"The Prime Minister [Tony Abbott] keeps talking about the 'death cult' of Islamic State but ice is a war that is raging across every city, town and social class of Australia," Gibbs tells Fairfax Media.

"Ice is stealing a lot more of our young people than IS and that is a reality the whole community needs to face up to."

That is not the only example of misplaced government priorities, Gibbs says, pointing to dole reform, cuts to women's refuges and a reluctance to borrow.

He sees that young people have had to bear too much of the burden in service cuts as budgets are reined in and argues Australian governments should be taking advantage of record low interest rates to borrow money to invest in tackling youth mental health and homelessness.

"One of the biggest fallouts of the global financial crisis is that a disproportionate burden of public cutbacks is falling on young people," Gibbs says.

"This government has taken a deeply cynical stance that underestimates the Australian people, when with good leadership I think most voters would support more investment in our youth."

One urgent investment should be in a national co-ordinated response to an epidemic in the use of ice, he says, arguing it would be in the country's best interests, socially and economically.

Gibbs also lashes Prime Minister Tony Abbott for pandering to middle-class Australia's obsession with property ownership while being "in denial" about his responsibilities to try to ensure the neediest people in the community have access to basic shelter.

Such concerns about where the most disadvantaged will take shelter is a long way from the property market that Mr Gibbs spent more than 20 years researching for Macquarie Bank.

Now he is concerned that a booming property market is disadvantaging not only the most vulnerable but average working Australians.

"It was so naïve of the PM to quip recently he wants to see housing prices keep going up. Really? We are on the cusp of really serious problems with housing affordability, especially in Sydney," Gibbs says.

"Australia should not keep building housing for foreign investors with no rent ceiling in place for local workers. It is absolutely unreasonable to expect nurses, teachers and police to move out of cities and then commute to work."

Gibbs advocates the introduction of rent ceilings and greater state-based investment in medium-density community-based housing.

Lace it Up 

His comments come ahead of National Homeless Persons Week from August 3 to 9. Youth Off The Streets will be selling blue shoelaces for $5 in a bid to raise money and awareness. People are encouraged to share photos of themselves wearing the laces on social media marked #laceitup.

"The time it takes to do up your shoelaces is a chance to reflect, just briefly, on how many little things most of us take for granted – like the comfort of being able to take off our shoes at night because we have a safe place to sleep," he says.

Mr Gibbs, who retired from the role of chief economist at Macquarie Group after 15 years in March, criticises the government for short-sightedness in cutting back funding in key areas when it should be increasing expenditure.

"As the mining investment boom falls off a cliff there are only two ways the government can go: cut back spending or borrow more," he said.

"This government is cutting back but the smarter thing to do would be to take advantage of record low interest rates to take on cheap debt and invest in targeted large infrastructure projects, including social infrastructure."

The federal government should be borrowing "tens of billions of dollars" and the states should also be borrowing to invest more, he said.

"Youth mental health services are being cut at a time when there has never been a greater need."

As a veteran investment banker Gibbs understands the mentality behind the current push to link government funding of social services to outcomes, although it is a trend that worries him.

"It is proper that charities should have to collect and report data in a meaningful way. We are not asking for a blank cheque. But there must be an understanding that we can't wring an efficiency dividend out of vulnerable human beings," he says.

A co-ordinated response to the ice problem that sees the states cooperate on policing as well as treatment services should be a national priority, he said.

"The government will have to face up to its responsibilities and lead. As NSW Police Commissioner Andrew Scipione has warned repeatedly, the ice epidemic is not something we can just arrest our way out of."

A former adviser to federal and NSW treasurers, Gibbs campaigned hard against now-shelved plans to make youth wait six months to be eligible for unemployment payments.

"It would have wrought havoc. We would have seen riots and increased crime rate. I am very pleased the government saw sense."

The NSW government's cuts to women's refuges are another target for criticism.

"It is a tragic irony that in the same year Rosie Batty is Australian of the Year, funding to women's refuges has been slashed. She is out there trying to raise awareness but if victims have nowhere safe to go, then what?"