Discussion about the new metropolitan planning strategy needs to address three fundamental shortcomings if Melbourne is to remain the most liveable city. Disappointingly, the strategy is not strategic. It undersells the western region of Melbourne and does not explain adequately to Victorians as a whole, not just Melburnians, where the money is coming from.


Consequently it makes no robust strategic choices. It's a plan for everyone. Every conceivable idea about Melbourne's development gets a run. It advocates more freeways, more public transport (but not soon enough), a greener Melbourne, a more concentrated Melbourne, more apartments in the city and more houses in the suburbs, all with jobs clustered nearby. Every element of this "Goldilocks city" is due to converge by 2050, but the plan gives little indication of how this will occur, at what cost and who will finance it.


In practice, major planning and infrastructure decisions are made to shorter time-frames by government, business and residents. Think especially of the largely unfunded commitment to build the eastern end of the East-West Road Link, including a tunnel without verified economic benefits, in preference to the metro rail project and other freeway links with clearer economic payoffs.


Contrast such hasty thinking with the more strategic choices made by people and business. Over the past decade, the growth of Melbourne has shifted westward, with the western region now accounting for much of Melbourne's booming demographics. Its population has almost doubled since the early 1990s and is approaching 1 million residents. Almost overnight, a region the size of Adelaide has grown up in the west.


The average rate of jobs growth is also higher in the western region than the rest of Melbourne. Census data show manufacturing jobs held up better in the west than elsewhere in Melbourne between 2006 and 2011, and new professional and service jobs are following the population shift from east to west. There are now more than 250,000 jobs in the western region, including more than 50,000 health, education and childcare jobs.


Total business investment in non-residential building approvals in the west exceeded $1 billion in the first nine months of 2012-13. Consider that the west is essentially home to three airports, two ports, the biggest new rail project in the country, the nationally important car and defence industries, plus many new and small businesses (with a higher start-up rate than Melbourne) and this economic success story should be embraced.


Happily, the strategy noted some of the west's economic and social transformation, including the game-changing $5 billion investment in regional rail, the revitalisation of Sunshine and Footscray, and the rapid growth in the Wyndham corridor stretching down to Avalon and Geelong. However, Plan Melbourne doesn't sufficiently recognise the pivotal role for the western region in a more liveable Melbourne and globally competitive Victoria.


The biggest threat to the surging demographic growth and economic dynamism in the west of Melbourne, and we think for Melbourne and Victoria in general, is the precipitous decision to start the eastern end of the East-West link, including a four-kilometre-long road tunnel between two inner suburbs, costing effectively $2 billion per kilometre.


The most strategic infrastructure project for a city racing towards 5 million is to resolve the spiralling truck and traffic flow problems at the western end of the East-West link (estimated to cost $4 billion) by building a second river crossing.


An equally urgent need is to start building a metro rail link from the inner west up through the Parkville precinct and on to the Domain/South Yarra and beyond. Estimated to cost $8 billion, this rail project would better meet the needs of all Melburnians, especially residents and businesses in the south-east. It would guarantee Melbourne a second rail connector, attract more people onto trains, take cars off congested roads and eventually separate out heavy transport and rail freight.


Ironically, this investment mix would better link people in the east with all of Melbourne and Victoria. Constructing a fast rail link from the city to Tullamarine, estimated to cost $3 billion (with potential stations at Flemington Racecourse and Highpoint), would complete the package, better connect the northern region of Melbourne to the city and the south, and warmly welcome international travellers and business.


The most telling feature of this superior infrastructure package is its similar cost to the road-only, East-West Link proposal of $15 billion. Moreover, it could be financed within anticipated annual Victorian government budget revenue of $50 billion at the manageable rate of $1 billion a year for 15 years. This course of action would release valuable private sector funds for other investment priorities, including the eastern end of the East-West Road Link.


Melbourne needs a longer term strategy, but one that should work for the north, south, east and west. Above all, the city needs an affordable and accountable mix of road and rail projects in the next 15 years that can be financed from within the $1 trillion of revenue that Victorian governments will accumulate by 2030. The best strategy for 2050? Spend wisely before 2030.


Lynne Kosky is the Vice Chancellor's Fellow at Victoria University. Professor Bruce Rasmussen is director of the centre for strategic economic studies at Victoria University.