The assessment comes from Infrastructure Australia's chief of policy and research, Peter Colacino at the inaugural Infrastructure and Investment Summit, hosted by Business Illawarra.

"We are fundamentally in an industry that is broken," he said.

The assessment comes at a critical time for the infrastructure sector, particularly in the Illawarra, as the region cries out for more housing, transport infrastructure and freight connections.

Read more: The crimes that have risen and fallen in the Illawarra

Population growth in the Illawarra is expected to create demand for an additional 58,000 homes in the Illawarra, however even with large land releases occurring, little, if any, of the new houses will address the affordability crisis.

Mr Colacino said that councils and communities needed to get behind medium density and affordable housing.

"We need to get the mix right, particularly medium density housing and a mix of affordable and social housing in new releases," he said.

In addition to including affordable housing in new developments, Mr Colacino suggested that existing public housing stock could be renewed to create more homes.

"NSW has a large stock of existing social housing that might not be in the right place and might not be fit for purpose. Government seriously needs to consider looking at that existing stock, releasing it into the market and reinvesting those funds in new properties that match the needs of the market, both in terms of locations and the style of development," he said.

A Housing Trust spokesperson said that while this strategy is sound, as some public housing is no longer fit for purpose, there needed to be a net increase in the number of affordable units.

"What has happened is there's been a net loss. There has been some renewal, but they have got to keep pace and increase the stock of social housing," the spokesperson said.

Housing reform advocacy body Everybody's Home highlighted that there was an urgent need for affordable housing.

"People on low and modest incomes are being pushed to the brink of homelessness," national spokesperson Kate Colvin said.

"This is the right thing to do but also the smart and rational thing to do. The federal government's own economic adviser is pointing out that social housing is an economic and social imperative."

The focus on housing coincides with the release of parliamentary inquiry into housing affordability and supply.

Committee chair Jason Falinski said the system was failing.

"We need to reform broken planning systems, fix inefficient regulation, and stop new home buyers unfairly bearing the brunt of taxes and charges that are designed to raise funds, not living standards," he said.

The report recommends that the federal government give grants to state and local governments that build affordable housing.

Read more: 10 things to do around the Illawarra this week

While policy settings are one piece of the puzzle, constructing the housing is another, with Mr Colacino highlighting that the infrastructure industry is facing significant pressure to deliver the largest infrastructure budget ever, tipped to top out at $52 billion worth of projects in 2023.

A shortage of skills, plant and materials and rising insurance costs, among other factors, are causing major builders, such as ProBuild, to collapse and leading to cost blow-outs and delays to major projects.

Compounding this is the concentration of major projects such as Sydney Metro and Melbourne's Suburban Rail Loop in major cities, leaving little capacity left over for regional infrastructure projects.

"We need to move to greater engagement of the supply chain and innovation through them with a clear and transparent pipeline and adoption of consistent contracting principles supporting digital innovation," Mr Colacino said.

Chief executive of Infrastructure Australia Romilly Madew said that with trends towards decentralisation not going away even as COVID-19 restrictions are lifted, governments will need to seriously consider how to deliver the right infrastructure to Australians.

"We're seeing large organisations and governments change their approach to their workplace, and that means staff can be located anywhere in Australia," she said.

"That is an opportunity for our regions, at the same time, it's a challenge because we need to make sure that we have the right organisations and services in place in our regions."

In the short term, however, governments need to deliver more affordable housing, said the Housing Trust spokesperson said.

"If we don't do something, then people are going to be homeless," they said.

"Homelessness doesn't just mean sleeping rough, it means unstable housing, overcrowding, and it's very difficult to keep a job to keep your health and to raise your kids if you're not in a stable, affordable home."

To read more stories, download the Illawarra Mercury news app in the Apple Store or Google Play.