Greens Senator Scott Ludlam lambasted the defunding of three affordable housing organisations last year after hearing the stories from a former homeless Canberra man in a senate committee meeting on Wednesday.
Nathan Cornell, a homeless man for eight years, told the inquiry cuts would make things worse for those on the streets.
"My personal experience is if they did cut the funding it's going to be a lot harder for people to get back in [accommodation] if they really want to get back off the street," he said. "In the long run that's what you end up resorting to survive and that's not the way we should be living," he said.
He was eventually housed by a Homelessness Australia program.
The three organisations said up to 90% of their funding were cut by the government and claimed that such blow in budget could lead to their closure.
One of these organisations catering to homeless Australians is the Community Housing Federation. Executive director Carol Croce said her group would lose $350,000 of funding, which would also lead to job losses in the area and a complete restructure.
"Our organisation had a contract with the government until June of 2016 but our funding has been cut and our contract will now end in June this year," she said.
National Shelter chief executive Adrian Pisarski echoed the sentiment and said it was likely his organisation would lose half or more of his staff as a result of the cuts.
"Beyond June 30 we face a future with no money and the organisation is considering a strategy to see how we might be able to cobble together some alternative sources of funding," he said.