The motion to amend the city's development contribution plans, which was approved at Monday's council meeting, came from an identified need to increase social and affordable housing.

The Lake Macquarie City Housing Strategy 2020 identified that 13 per cent of city households need social housing, which supports the disadvantaged including domestic violence survivors and people with disabilities; or affordable housing, which is for people on low incomes.

Based on current supply, the waitlist for people needing this type of housing is between five and 10 years and it is forecast that an additional 1825 social or affordable dwellings will be needed by 2036 to meet demand.

Cr Adam Schulz said 13 per cent was a significant number of people when talking about Lake Macquarie's population of about 200,000.

Cr Barney Langford said the initiative would benefit the city. "If you can't house your family or can't afford to pay rent or if you're paying rent but something else is going by the board then the social fabric of our community breaks down," he said.

Cr Jason Pauling supported the motion, but said he did it "far less gleefully" than others. He referenced the council report which said the discount would amount to approximately $650,000 per year of development contributions council would not collect, based on approvals over the past five years.

He asked what projects would be foregone due to the almost $2 million reduction expected over three years.

"Unfortunately I think the problem is bigger than this. I think this is a small piece of that puzzle but it comes at a cost and that's the key bit," he said. "I understand it's only $650,000, but I'm sure similar comments were stated down at Central Coast Council not that long ago.

"Everything comes at a cost. This is the tradeoff. It is a good initiative, however I do wish to highlight there is a harsh reality. It is to some degree a gamble, we really don't know what impact this will have."

But Mayor Kay Fraser said the situation was not like Central Coast Council as the initiative did not require council to outlay money.

"This is not money that's going to put us in debt because we don't already have it," she said. "This is about us caring about people.

"For someone like me who grew up in Department of Social Housing I know how important it is to have affordable and social housing out there."

Cr Brian Adamthwaite said in response to Cr Pauling that council got "an investment in social equity" in return for the financial impact.

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