Chief Minister Andrew Barr has declared a more compact city is a more cohesive city as he warned growing urban centres must prioritise stronger community ties.
Mr Barr said opportunity would spread out of reach from more people without greater housing density and investment in communities, as he sounded the alarm about political pressure fraying social cohesion.
"Because the test of our cities will not just be how much they grow, how big their economies become, but whether people still feel they belong," he said.
"If we get this right, there is a very different story available for our future. Growth that builds connection, change that strengthens communities, and cities where people don't turn away from each other, but towards each other."
Mr Barr said people who felt left behind did not sit quietly, but looked for explanations that were increasingly simple, emotional and unfortunately wrong.
"Uncertainty becomes grievance. Loneliness becomes anger. And that reshapes how people see institutions, policy and each other," he said.
Mr Barr addressed the Australian Local Government Association's urban forum at the National Convention Centre on Tuesday, telling delegates housing policy was also cohesion policy.
"If we push growth outward to urban fringes, distance increases, commutes get longer, infrastructure costs more, access declines. And, over time, so does participation in our community," he said.
"So we've made a decision to grow the infill in our existing suburbs ... This helps this city stay connected, to use its infrastructure more efficiently, to better support public transport, and to strengthen cohesion."
But infill meant change in existing suburbs which created social pressure and where leadership mattered the most, he said.
"Our view is clear: a more compact city is a more cohesive city. One where access, opportunity and participation remain within reach," he said.
Mr Barr referenced Tip Toe, the Channel 4 television miniseries written by former Doctor Who showrunner Russell T Davies that charts the deadly impact of contemporary homophobia in Manchester.
The program was essential viewing for anyone who wanted to understand prevailing social trends in the western world, he said.
"The story is essentially this: two neighbours, the same street, years without incident. And then, quite quickly, everything breaks down," Mr Barr said.
"Not because of one moment, but because of accumulated pressure. Economic dislocation, loneliness, anger is amplified online, and public conversation defaults to blame.
"What begins as misunderstanding becomes suspicion. Suspicion becomes grievance, and then the change is sudden. And what makes this story so powerful is just how familiar it feels."
The Chief Minister said Australia remained a more cohesive society than the United Kingdom or the United States but this could not be taken for granted.
"Trust is more fragile and complex problems are being reduced to dividing lines. And you can see this most clearly where pressures intersect in housing, in migration, in infrastructure, and cost of living," he said.
"And this is where policy becomes personal. It's where local government sits at the front line, when the abstract becomes real and decisions are felt street by street, suburb by suburb.
"So for urban leaders in this time, the task is clear. It's not just managing growth. It's maintaining cohesion whilst we live. And that requires deliberate choices."
Mr Barr touted his government's move to abolish stamp duty for first home buyers and others as an example of a joint move to boost housing and social cohesion.
"It punishes mobility. It locks people into homes longer than what suits them. And it locks others out entirely," he said of the "inefficient" tax.
