Community groups have welcomed Labor’s plan to pour $6.6 billion into 250,000 new rental homes, with a cap at 20 per cent below the market price.

Federal Opposition Leader Bill Shorten announced the plan in his opening address at the ALP National Conference on Monday. It includes 15-year subsidies of $8,500 per year to investors who build new houses, which has been celebrated in the sector.

Community Housing Industry Association Chief Executive PETA Winzar welcomed the long-term plan and the Australian Council of Social Services said the 25,000 units and homes over the lifespan of the program was a good start.

“Our plan will mean that a family paying the national rental average would save up to $92 a week, every week of the year,” Shorten said. “[We’ll] make sure these homes are built where they’re needed most, and to go to the people who need them most.”

The cost of the program is valued at $102 million over the forward estimates to 2021-22 and $6.6 billion over the decade to 2028-29. Shorten planned the tell conference delegates Labor’s mission between now and the next federal election is to not only secure government, but to “restore meaning to the fair go”.

In a speech extract circulated before the event, Shorten said: “A hidden struggle in this country is being fought by the hundreds of thousands of our fellow Australians who can’t afford to live anywhere near where they work. They’re spending over a third of their pay packet on rent – and plenty more on petrol each day they travel.”

Social Services Minister Paul Fletcher condemned Shorten’s plan, pointing out that a similar program under Kevin Rudd had been full of holes.

“The incentive is the same for a one bedroom unit or a four bedroom house – so the scheme has discouraged the construction of bigger houses for families in need. Bill Shorten wants to revive the scheme, but how it will be funded is all smoke and mirrors.”

Shadow Treasurer Chris Brown has rejected Fletcher’s analysis and said the scheme under the Rudd government had worked well. But he added that Labor had learned how to improve it and the party was taking action to make it easier to find housing.