A report released by Melbourne's Interface Councils warns that the outer suburbs of the city are at risk of transforming into "ghettos for the underclass" if government refrains from spending billions of dollars on infrastructure over the next 15 years.

The group’s Fairer Funding report says investment in critical infrastructure such as public transportation in Melbourne’s outer suburbs has failed to keep pace with the strong growth experienced over the past few decades.

“The more problematic areas in the outer suburbs are the ones that had significant growth 20 years ago, yet were not provided with infrastructure and support services at that time,” said the report.

The authors of the report claim this lack of key infrastructure threatens to exacerbate the geographic nature of socio-economic disparities in the city, resulting in the marginalisation of those who reside in its peripheral areas.

“There is the risk that parts of outer Melbourne will become a collection of ghettos, accommodating Victoria’s underclass, people who can’t afford to live in other parts of Melbourne,” said the report. “If history is allowed to repeat itself, the financial and social burden on future governments will be enormous, far greater than the cost of early intervention.”

The Interface Councils, which launched the report, represent the interests of 10 of Melbourne’s outer municipalities, and include the Cardinia Shire Council,  the City of Casey, Hume City Council, Melton Shire Council and Mitchell Shire Council. According to the councils, these areas collectively comprise 60 per cent of Victoria’s projected population growth to 2026.

The group believes they will need in excess of $10 billion in funding over the next 15 years for the construction of new schools, libraries, hospitals, roads and public transportation facilities.

Rodney Parker, the Mayor of Mitchell, warned that without key infrastructure, the outer suburbs of Melbourne could experience major social dysfunction.

“The social impacts would be along the lines of disconnected youth and communities and a lack of employment opportunities,” he said. “The reality is that if you don’t get the infrastructure required, the communities are going to become more and more disconnected from what is essentially Melbourne.”