Last week, six months into the job, the Minister for Social Housing Mark Arbib delivered a speech to a burgeoning industry: the community housing sector. His aim: to inspire the private sector “to be creative in thinking about how federal government can better help people who need access to housing support”.

In the speech, Arbib said that public housing in its current form was a financially unsustainable business model, in drastic need of change. He’s right.

Low returns, and decades of under-investment, at all levels of government means that after “60 years, state and territory investment in public housing is longer financially viable”, deputy head of Australian Centre of Social Services and head of Queensland National Shelter Adrian Pizarski told Crikey.

“There is not enough capital going in to keep it afloat in a viable way, we need to try some new approaches,” Victorian Council of Social Services CEO Cath Smith told Crikey.

Last year, almost 250, 000 people remained on public housing waiting lists across the country, and while waiting times vary between states and territories, applicants in some areas of NSW can wait up to 13 years for a property. Ageing public housing stock is also set to affect the number of available properties. Meanwhile, demand is set to rise, as increasing house prices collide with an ageing generation of renters in need of affordable housing.

Over the next five years the federal government will invest $20 billion into social and affordable housing measures, and allocate $6.2 billion over five years to the states and territories under the National Affordable Housing Agreement.

But will this be enough to meet demand? Especially when you consider that 60,000 families classified in “greatest need” already occupy the public housing waiting lists.

According to a National Shelter Report from last year, there are about 330, 000 public housing dwellings in Australia, and about 46,000 social housing dwellings supplied by the community housing services sub-sector. Meanwhile, demand for public housing is estimated to rise by 28% or about 93,000 houses by 2023. And to meet this demand, Arbib says, Australian taxpayers are looking at a cost of about $25 billion.

The Labor government solution is a continued shift away from public housing towards a social and community housing model. A move Arbib said will “fulfil the glut of housing and drain of public housing debt on the economy”.

However, in order to do this, Arbib suggests a significant attitude change is needed from the states and territories.  “Parochial” and “protectionist” attitudes towards state assets have no place in the solution. And if they do persist, “public housing will continue its terminal decline”, Arbib said.

To meet the scale of this demand would be impossible under a publicly funded system, which is where the community housing comes into play, according to Arbib.

Pisarski said in recent years state governments have found themselves in an increasingly difficult financial position. “In an attempt to make sure public housing is only available to those who desperately need it, the federal government has gradually constricted who the states are able to house”, i.e. only the most disadvantaged among society. Meanwhile, state governments only able to charge tenants 25%, of a very low income, as rent.

Change, Pisarski told Crikey, will mean selling off state government housing stock (something that has already begun) to community housing services, who in order to maintain a financially viable business, will need to supply housing to a broader range of tenants, not only to those with the lowest incomes.

Pisarski said this push for change will need to come from the Commonwealth government, and big funding is needed.  “However, we need to ensure that varying income levels among tenants are shared: although states need to transfer stock, the state can’t only host the most disadvantaged,” he said.

“The reality will be we will support the role of the not-for-profit community sector and we support their place in supporting the solutions,”  Smith told Crikey.

However, Smith stressed that whatever set of solutions are rolled out “it’s still going to require strong state and federal investment”.  “The federal government can’t outsource risk and financial viability without strong federal funding measures,” Smith said.

Pisarski said that while there is a risk for people on the lowest incomes, to be affected negatively by   community housing sector providers will be required to accept tenants off the public housing waiting list. In Queensland this is already the case. This, he said, will provide protection for both systems.

Executive director of the Community Housing Federation Carole Croche said such fears were not warranted: “We are a not-for-profit sector that handles the most disadvantaged people in our society,” she told Crikey.  Croche also welcomed the push for a national regulation. “We’ve been pushing for it for almost 10 years now, we need something consistent and strong to work with,” she said.

But with the demand for public housing for elderly Australian’s set to double by 2028, Pisarski said that regardless of whether the change is provided by the public or community sector, “something has to be done”.