ACT Chief Minister Andrew Barr believes there is an opportunity for reform in Australia to make more homes available for people whose incomes are too high for public housing but still struggle to access private rentals.
Mr Barr said it was clear rent assistance in the private market had not kept pace with increasing prices.
Forthcoming changes to the ACT's planning system would give the government more opportunities to create new housing, which Mr Barr said the government intended to take.
"I certainly take on board the advice that planning and zoning plays a massive role in increasing the supply of housing in locations where people want to live and close to where they work," Mr Barr said.
The Chief Minister's comments followed the release of a Productivity Commission report into the national housing and homelessness agreement, which said more urban infill was required to meet demand for new housing.
Mr Barr said the ACT had already had a big program of developing brownfield sites and increasing the number of dwellings in town and group centres, as well as local shopping centres.
"I'd look at [options for increasing density] in the context of the employment distribution within the ACT and the capacity to provide an economic stimulus by way of increased residential population around local and group commercial centres," he said.
Mr Barr said he believed his government had already taken steps to allow more homes to be built in established areas but the question of whether further changes could be made to areas set aside for detached homes would be the subject of another year's discussion on planning changes.
The Productivity Commission said Australia had a housing affordability problem and the national housing and homelessness agreement was ineffective and needed an update to set out a national reform agenda to make housing more affordable.
The commission's assessment of the national housing and homelessness agreement said state and territory governments should phase out assistance, including grants and duty concessions, provided to first-home buyers, which are worth about $3 billion across Australia each year.
Mr Barr said he would need to consider more closely the commission's arguments for phasing out duty cuts to first-home buyers, given previous recommendations to phase out stamp duty.
"First-home-owner grants were abolished in the ACT some time ago for the very reasons the Productivity Commission outlined. And that stamp duty reductions are part of a long-term tax reform policy that has already been advocated by the Productivity Commission," he said.
The commission said the public and private benefits of assisting people who are homelessness, or risk homelessness, would likely be greater than helping people buy a home.
Commonwealth Rent Assistance should also be reviewed, the commission said.
National cabinet discussed housing supply and accessibility at its meeting on Friday, where state and territory leaders agreed to re-establish the housing and homelessness ministerial council.
The Canberra Liberals called out what it called "the heartless infill agenda" of the ACT government on Friday, but Mr Barr said the opposition was "more than welcome to continue to advocate the same, I guess, discredited policies that they have over the last 20 years".
The Real Estate Institute of Australia president, Hayden Groves, on Saturday said addressing constraints to housing supply were crucial.
"The focus of the next agreement should be on improving the affordability of the private rental market," Mr Groves said.
Master Builders Australia also backed the recommendation to find ways to remove supply constraints on new housing,
"Master Builders welcomes a key finding from the Productivity Commission that if governments implement reforms to improve supply, to ensure more homes are built, then housing for both homeowners and renters will become more affordable," the association's chief executive, Denita Wawn, said.
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