‘Computer says no’: why we need better rules for housing

28 July 2026 | Danielle Wood

Don’t ‘attempt to be clever’ – that’s the advice one local Sydney council gives to its residents who want approval to renovate their garage.

Councils in Victoria ask homeowners to guess how proposed changes to their property will affect the ‘architectural rhythm’ of their street.

One homebuilder was told by a council to plant native trees to support the local environment – only to be told by the fire authorities they had to reduce tree cover to lower the bushfire risk.

These are the stories the Productivity Commission has heard about the ways government rules stop people from being able to build on their own land. 

As the Commission’s Chair, it boggles my mind.

We want people to be able to build a granny flat for mum in the backyard, turn their place into a duplex, and build more room for a growing family when they need it.

But when they try, the response from governments is often the same: ‘computer says no’.

This matters. When planning systems give a default ‘no’ rather than a ‘yes’, the cost of housing goes up for everyone. Rents increase because people have to pay more to secure a lease near good transport and jobs. Prices increase too, making it harder for first home buyers to get onto the property ladder. Those do buy are spending a record share of their income to service a new mortgage.

Business as usual isn’t working and that’s why politicians of all stripes are calling for more housing, so young people aren’t priced out of homes near jobs and their families.

The PC’s latest housing report, released for consultation today, is the next step towards a solution. 

We’ve put forward ideas that will give people more scope to decide what kinds of houses they want to live in, and build what they want to build on their land.

We want councils and state governments to allow more townhouses across more areas. And we think developers should be allowed to build more apartments in places that have good access to public transport.

We’re also calling on councils and other regulators to avoid mandating things that people might not actually want or need in a new home. Why should people have to pay for storage or a bigger bedroom if they’d be happier to live in a smaller place and save on costs?

For housing approvals, we think simple proposals like a garage or a shed shouldn’t need council assessment to go ahead. Be as ‘clever’ as you like (as long as you meet the safety standards).

Similarly, many states have set up fast track approval processes for straightforward developments like detached homes and townhouses. We think more should be put through these channels.

For this to work, local councils should avoid rules that can mean different things to different people. People need to know what the requirements are from the outset and get an approval if you can show you meet them. On the other side of the spectrum, large or complex projects should be looked at by the state government to see how they fit with their state’s broader housing goals. States could also use these pathways to override councils who obstruct important housing projects using arbitrary rules.

Some of these ideas are controversial. New development can come with costs – to neighbours, increasing local traffic, and adding more people to local schools.

All of those concerns point to something real. New housing can strain infrastructure. We need local councils – and state governments – to plan for that, and we need to find smart ways to pay for it.

We also, of course, need governments to make sure new homes and renovations are safe and built to a proper standard.

But the way the rules are working now? They go well beyond these worthy goals.

What we have instead is a spaghetti bowl of rules and requirements that stop people from being able to build anything and often do little to solve genuine problems with new development.

The PC is calling for a new approach. We want governments to adopt a ‘build mindset’ – one that wants to see things happen, rather than defaulting to no. We want to see regulation only where it’s necessary, and simple processes for approvals. And we want to see governments at all levels do better at making sure infrastructure delivery keeps pace with new housing when it goes up.

Because putting up with a clever garage here and there or more townhouses on our street seems a small price to pay to restore the Australian dream.