Plan Victoria: planning ambition without an economic strategy?

Article by George Bougias, Partner Advisory

The recent release of Plan Victoria was a welcome step toward a long-term and holistic planning vision for Victoria. But almost immediately, it felt like time for an update.

At the outset, it’s essential to understand the broader context: We are navigating a period of heightened economic and financial uncertainty - marked by global trade realignments, cost pressures, volatile interest rates, inflationary dynamics, and accelerating technological change. Now, with the federal election behind us, it’s time to undertake some serious long-term thinking. Australia - and Victoria - urgently need a clear economic vision and strategy to navigate the 21st century.

While Plan Victoria sets bold goals - 2.24 million new homes by 2051 and major infrastructure investment - it lacks an explicit economic strategy to support, or underpin, those ambitions. What’s missing is a serious discussion about how planning will contribute to economic growth, productivity and prosperity over the medium to long term.

This isn’t just a gap in the plan - it’s also absent from the ensuing public debate. Most commentary focused on familiar ground: housing targets, the greenfield vs. established area balance and delivery risks for big-ticket projects like the Suburban Rail Loop (SRL). What’s largely missing is any conversation about whether these planning choices align with Victoria’s long-term economic needs.

Source: Plan Victoria; concept depicting housing within commercial sites to create diversity of homes and support for local businesses.

Several mismatches, including weak alignment between projected dwelling growth and major employment centres, stand out immediately. These mismatches risk worsening spatial inequality, increasing commute times and further reducing economic efficiency. The plan’s heavy reliance on designated activity centres also raises concerns about localised oversupply, underutilised infrastructure and congestion— issues that strain productivity and make certain locations less attractive for business and investment. These aren’t just planning and land use concerns —they’re economic vulnerabilities with long-term consequences.

Source: Plan Victoria; concept depicting increased home choices with access to jobs, shops, public transport, facilities and services.

At a more fundamental level, the plan only touches on the issues of economic growth and productivity - these are not side issues to strategic planning - they are core drivers of prosperity, housing affordability and liveability.

Australia’s continued poor productivity performance underscores the challenge and reinforces the urgent need for a fundamental review of how we plan our cities and regions. Labour productivity fell by 3.7% in 2022–23, the largest annual decline since records began. This followed a 6.9% surge in hours worked, also a record, without a corresponding lift in output, sending a warning sign that we’re doubling down on working harder, not smarter. Victoria’s own productivity performance reflects similar long-term stagnation, reinforcing the urgency of a more integrated policy response.

Plan Victoria acknowledges the importance of economic policy, referencing the State Government’s economic statement. However, a credible long-term and holistic planning strategy must do more than gesture at broader economic shifts - it must be explicitly guided by them. We’ll explore the economic statement in a future post, but for now, it’s clear more work is needed to explain how Victoria (Melbourne and the regions) will adapt to a changing world and international economy.

Importantly, Plan Victoria leans heavily on existing frameworks rather than addressing the transformational forces reshaping our world including:

• The Fourth Industrial Revolution and rapid technological disruption

• A shifting global economic order

• The rising economic role of regions, accelerated by post-COVID migration and technology

• Immediate pressures on businesses from high input costs, high rates of taxation, skills shortages and significant regulatory constraints

Many of these trends have been building for decades, yet they remain largely absent from the strategic core of Plan Victoria.

To succeed, our planning system must be embedded within a coherent economic vision - one that understands and evolves with these broader forces. Cities and regions won’t thrive on land use planning that overlooks the changing economic and technological landscape, they need strategies that can evolve and adapt.

Without a tighter link between strategic planning and strategic economic policy, Victoria risks drifting.

💬 What do you think…. can Plan Victoria evolve to meet the real planning and economic challenges ahead, or do we need a new, more integrated strategy to future-proof the state?

Comment below, we'd love to hear your thoughts!