During an extraordinary rental crisis and political stalemate over funding, promising to build 1.2 million homes over five years sounds impressive. If achieved, this would well exceed the number of new dwellings completed over the past five years (around 857,000 between June 2016-22).

The problem is the target depends almost entirely on the private sector to increase production at a time when house prices are stagnant or falling, and the costs of finance, labour and materials are at historical highs.

The pledge for "a National Planning Reform Blueprint" does nothing to address market constraints. The familiar language of "planning, zoning, land release" perpetuate a misconception that recalcitrant councils or hostile NIMBY groups are blocking approvals.

In fact, housing approvals aren't the problem. Over the past decade, residential approvals have reached historic heights. It's the lag in new housing starts and the gap between approved homes and actual completions that should be the focus.

Between June 2020-21, more than 221,000 new homes were approved despite a decline in the nation's population growth. The problem is, only two thirds of these dwellings began construction. We can't blame COVID-related labour and materials shortages either. In other boom years when even higher rates of housing approvals were recorded, commencements - and ultimate completions - ran at a much slower rate.

Planning reform can improve the decision-making system but it doesn't deliver new dwellings.

Targets for building homes in areas near transport and jobs have featured in every capital city metropolitan plan since the early 2000s, supported by wholesale land release and upzoning programs, and to some extent, major new infrastructure investment.

The private sector - now responsible for around 98 per cent of new builds - has delivered against these targets, at favourable points in the market cycle. When interest rates fall and house prices rise, we have seen strong supply responses nationwide.

Promises to sustain, let alone increase high rates of private sector housing construction when market conditions shift, seem fanciful. It's hard to conceive why private sector developers would ramp up housing production with prices flat or falling, and with rising finance costs.

To overcome this problem, Australia needs to urgently increase the scale and capacity of its affordable housing industry. On the supply side, this means financing new social and affordable housing - whether by the tenuous Housing Australia Future Fund - or directly, but at a greater scale. A target to house the 174,000 Australians currently waiting for public housing would be a meaningful, and achievable, start.

Focus is needed on how state and local governments can intervene to bring about land for new and affordable housing. Prioritising these developments on government sites rather than chasing maximum profit when public land is sold, is critical. States such as NSW have promised that at least 30 per cent of new homes on government land will be affordable. Making good this commitment will do more to deliver against the housing target.

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Another major supply injection could be realised by restoring the role of government land developers. Historically, these entities delivered new land supply at scale, moderating the market, and demonstrating innovative and affordable housing models.

On privately owned land, the reform we need is the one that Australian governments seem most reluctant to entertain; across Europe, the UK, and northern America, affordability requirements are set when planning rules are changed to support new and higher density housing. A form of "inclusionary zoning" - land prices adjust downwards, reflecting these obligations. With land sellers absorbing the cost, developers can include affordable rental or home purchase products in their projects, often in partnership with non-profit providers.

By ensuring that new residential projects support affordable developments and partnerships, Australia's housing system can shift towards a stable housing supply. The modest Housing Support Program funding promised to address infrastructure and services could provide further support.

Talk about supply shifts attention from the inefficient and counterproductive tax settings and grants that have exacerbated Australia's house price inflation over the past three decades.

The political will to remove negative gearing seems broken for now. But it's critical to match other demand-side schemes - such as the Commonwealth's new shared equity program - to new supply. Targeting the scheme to new housing construction could help deliver 250,000 of the dwellings promised by national cabinet.

What about renters? national cabinet's agreement to forge "a better deal for renters" has attracted criticism for promising initiatives already underway. There's certainly nothing in the announcements that signal immediate rental relief.

With Australia's community housing providers bound by strong government regulation, parity for the private rental sector is long overdue. But just like cliches about planning reform, debates over rental regulation distract from the structural solution: sustained redirection of investment towards the affordable housing sector.