Homelessness services were unable to provide housing to more than one third of clients in the ACT last year as spending on the sector dropped, a Productivity Commission report has found.
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The proportion of clients unable to find accommodation climbed from 33.9 per cent in 2014-2015 to 34.1 per cent.
The ACT also recorded the highest percentage of clients experiencing repeat periods of homelessness, at 7.9 per cent, larger than the 5.6 per cent national average.
Funding for homelessness services dropped from $24.8 million in 2012-2013 to $20.1 million in 2015-2016, in real terms, for the ACT.
ACT Shelter executive officer Travis Gilbert said while public housing had previously been the common exit point into stable housing for homeless people, waiting times had increased as investment declined in favour of subsidising people to live in private rentals.
As a result, homelessness services took on another purpose.
"[They] function as a kind of a holding pattern or 'safety net beneath the safety net' for people whose incomes do not match market prices for housing, or whose disability or other supports mean there are next to no options in private rental," he said.
Public housing dwellings grew by 84 to 10,917 in 2016, while the number of applicants on the waiting list dropped by 403 to 1,917, the lowest figure since 2012.
Mr Gilbert queried how the waiting list had fallen.
"If we accept that 84 new properties were added, housing 2.2 people per property, we get a maximum of 170 people housed. Where are the 233 people and why were they kicked off the list?
"They haven't all been allocated public housing because the number of new allocations is much lower but not transparent in the reports."
The number of households in public housing dropped by five to 10,606, and those in community housing grew by 60 to 634 last year.
ACT Housing said a total of 591 households moved into public housing dwellings throughout 2016.
"Over the past few years there have been higher vacancy rates and a drop in rental prices thus making it easier for more people to access private rental, though we recognise that the latest figures show a tightening in the rental market which may flow through to an increase in households on the waiting list.
"The drop in the number of households on the public housing waiting list is also partly due to a strengthening of conditions on the suitability of applications and tighter targeting in the assessment processes to ensure that public housing is allocated to those people who need it most."
Mr Gilbert said while the Productivity Commission report into government services showed the ACT's public housing stock had increased, it remained a smaller proportion of all housing than 10 years ago.
The current funding model for public housing and homelessness disadvantaged the ACT, and federal funds should be allocated according to public housing numbers and need rather than population, Mr Gilbert said.
The federal government provided states and territories with $1.3 billion in 2015-2016 through the National Affordable Housing Agreement, which included about $275 million for homelessness services, while under the National Partnership Agreement on Homelessness, it provided $115 million.
That year, the ACT received $21.7 million under the NAHA and $1.5 million under the NPAH.
Homeless clients were more likely to find work after engaging with services in the ACT, as 23 per cent were employed after getting assistance, compared to the 18.2 per cent national average, the Productivity Commission report showed.
The ACT Labor party committed to a new housing strategy before the October election and has begun consultations.
