MELTON Council has slammed the state government for planning a new $500million prison in the shire ahead of vital transport and health projects.
The 500-bed, privately run men's jail is expected to be operating by 2017.
News of it comes as the government's new mandatory sentencing laws take effect, adding pressure on the state's already overcrowded prisons.
The construction of the jail in Ravenhall, near Deer Park, will create a prison precinct on a former rocket range, with the Dame Phyllis Frost Centre and Metropolitan Remand Centre within several hundred metres.
Melton mayor Justin Mammarella said the council was bemused that the government appeared to be more concerned about overcrowded prisons than overcrowded hospitals, roads and public transport.
"Although council welcomes the employment opportunities that the planned prison will bring, we have been advocating to the government for several infrastructure projects and services that are much needed for our fast-growing community," he said.
Melton Residents Association president Peter Rowan said the shire was crying out for infrastructure improvements, including the upgrade of Melton Highway and works to ease traffic and parking congestion on Bulmans Road.
Corrections Minister Andrew McIntosh told The Age a new prison was vital despite the state's faltering economy.
Concerns have also been raised about contamination of the former Defence Department land. A Corrections spokesman confirmed the site was used to test rocket motors during World War II.
He said the land would be tested for contamination ahead of the prison's construction, with the cost of remediation included in the budget.
Western Metropolitan Greens MP Colleen Hartland slammed the government's "economic irresponsibility" in promising the prison before knowing the remediation costs. "A similar situation occurred when the MFB bought land at Burnley without knowing the cost of remediation. It ended up costing more than $30million, more than half the $46million total project cost."
The Victorian Council of Social Services said the $500million would be better spent on crime prevention.
Greens MP Sue Pennicuik said prisons should be a last resort, and non-custodial sentences should be applied.
The Victorian prison population increased to a daily average of 4586 in 2010-11 from the 2009-10 daily average of 4492.
Ms Pennicuik said prisons and periodic detention centres cost $2.3 billion a year. "The decision to build this prison when many social welfare services are threatened with funding cuts is hard to fathom."