The department will make "Every effort to assist tenants to find a property close to their preferred area.": Pru Goward. Photo: Wolter Peeters
The O'Farrell government ignored advice from its own consultants on how to evict vulnerable tenants from Millers Point public housing with minimal damage to their health and wellbeing.
A planning expert who reviewed the study said the relocation appeared "clumsy" and "driven by people trying to get their hands on some quick cash".
But Community Services Minister Pru Goward said the government must balance the needs of Millers Point tenants against those of 57,000 families on the social housing waiting list.
The government will sell 300 properties at Millers Point, The Rocks and Gloucester Street, saying maintenance costs and rent subsidies were too high. The proceeds, expected to be hundreds of millions of dollars, will be reinvested in the social housing system.
A social impact assessment on selling public housing at Millers Point, carried out for the government last year, said some proceeds should be used to build new social housing in the area, especially for older residents.
It warned relocated residents may experience ''negative impacts of stress and poor health outcomes'', especially the elderly and those with mental health issues or long-term connections to the area.
More than 40 per cent of residents are 60 or over and some have links to the area going back five generations.
The report, by Cred Community Planning, urged the government to help provide new affordable housing for key workers in Millers Point. It noted a fall of up to 45 per cent in low-income rental stock in the City of Sydney between 2006 and 2011.
The government rejected the recommendations, saying sale proceeds would be spread across the social housing system and older people would be encouraged to "build connections in their new communities".
A draft of the report was finalised earlier this year but it was not released publicly until Wednesday.
Ms Goward said the department would make "every effort to assist tenants to find a property close to their preferred area".
University of Sydney urban planning professor Peter Phibbs said it made sense to reinvest money in social housing, but "the implementation strikes me as clumsy".
''It seems to be driven by people trying to get their hands on some quick cash rather than thinking about things from a policy perspective," said Professor Phibbs, who peer-reviewed the consultants' report.
Moving elderly residents away from their communities and social ties was ''not a very humane policy'', and inconsistent with the government's own ageing policy.