By Dominic Giannini in Canberra

Withholding GST and infrastructure payments from states if they fail to come to the table to ease a housing crisis are being flagged by the opposition.

The Albanese government has tried to incentivise states to clear red tape and put more investment towards building houses as Australians are priced out of a surging market.

Opposition infrastructure spokeswoman Bridget McKenzie flagged federal infrastructure funding as a lever to put pressure on states to stump up on housing with the crisis getting “worse, not better under Labor”.

“The coalition will have a plan that opens up more housing supply for everyday Australians,” she told AAP.

“There is a range of levers available to the commonwealth to incentivise state and local governments to increase housing supply.

“The Commonwealth taxpayer contributes billions of dollars in infrastructure funding through national partnership agreements and grant programs.”

Opposition assistant spokesman for home ownership Andrew Bragg said the federal government “need to be creating and finding a way to hit the states hard where it hurts,” so they invest more in housing.

“Everything is under consideration,” Senator Bragg told the ABC’s Insiders on Sunday when asked about withholding GST payments as a bargaining chip.

“When you see councils and states block developments, particularly apartment buildings, that is a disaster for young people.

“So we have to hit the states and the councils in whichever way we can to make sure that we build the supply that’s needed.”

Nationals Leader David Littleproud said he hadn’t seen a proposal about GST being used as a lever but “we shouldn’t have to get to a stick situation”.

“This is a crisis … and we’re in this predicament because of state and local governments inability to plan and to act,” he told AAP.

“So they need to get on with the job – I think every Australian expects that of them.”

Bringing in more skilled workers would also help address this, Mr Littleproud said.