Government defends one million home target

The Albanese government has defended its aspirational target of building one million homes in five years despite scepticism the plan will yield many extra homes.

In the October budget, the government announced a national housing accord to build one million new homes over five years starting from 2024.

Greens senator Nick McKim asked Treasury officials if the housing accord would actually boost housing supply above and beyond normal construction levels in the private market given the industry has completed 985,000 homes in the past five years.

Finance Minister Katy Gallagher said the housing accord was broader than just delivering more affordable homes.

"It's an aspirational target, informed by the delivery of what's happened over the past five years and extra effort going in by the Commonwealth states and the territories," she said, referring to related commitments to build 20,000 affordable homes.

Treasury official Laura Berger-Thomson said the government's pledge would help deliver extra housing because rising interest rates were expected to dampen construction over the next few years.

"If there wasn't any policies in place, there would actually be substantially less than the one million (homes built)," Ms Berger-Thomson said.

Treasury was asked to clarify how the government's commitment to spur more private sector investment in affordable housing was expected to work.

The government allocated $350 million over five years towards this endeavour in the budget.

Owners of dwellings would most likely be paid regular annual payments, Treasury officials explained, with the affordability of dwellings to be embedded in contract terms.

Senator Gallagher said the community housing sector would play a major role in the delivery of the affordable home component of the housing accord but did not rule out funding going to private developers or investors to deliver these homes.

"Our preference would be to work with existing providers, but obviously, there's been discussions with institutional investors as well," she said.

The coaltion's HomeBuilder grant program also got some airtime in the budget estimates session.

A review of the program released on Wednesday found the pandemic-era grant program contributed to overheating in the construction sector.

The $25,000 grants for home builders and renovators did successfully stimulate the sector during the pandemic - as it was set up to do - but arguably too much, with the costs of construction hitting record highs.

Treasury confirmed that the program, which had an uncapped budget, was originally costed at $680 million and costs added up to $2.7 billion by its completion.

Labor senator Deborah O'Neil accused the scheme of funding lavish renovations - with projects needing to be costed at $150,000 to qualify - for people who were already well off.

"Could I spend it on, you know, gold taps in the bathroom?" she asked.

Treasury officials said there was no data about the type of renovations funded by the grants but that granny flats and pools had been excluded.

Opposition's finance spokeswoman Jane Hume defended the program's success and said Labor would have preferred pandemic support for the construction industry in the form of "little boxes" of social housing.

"Little boxes. Little pieces of social housing would have been so much better," Senator Hume said.

Senator O'Neil asked the senator to withdraw the comment, noting that it was an inappropriate way to characterise social housing.