Minister for Industry, Science and Technology Karen Andrews was interviewed on ABC Sydney Focus by Cassie McCullagh.

Cassie McCullagh: Did you see that news article yesterday that a growing number of Australians are falling behind on their mortgages, hit by weaker house prices and higher levels of debt as it looks like the economy is slowing just a bit? Now, it’s only the tiniest, tiniest amount – the amount of delinquencies as they’re called in residential mortgages – were up to 1.58 from 1.48 back in March- in the March quarter. So, a bare move but of course this has people in the industry very interested and some people suggest it may be a sign of growth in that in coming months and years.

But what about this tiny house movement? I mean maybe you’ve been part of it, maybe you’ve got one. It’s been trialled in different parts of Australia, different projects. We’re going to hear about one on the Central Coast of New South Wales which is all about making a stepping stone for people who are in housing difficulty, perhaps couch surfing or staying with relatives or sleeping in a car and homeless to getting into some more permanent housing. And also down on the Great Ocean Road on Apollo Bay, there’s a big project there that’s a little bit more luxurious, I think, it’s a bit a more of a holiday style version of an estate with tiny houses. But you may have one in your backyard, you may have one on a plot of land somewhere nearby. Be interested to know how that works for you.

But as I say, yesterday, the Morrison government announced a study into the pre-fabricated building industry and how we could see it grow as a sector. And the person who was announcing it was the Industry Minister Karen Andrews. Well Minister, thanks very much for joining us.

Karen Andrews: It's a pleasure.

Cassie McCullagh: Tell us about this study that you've launched.

Karen Andrews: Okay. So what the Coalition is doing is working with the Advanced Manufacturing Growth Centre, we’re contributing $2 million to funding to look at a feasibility study to look at pre-fabricated housing and buildings. So we know that in Australia the industry now represents about 3 to 5 per cent of Australia's construction sector but we think we can grow that to 15 per cent by 2025, which would contribute 20,000 new jobs and $30 billion dollars in growth to our economy. So it's a segment that we really need to look at our opportunities.

Cassie McCullagh: So describe the pre-fabricated building industry for people who haven't come across it before?

Karen Andrews: So it's pretty much you're able to buy things that are already manufactured, so whether that be timber panels or concrete panels, they get delivered to site and they’re put up in place. So instead of having to do a concrete floor and looking at what you're doing for walls, the slabs will arrive already made and the walls will be constructed. It could be timber internal doors, so it’s pre-fabricating a building ready for easy construction. The easiest thing to do is look at the IKEA model for furniture.

Cassie McCullagh: Uh-huh. So the kind of buildings are homes, offices, I guess a range of different styles of buildings. Tell us about the tiny house part of this.

Karen Andrews: Yeah. Well look, I'm a personal fan of tiny houses. And of course, if you're looking at pre-fabricating something smaller, the quicker it is to build, put together. So, tiny houses provide some great opportunities. Subject to local laws, they could be installed in people's backyards as a stand-alone granny flat. Some people who want to live on a smaller block of land and just want something that they can construct fairly easily, they don't want a lot around them, they're happy with a couple of rooms. Tiny houses provide a real opportunity for them.

I mean, what's interesting is that the Australian National Outlook Report that has been released today by the CSIRO particularly looks at housing density, and in Australia we currently have quite low housing density. That in turn leads to an urban sprawl. What we can do with the likes of tiny houses is look at opportunities for them to be more useful for high density housing.

But I really just want to stress that this - the money that we're giving to the Growth Centre is not just targeted at tiny houses. That is a part of it. And clearly, there's a market share that we want to maximise opportunities for. But it’s part of the whole prefabricated building and construction sector that we're focused on.

Cassie McCullagh: And as you’ve said, that's a $30 billion prospect over five years. You'd like to see it grow to that as part of, you know, creating jobs in industry et cetera. But let's focus on the housing side of things. So that kind of opportunity that you say the CSIRO has identified in increasing density in our residential areas. What are the logjams on that? What are the regulatory and planning difficulties standing in the way of that happening?

Karen Andrews: Well, a lot of those are state and territory regulations that need to be dealt with in terms of what you can construct on a typical residential allotment or what you can construct in a commercially zoned area, but that’s for state and territories to look at. What the report was saying, though, is that we need to look at our satellite cities. And of course in Sydney we have Western Sydney which has developed and is effectively a satellite city in that it has it’s own central business district, it is a growing community out there. It's very large at this point in time and will probably grow to be even larger.

What the report is saying is that when you have low density housing, that means that you will have larger areas over which your housing is constructed. So if you look at higher density housing – which is what this report is looking at – you are looking at more apartments. Tiny houses may well have a place in that, but you are looking at how you can happily house more people in a smaller area.

Cassie McCullagh: And you say you're a fan. Have you ever been in one or would you ever have one yourself?

Karen Andrews: Well I have been inside a tiny house. Look, I think they're great, they're very niche. So they're not going to be for everyone. I would be probably comfortable at some stage in my life living in a tiny space. I would certainly have a lot less things that I had to worry about if I was in a tiny house. We collect many things over our lives and I'm sure I don't need some of them, and in a tiny house I'd have to move them on.

Cassie McCullagh: Yeah. I'm sure Marie Kondo, the Japanese clean living guru, would approve of them. Now, there have been some projects around the country where we've seen estates with smaller houses, tiny houses on them. There's one on the central coast of New South Wales, a very small one which is devoted to helping people out of homelessness and couch surfing and living in cars. And that's a possibility they've identified as a way of putting a sort of ladder between homelessness and moving into more secure housing. What do you think of that?

Karen Andrews: Look, it's certainly an option that is worthwhile considering and that's something that we'd need to look at as a Federal Government but also state and local governments need to look at as well: how are we going to deal with the housing crisis? Prefabricated housing means that you can build a house much quicker. Tiny houses provide different options. There's also export opportunities for us that we should be very mindful of, particularly exporting our prefabricated houses into the Asia-Pacific region.

For example, where there has been a local disaster, if cyclones have gone through the Pacific, we can look at an export opportunity for our prefabricated housing to go in there and provide accommodation for people who have lost everything. And that's already happening. There's already a provider in Queensland called Nev’s Houses and he actually won the Pitch@Palace innovation challenge about two years ago now, I think, and he's been developing effectively pre-fabricated housings to go into the Asia-Pacific region to deal with the natural disasters. So he's opened up an export opportunity but there are many other opportunities, and of course, Australia needs to grow its export opportunities and its export market.

Cassie McCullagh: So, into Asia and the Pacific, we could be sending basically flat-pack homes in shipping containers?

Karen Andrews: Yes, absolutely. Yes, yes, and that would be a good thing. The other thing that we could do is export the technology so that some of these companies and countries could do that themselves overseas. So, it's not just the physical engineering componentry that we could send overseas, we could send and sell our intellectual property.

Cassie McCullagh: So the plans and designs for modular buildings of whatever type, whether they're tiny homes or other kinds of built...

Karen Andrews: Yeah. And then of course there's an education and training option where we could provide support for people to train others to fabricate these houses. So, you know, there are limitless opportunities. But what we want to do through this $2 million is make sure that we're focused on what are the realistic opportunities and focus on the ones that are going to give us the best benefit. We don't want to go down a path where we're trying to be all things to all people. So this feasibility study will look at what are the best markets for us to be looking at and how do we develop our expertise.

Cassie McCullagh: Minister Karen Andrews is with us. She's the Minister for Industry, Science and Technology and she's announcing a study that's going to look at the ways we can develop our prefabricated building industry, which has a range of different applications. But the one that's particularly got our notice this morning is the tiny houses prospect. So, we know that it's millennials who are particularly locked out of the housing market and also older Australians who, for one reason or another, have found themselves relying on the aged pension.

And we saw that big news - the Anglicare report about - saying really that rental properties aren't an affordable prospect for so many people who are either on Newstart or on pensions and so on. Can you ever imagine us sort of taking this to the next level and seeing it as a part of a temporary or even long-term solution, maybe, that the Government could take up? The idea of using these stepping stones to keep people out of shelters and to keep them off the streets and to enable giving them access to the kind of services they might need to make the stepping stones back into an unassisted life.

Karen Andrews: Look, clearly there's an opportunity there, and at this early stage in looking at those opportunities, I don't want to rule anything at all out. So, yes, there are opportunities that state governments, in particular, could look at what they could do with homeless people, what’s the best way to accommodate them. Are tiny houses an option for people that are looking for something to significantly downsize themselves? They don't want to worry too much about something that's got three or four bedrooms in it, they just really need the one bedroom and the kitchen, lounge area and bathroom facilities.

That provides an opportunity for them and there already is a market for that, not just in Australia but overseas. And some of the designs of the tiny houses can be quite grand and quite spectacular. What that does is it enables people, who choose to live on their own or whose circumstances are such that they need to live on their own, for example, could live in accommodation that they can be proud and happy to live in. And if that goes towards helping them continue to live with dignity, to be self-sufficient, and to be very proud of what they've achieved, then I'm all for it.

Cassie McCullagh: It does seem like the New Zealand, Minister, might be ahead of us. Apparently, Bunnings in New Zealand has these things on the shelves already, flat-pack homes.

Karen Andrews: Yeah. Well, it's not a new concept but it's something that Australia hasn't engaged in to the level that we, as the government, believe that it’s possible and that’s why we’re looking at this and saying well it’s only about three per cent of the market, maybe five per cent of our market at the moment; we believe we can grow that to 15 per cent and if we do that it’s a huge injection into our economy and about 20,000 new jobs – so it ticks a lot of boxes. So, that's why we've put up $2 million. We’ll look at the feasibility study. We're doing it through the Advanced Manufacturing Growth Centre. We want to look at what the technology is, what the materials are that are being used to put these homes together, because we want to make sure that we are going to be able to meet people's needs. We certainly don't want to be putting up something that's not robust.

Cassie McCullagh: Well I mean, as you've pointed out, so many of the positives and the possibilities and the opportunities there, but I guess some critics would say: oh well, you know, this is a kind of slippery slope to allowing sort of smaller slum dwellings and the quality may not be as high as it should be and it will be an unregulated amateur market if people are putting these things together themselves. I guess it does really come down to the regulation in, as you say, the states and territories but also the local councils and the planning codes too.

Karen Andrews: Yes, it does and let me be quite clear. I don't think that prefabricating houses is an opportunity to lower quality standards, to reduce issues around compliance and enforcement of current building regulations, and I clearly don't support the establishment of slum communities in Australia. And I think maybe people who are making those comments aren't making it with a very good understanding of what prefabricated housing is all about or what tiny houses are about either. So, let's be positive. Let's be open. That's the Australian way of doing things. Let’s look at the opportunities, and let's not judge others simply because we might not want a tiny house. Let's look at the opportunity that it provides for all Australians.

Cassie McCullagh: Anywhere to call home, I guess, is a valuable thing.

Karen Andrews: Sometimes that is what people need. And it is very important that we get the balance right between technology, which is where we're headed with prefabricated buildings, and the societal aspects as well. So we need to get that balance right.

Cassie McCullagh: Minister Andrews, thank you very much for talking with us.

Karen Andrews: It's a pleasure.