Scholars have long draw on neoliberalism and paternalism as theoretical frameworks to argue that states have become less generous in providing welfare and housing resources. These theories similarly demonstrate that the resources that are provided are characterized by conditional exchanges, whereby welfare recipients and social housing tenants are required to comply with behavioural conditions. Theoretical critiques of state intervention influenced by neoliberalism and paternalism are broad, but they generally agree that conditional welfare approaches, including social housing, focus on changing individuals living in poverty themselves and not sufficiently changing policy, economic, social and institutional forces that underpin poverty. In light of these theories of state intervention, this article draws on an Australian qualitative study with tenants and service providers in supportive housing. The article shows that supportive housing is positioned as a significant intervention to not only house disadvantaged groups, but rather as an optimistic mechanism to directly improve disadvantaged people’s lives. The article argues that when coupled with long-term housing, a weak form of paternalist welfare for people who have experienced chronic homelessness can be justified.