News: SYD Sydney Airport Holdings declines to develop city's 2nd major airport, page-11

In fairness to Avalon, it was built when Tullamarine wasn't at full capacity and prior to its expansion. Badgerys Creek is slightly different as population movement is already moving to the west and CKS has expanded due to growth in passenger numbers. Not sure how many posters live in Melbourne but Avalon will be an international airport in the next decade. The next two largest cities in Victoria, Geelong and Ballarat is growing strongly and is located within 10-40 mins of Avalon.
In terms of SYD, they have taken the conservative option. It came down to risk/reward. They chose the former.