Just a quick reality check for you here: People don't travel halfway across the country for a water park. Only the smallest, most insignificant number of people from interstate will decide to take their holidays to the western suburbs of Sydney rather than the Gold Coast because of one water park.
Here's why: The reason WnW on the Gold Coast is so successful as a destination is because there is a critical mass of theme parks:beach/other attractions to make the Gold Coast as a whole a destination. The park manages to get as many tourists as it does thanks to some clever ticketing, leveraging off the other theme parks.
Now, that won't work in Western Sydney since it really doesn't have that critical mass of attractions, (Sydney does, Western Sydney does not) but there are a buttload of locals that will support the park. The Government approved the proposal because it will provide jobs and would be popular with the locals. The website might say it aims to attract tourists from around Australia because the promotional website is supposed to say things like that, but the reality is that 99% of tourists who visit the park will do so as part of a holiday that they were already taking, and maybe they'll do a deal with Sydney Attractions group for combo tickets, but make no mistake, this park is predominantly for locals of Western Sydney, and as such there's no reason why they couldn't build another WnW in Melbourne to go after locals there. I agree that The Sydney park would have to be a success before they they seriously thought about another, and it's unlikely to happen for a while since they've sunk so much money into the Sydney park, but if you think a WnW in Melbourne would be competition for the Sydney park then you are well and truly mistaken.