The distinctive high-rise public housing towers of Redfern and Waterloo could be pulled down under a $540 million plan that allows private developers to profit from government land.
The Department of Housing is the largest single landholder in a 340-hectare area earmarked for massive redevelopment.
About two-thirds of the department's 23.4-hectare Redfern-Waterloo estate would be handed to private developers, say confidential government documents dated October 2004.
The developers would be allowed to build 6300 apartments on 15.8ha of the department's land, bringing in 12,500 new private tenants and owners to change the social mix.
The aim is to redevelop the estate, which contains 3519 apartments, at no cost to the Government, the papers reveal.
Limits on floor space in the area should be scrapped and developers given the go-ahead to build more than the amount now allowed, the documents say.
The new Redfern Waterloo Authority could use the money from the private development to build new houses, refurbish existing stock and temporarily move 200 families to other accommodation during the reconstruction phase, the papers say.
But the documents reveal that the Government has wider goals than just making money out of public land.
It also plans to completely change the face of the two suburbs by reducing the proportion of public tenants and attracting more affluent residents to the area.
The 7000 public tenants would be allowed to stay. They make up about 35 per cent of the population, which stands at about 20,000.
The plan is to add 20,000 new private renters and owners, doubling the area's population. This will reduce the overall percentage of public housing to 17.5 per cent.
The goal is to "integrate" the more affluent newcomers to "break down any stigma associated with concentrated public housing," the documents say.
But the papers also show the Government has a tougher option. If it wants to move public tenants out permanently and get a quicker result, it could sell a bigger part of the site to private developers and use the money to buy public housing elsewhere.
The overhaul would include a $297 million demolition and rebuilding plan that is likely to see the end of the 30-storey Turanga tower where the Aboriginal youth Thomas "T. J." Hickey died in February when he crashed his bike, sparking the Redfern riot. Its twin, Matavai, is also likely to go, along with seven 17-storey buildings.
"It is likely that the majority of the high-rise buildings (which represent two-thirds of the stock) will need to be demolished because they will be the hardest to refurbish to meet current standards and to allow the mingling of different types of occupier", the documents say.
Private sector development could extend over 10 years "depending on the rate of take-up of the new apartments", they add.
This would mean "a lower ultimate proportion of public housing tenants in this area".
The papers reveal that the average age of tenants on the Redfern-Waterloo estate is 59 years. Almost one in three public housing tenants in the area receives a disability support pension.