As of May 2026, 1432 of the Housing Australia Future Fund's target of 40,000 new social and affordable homes had been delivered, the Australian National Audit Office found in a report released on Tuesday.
The $10 billion fund's forecast to hit its target by mid-2029 faced "considerable uncertainty" as of June, the auditor-general found.
It's another setback for the government's broader housing supply agenda, with the construction industry about a year behind on its target to deliver 1.2 million new homes in the five years to June 2029.
Meanwhile, the social housing waitlist has grown from 155,000 to 169,000 in the 10 years to June 2024.
While Treasury was largely effective in designing the fund, the department had failed to take clear responsibility for delivering the program and provided little transparency about how it was progressing, the audit found.
Although funding applications opened in January 2024, Treasury had not finalised delivery arrangements until May 2026.
"The delayed finalisation of most governance and oversight arrangements has limited the ability of Treasury to systematically monitor and manage program risks and performance over time," the auditor-general said.
"Once finalised, Treasury has not always implemented governance and oversight arrangements as intended, with sometimes out-of-date and inconsistent arrangements.
"Risk management arrangements are insufficient, including for shared risks."
The fund works by giving money to providers to either build new homes or purchase newly constructed homes from developers.
Once built, homes are subsidised by the government to provide tenants below-market rates for 25 years, at a cost of about $393,000 per dwelling in today's money.
Of the 1432 homes delivered by the fund, 762 were new homes constructed by housing providers and 670 were newly built by private developers and purchased by a housing provider before, during or immediately after development.
The audit made five recommendations to improve governance, risk management, performance review and transparency of the program.
Housing Minister Clare O'Neil welcomed the report findings and accepted all recommendations.
"Importantly, the report found Treasury's design of the Housing Australia Future Fund was largely effective and supported by largely sound policy advice," she said.
"This program is being delivered in one of the toughest construction markets in decades.
"As building and financing costs increased, Treasury identified those pressures early and the government acted to protect our commitment to deliver more social and affordable homes."
Opposition housing spokesman Andrew Bragg said the report laid bare how the fund failed to deliver.
"Only a handful of houses have been built, and just under half are not new," he said.
"Buying homes is not building homes. It does nothing to fix Australia's housing supply crisis."
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