Sydney and nearby cities will increasingly need to shift from traditional house-and-backyard homes to units in suburban hubs, a future-looking commission says.
The Greater Cities Commission outlined its vision to turn Sydney and its neighbouring areas into a metropolitan region resembling the San Francisco Bay area or the Netherlands' Randstad in a discussion paper released on Thursday.
As well as fast rail and bidding to have Australia's next submarine base, a key to the 20-year plan is overcoming the too-often mismatch between supply and demand for types of housing, the paper says.
The commission recommended increasing the proportion of multi-unit and higher-density housing in accessible locations that are supported by infrastructure.
The government-commissioned review of this year's floods in northern NSW and western Sydney made a similar recommendation.
Councils would have to deliver 25 per cent of all new housing within 800 metres of a strategic centre or transport hub.
The Urban Development Institute of Australia had its own recommendations it says will complement those in the discussion paper.
"There is a long way between an ambitious vision and seeing that vision turn into reality," the institute said in a statement.
It recommends the government move transport and land use planning into one agency and ask the productivity commissioner to review how it can better leverage private investment.
The paper encompasses Sydney, Newcastle, Penrith, Wollongong, Gosford and Illawarra-Shoalhaven, an area roughly one-third the size of Tasmania.
Each city will require its own so-called "globally significant innovation districts" centring on semiconductors, defence, aerospace and modern manufacturing.
Premier Dominic Perrottet says the discussion paper will soon be accompanied by other outlines on the state's future for fast rail and the defence and aerospace industries.
"When governments drive confidence, the private sector invests," Mr Perrottet said on Thursday.
"For people to invest, they need to know where we're going as a state."
Part of the defence industry strategy will require competing with other states for federal investment in a new submarine base.
Mr Perrottet is the only Liberal leader of a mainland state, but doesn't expect that to present a challenge with the federal Labor government.
"It's in the national interest to have this base here," he said.
But Urban Taskforce Australia described it as a "glossy cliche-filled paper" that functions as a "as a marketing pitch for an ivory tower utopian vision for greater Sydney".
"It promises global competitiveness and local liveability, but its policy targets will take housing supply backwards and drive price upwards," said the group's CEO Tom Forrest.
"The Discussion Paper does nothing to boost housing supply now and ignores the crisis we currently face".
But think-tank Committee for Sydney said the paper was a fantastic promise of things to come, with fast-rail connections from Newcastle to the Illawarra key to enabling the huge economic opportunities.
"The focus should now move to concrete policies and financial commitments - let's turn this great vision into concrete commitments and policy," the committee's public policy adviser, Harri Bancroft, said on Thursday.
The announcement follows the publishing on Monday of the state government's 50-year future transport vision, which de-emphasises private cars.
Mr Perrottet said the full six-cities strategy will be finalised by the end of next year.
Opposition planning spokesman Paul Scully said without a finalised plan, Thursday's discussion paper was a distraction to cover a lack of progress on previous plans.
"What we have today is a tired government announcing yet another plan to have a plan," he said.
"Improving the global competitiveness and local livability of Sydney should start with finishing half done projects on time and on budget."