Infrastructure Victoria has recommended the state government build a youth foyer in Wodonga and Wangaratta to break the cycle of poverty.
Acting chief executive Jonathan Spear said youth foyers gave people between 21 and 24 years old stable accommodation for about three years, while they completed education or training.
"It's a really proven effective way of both dealing with youth homelessness, but also unemployment and underlying disadvantages that they might have," he said.
Mr Spear said Wodonga and Wangaratta were identified among other regional Victorian towns.
"Because they've got existing public transport links that young people would need to get there, but also access to the education and community services that you need to deliver these youth foyers," he said.
"And when you're looking specifically at Wangaratta and Wodonga they're locations where they've got lower levels of educational attainment and higher levels of youth unemployment comparing it to the rest of the state.
"So say in Wangaratta you've got up to 34 per cent of people between 20 and 30 years old who haven't completed year 12, whereas the Victorian average is 17 per cent, so it's about double the average.
"And in Wodonga, less than 40 per cent of those aged 15 or over have completed Year 12 or equivalent, considerably lower than the state average of about 52 per cent."
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Mr Spear said lower educational attainment lead to higher unemployment.
"We think in regional Victoria there can be a smaller job market too, so that can make it harder for young people to gain employment without experience," he said.
"So what the youth foyers can do is support young people, who might be vulnerable, to navigate that transition of finishing education and getting their first job, but also breaking the cycle of disadvantage that they might be in already."
In its 30 year infrastructure strategy, Infrastructure Victoria recommended the government fund at least six new 40 bed youth foyers within five years.
Mr Spear said he was confident the recommendation would be accepted.
"In the first strategy we issued in 2016, over 90 per cent of the recommendations that we've made to the government are either implemented or underway," he said.
"These youth foyers have been evaluated independently and its an existing model that we think is a really practical way, a really good way of addressing youth disadvantage, unemployment and educational attainment in the regions."
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