Tram patronage in Melbourne has risen to over 200 million passengers annually, its highest since the peaks of the 1950s. Trams in Melbourne continue to be among the world’s slowest due to traffic congestion, with many routes operating at or above capacity in peak periods. According to Public Transport Victoria (PTV), these problems result from a boom in apartment construction along inner-city tram routes, with the election-sweetening policy of free trams in the central city also playing a role. This paper explores how the resilience of Melbourne’s tram system, and inner urban public transport system in general, has evolved recently in the context of ongoing urban intensification, and it can be secured in the future against the vicissitudes of short political cycles. Melbourne’s policies at state and local level encourage activity centre and tram corridor intensification, yet neither level of politics currently has answers to the challenge of significantly enhancing the performance of surface public transport across Melbourne’s urban consolidation areas. We draw on the Spatial Network Analysis for Multimodal Urban Transport Systems (SNAMUTS) tool to quantify and illustrate how policies premised on making better use of existing infrastructure require a more active approach to understand the impact of induced demand in relation to intensification. We track data on housing growth, population and public transport performance along key tram corridors between 2006 and 2016. By projecting the implied level of further population increase contained in planning schemes and by testing several scenarios of tram capacity enhancements and network densification, we seek to better understand the relationship between intensification and induced demand and highlight potential pathways out of the dilemma of a burgeoning residential sector in attractive inner urban areas and an increasingly overcrowded tram system.