Government-assisted or sponsored public housing represents a key component of affordable housing in Australia, yet at end of the 2005/06 financial year the total stock of public housing has again fallen well below that which applied in 2000/01. The erosion of the level of public housing stock over this period is similar to that which occurring over the previous five-year period, recorded in AHURI's 2004 report, 'Operating Deficits and Public Housing: Policy Options for Reversing the Trend'.

A key constraint on the continued provision of mainstream public housing in Australia is that the net incomes after rebates received by housing authorities should at least pay for their operational costs (net of interest paid or received). If this is not the case, any addition to stock expands the funding required to pay for the growing deficit. If funding is not forthcoming, the only option for reducing or freezing the additional funding requirement is to sell stock and therefore reduce the number of households provided with longer-term assistance. The evidence is now mounting that it is this latter scenario that is happening.