-McCall, the report is ultimately about changing the way governments think about housing. Rather than viewing it solely as a construction challenge, he believes Australia’s housing shortage should also be seen as an opportunity to rebuild sovereign manufacturing capability, improve productivity and generate broader economic value.

As governments across Australia search for ways to increase housing supply, improve productivity and address labour shortages, modern methods of construction are increasingly being viewed as part of the solution. Kerwood-McCall believes that presents an opportunity to think more broadly about the purpose of housing investment, ensuring it supports not only housing delivery but also Australia’s long-term industrial capability.

Demand certainty, not subsidies
Kerwood-McCall believes one of the greatest misconceptions surrounding Australia’s offsite construction sector is that manufacturers are seeking permanent government support.

Instead, he argues the industry needs governments to provide confidence that a sustained pipeline of work will exist.

“The industry doesn’t need the government to prop up the industry indefinitely,” he said.

“What we need is for government to provide demand-side certainty that allows industry to achieve those economies of scale and unlock those efficiencies.”

According to Kerwood-McCall, predictable demand encourages manufacturers to invest in production facilities, automation and workforce capability, ultimately lowering the cost of housing over time.

“Government intervention on the demand side will push costs down in the long run, not up.

“That’s been my core message to Treasury and to other economists and people in government that we’ve consulted with.”

He argues governments have a unique ability to provide the long-term confidence manufacturers need to invest. Rather than viewing procurement simply as a purchasing mechanism, he argues it should be recognised as a strategic policy tool capable of stimulating investment, encouraging innovation and improving productivity across Australia’s construction sector.

Procurement as a catalyst for industry
For Kerwood-McCall, procurement is about far more than purchasing homes.

He argues that governments have an opportunity to use housing investment strategically, creating the certainty manufacturers need to expand production, invest in automation and develop skilled workforces.

Rather than relying on ongoing subsidies, he believes clear and consistent demand signals are far more likely to encourage long-term private investment.

That philosophy underpins Manufacturing Homes, which frames housing investment not simply as expenditure on construction, but as an opportunity to improve productivity, strengthen sovereign manufacturing capability and generate broader economic benefits.

With one of the report’s recommendations already reflected in Labor’s National Platform, Kerwood-McCall believes the policy conversation has already begun to shift.

Housing investment with broader economic returns
One of the report’s central arguments is that housing policy and industrial policy should no longer be treated as separate conversations.

Kerwood-McCall argues the real policy choice is not simply about delivering cheaper housing. Rather, it is about where the economic value generated by that investment ultimately remains.

Throughout the conversation, he contrasted two broad approaches to improving housing affordability. One seeks to build a competitive Australian manufacturing sector capable of delivering homes more efficiently. The other relies more heavily on imported housing systems, which may reduce costs further but shift much of the associated economic value offshore.

Both options involve housing becoming cheaper and more affordable, according to Kerwood-McCall. The real policy question, he argues, is how governments define value. If the objective is simply to minimise the upfront cost of housing, imported systems may appear attractive. If the objective is to reduce housing costs while also creating jobs, lifting productivity and strengthening domestic manufacturing, the policy response looks very different.

“Do we want to significantly reduce the cost of housing in Australia while creating tens of thousands of local jobs, delivering billions of dollars in value-added to the Australian economy, supporting regional employment, supporting local innovation and lifting productivity?

“Or do we want to reduce housing costs while sacrificing those jobs and the broader economic benefits that come with them?”

For Kerwood-McCall, the distinction is that housing investment should be measured not only by the number of homes delivered, but also by the long-term economic value it generates for Australia. In his view, procurement policy should be designed to reduce housing costs while also strengthening domestic manufacturing, creating skilled jobs and improving productivity.

HAFF offers an early test
Among the report’s recommendations is a proposal to incorporate an MMC content requirement into a future round of the Housing Australia Future Fund (HAFF).

Asked which recommendation governments could realistically adopt first, Kerwood-McCall identified the fund as the most immediate opportunity.

“I think it really has to be the 80 per cent MMC content requirement in HAFF Round Three.”

Kerwood-McCall said discussions with manufacturers during the research suggested there was an opportunity to examine whether future procurement models could accelerate housing delivery while also supporting domestic manufacturing capability.

In his view, government procurement has the potential to provide the demand certainty manufacturers need to invest in new facilities, automation and workforce development while helping build a more productive domestic housing industry.

“If governments are already investing billions of dollars to address the housing shortage,” he said, “there is an opportunity to ensure that investment also strengthens Australia’s manufacturing capability.”

Retaining economic value in Australia
Beyond the report’s formal recommendations, Kerwood-McCall also discussed Australia’s growing reliance on imported housing systems, arguing that procurement policy has an important role to play in strengthening domestic manufacturing.

Kerwood-McCall is equally clear about what he is not advocating.

“We haven’t recommended tariffs or anything like that.

“What we’ve argued is that procurement policies should support domestic manufacturers so that value is being recycled back into the Australian economy.”

In his view, the implications extend well beyond Australia’s existing offsite manufacturers.

“The risk from imports isn’t just that imports threaten Australian offsite builders.

“The risk also is that imported housing significantly replaces not just Australian manufactured housing, but Australian onsite construction.”

For Kerwood-McCall, the issue is not whether Australia should participate in global markets. Rather, it is whether the inevitable shift towards industrialised construction occurs within Australia’s own manufacturing sector or increasingly moves offshore.

“Our argument is that we should be significantly shifting the focus from onsite construction to offsite construction.

“If a large chunk of the domestic onsite construction industry were essentially to go offshore rather than shifting into an Australian factory, the consequences for the Australian economy are quite substantial.”

He argues Australia’s transition to industrialised construction represents a once-in-a-generation opportunity to establish advanced manufacturing capability that supports productivity, innovation and skilled employment for decades to come.

A manufacturing strategy, not just a housing strategy
For Kerwood-McCall, Manufacturing Homes is ultimately about Australia’s future economic direction as much as its housing future.

He argues the nation has a rare opportunity to address housing affordability while simultaneously strengthening advanced manufacturing, creating skilled employment and lifting productivity.

“The choice isn’t between affordable housing and more expensive housing.

“The question is whether we want housing to become cheaper while rebuilding sovereign manufacturing capability, supporting employment and lifting productivity—or whether we want to miss out on those benefits altogether.”

With one of its recommendations already incorporated into Labor’s National Platform, Manufacturing Homes is already influencing the national debate beyond the construction sector.

For Kerwood-McCall, the focus now shifts from shaping the conversation to seeing whether those ideas translate into procurement reform and the long-term demand certainty needed to encourage investment in Australia’s industrialised construction sector.

Whether that momentum ultimately results in lasting reform remains to be seen. However, the report has already helped elevate modern methods of construction from an industry discussion to a broader conversation about housing, manufacturing and national productivity.

If governments ultimately adopt the procurement measures proposed in the report, Kerwood-McCall believes the benefits could extend well beyond delivering more homes—strengthening sovereign manufacturing capability, creating skilled employment, improving productivity and ensuring more of the economic value generated by Australia’s housing investment remains within the domestic economy.

Part Two examines the structural reforms Kerwood-McCall believes are still required if modern methods of construction are to become a mainstream component of Australia’s housing system, including national data collection, certification, digital standards, regulation and industry collaboration.

Read the John Curtin Research Centre Manufacturing Homes report HERE (pdf)