Gradle-based projects under Java 17 try to launch Gradle daemon with VM option -XX:MaxPermSize=512m removed in Java 17

Running with Java 17 (now required?) with Gradle-based project fails because Gradle launcher command contains VM option -XX:MaxPermSize removed in Java 17.

Environment

• Operating System: macOS
• JDK version: Corretto 17.0.3.6.1
• Visual Studio Code version: 1.69
• Java extension version: 1.8.0

Steps To Reproduce

1. Open Gradle-based project
2. See Java project fail to be created
3. Look at output for Language Support for Java:

WARNING: Using incubator modules: jdk.incubator.foreign, jdk.incubator.vector
[Warn  - 10:34:48 PM] Jul 9, 2022, 10:34:48 PM Synchronize project slime failed due to an error connecting to the Gradle build.
Could not run phased build action using connection to Gradle distribution 'https://services.gradle.org/distributions/gradle-7.4.2-bin.zip'.
org.gradle.tooling.GradleConnectionException: Could not run phased build action using connection to Gradle distribution 'https://services.gradle.org/distributions/gradle-7.4.2-bin.zip'.
	at org.gradle.tooling.internal.consumer.ExceptionTransformer.transform(ExceptionTransformer.java:55)
	at org.gradle.tooling.internal.consumer.ExceptionTransformer.transform(ExceptionTransformer.java:29)
	at org.gradle.tooling.internal.consumer.ResultHandlerAdapter.onFailure(ResultHandlerAdapter.java:43)
	at org.gradle.tooling.internal.consumer.async.DefaultAsyncConsumerActionExecutor$1$1.run(DefaultAsyncConsumerActionExecutor.java:69)
	at org.gradle.internal.concurrent.ExecutorPolicy$CatchAndRecordFailures.onExecute(ExecutorPolicy.java:64)
	at org.gradle.internal.concurrent.ManagedExecutorImpl$1.run(ManagedExecutorImpl.java:48)
	at java.base/java.util.concurrent.ThreadPoolExecutor.runWorker(ThreadPoolExecutor.java:1136)
	at java.base/java.util.concurrent.ThreadPoolExecutor$Worker.run(ThreadPoolExecutor.java:635)
	at java.base/java.lang.Thread.run(Thread.java:833)
	at org.gradle.tooling.internal.consumer.BlockingResultHandler.getResult(BlockingResultHandler.java:46)
	at org.gradle.tooling.internal.consumer.DefaultPhasedBuildActionExecuter.run(DefaultPhasedBuildActionExecuter.java:63)
	at org.gradle.tooling.internal.consumer.DefaultPhasedBuildActionExecuter.run(DefaultPhasedBuildActionExecuter.java:31)
	at org.eclipse.buildship.core.internal.workspace.EclipseModelUtils.runPhasedModelQuery(EclipseModelUtils.java:111)
	at org.eclipse.buildship.core.internal.workspace.EclipseModelUtils.runTasksAndQueryCompositeModelWithRuntimInfo(EclipseModelUtils.java:86)
	at org.eclipse.buildship.core.internal.workspace.EclipseModelUtils.runTasksAndQueryModels(EclipseModelUtils.java:60)
	at org.eclipse.buildship.core.internal.workspace.DefaultModelProvider.lambda$fetchEclipseProjectAndRunSyncTasks$4(DefaultModelProvider.java:75)
	at org.eclipse.buildship.core.internal.DefaultGradleBuild$GradleConnectionOperation.runInToolingApi(DefaultGradleBuild.java:329)
	at org.eclipse.buildship.core.internal.operation.DefaultToolingApiOperationManager$WorkspaceRunnableAdapter.run(DefaultToolingApiOperationManager.java:58)
	at org.eclipse.core.internal.resources.Workspace.run(Workspace.java:2380)
	at org.eclipse.core.internal.resources.Workspace.run(Workspace.java:2405)
	at org.eclipse.buildship.core.internal.operation.DefaultToolingApiOperationManager.run(DefaultToolingApiOperationManager.java:39)
	at org.eclipse.buildship.core.internal.DefaultGradleBuild.withConnection(DefaultGradleBuild.java:122)
	at org.eclipse.buildship.core.internal.workspace.DefaultModelProvider.lambda$fetchEclipseProjectAndRunSyncTasks$5(DefaultModelProvider.java:75)
	at com.google.common.cache.LocalCache$LocalManualCache$1.load(LocalCache.java:4853)
	at com.google.common.cache.LocalCache$LoadingValueReference.loadFuture(LocalCache.java:3529)
	at com.google.common.cache.LocalCache$Segment.loadSync(LocalCache.java:2278)
	at com.google.common.cache.LocalCache$Segment.lockedGetOrLoad(LocalCache.java:2155)
	at com.google.common.cache.LocalCache$Segment.get(LocalCache.java:2045)
	at com.google.common.cache.LocalCache.get(LocalCache.java:3951)
	at com.google.common.cache.LocalCache$LocalManualCache.get(LocalCache.java:4848)
	at org.eclipse.buildship.core.internal.workspace.DefaultModelProvider.getFromCache(DefaultModelProvider.java:98)
	at org.eclipse.buildship.core.internal.workspace.DefaultModelProvider.executeOperation(DefaultModelProvider.java:90)
	at org.eclipse.buildship.core.internal.workspace.DefaultModelProvider.fetchEclipseProjectAndRunSyncTasks(DefaultModelProvider.java:72)
	at org.eclipse.buildship.core.internal.DefaultGradleBuild$SynchronizeOperation.runInToolingApi(DefaultGradleBuild.java:226)
	at org.eclipse.buildship.core.internal.operation.DefaultToolingApiOperationManager$WorkspaceRunnableAdapter.run(DefaultToolingApiOperationManager.java:58)
	at org.eclipse.core.internal.resources.Workspace.run(Workspace.java:2380)
	at org.eclipse.core.internal.resources.Workspace.run(Workspace.java:2405)
	at org.eclipse.buildship.core.internal.operation.DefaultToolingApiOperationManager.run(DefaultToolingApiOperationManager.java:39)
	at org.eclipse.buildship.core.internal.DefaultGradleBuild$SynchronizeOperation.run(DefaultGradleBuild.java:192)
	at org.eclipse.buildship.core.internal.DefaultGradleBuild.synchronize(DefaultGradleBuild.java:100)
	at org.eclipse.buildship.core.internal.DefaultGradleBuild.synchronize(DefaultGradleBuild.java:86)
	at org.eclipse.jdt.ls.core.internal.managers.GradleProjectImporter.startSynchronization(GradleProjectImporter.java:401)
	at org.eclipse.jdt.ls.core.internal.managers.GradleProjectImporter.importDir(GradleProjectImporter.java:289)
	at org.eclipse.jdt.ls.core.internal.managers.GradleProjectImporter.importToWorkspace(GradleProjectImporter.java:205)
	at org.eclipse.jdt.ls.core.internal.managers.ProjectsManager.importProjects(ProjectsManager.java:148)
	at org.eclipse.jdt.ls.core.internal.managers.ProjectsManager.initializeProjects(ProjectsManager.java:110)
	at org.eclipse.jdt.ls.core.internal.handlers.InitHandler$1.runInWorkspace(InitHandler.java:244)
	at org.eclipse.core.internal.resources.InternalWorkspaceJob.run(InternalWorkspaceJob.java:43)
	at org.eclipse.core.internal.jobs.Worker.run(Worker.java:63)
Caused by: org.gradle.api.GradleException: Unable to start the daemon process.
This problem might be caused by incorrect configuration of the daemon.
For example, an unrecognized jvm option is used.
Please refer to the User Manual chapter on the daemon at https://docs.gradle.org/7.4.2/userguide/gradle_daemon.html
Process command line: /Users/inonit/.inonit/tool/vscode/jdk/Contents/Home/bin/java -XX:MaxPermSize=512m -XX:+HeapDumpOnOutOfMemoryError --add-opens java.base/java.util=ALL-UNNAMED --add-opens java.base/java.lang=ALL-UNNAMED --add-opens java.base/java.lang.invoke=ALL-UNNAMED --add-opens java.base/java.util=ALL-UNNAMED --add-opens java.prefs/java.util.prefs=ALL-UNNAMED --add-opens java.prefs/java.util.prefs=ALL-UNNAMED --add-opens java.base/java.nio.charset=ALL-UNNAMED --add-opens java.base/java.net=ALL-UNNAMED --add-opens java.base/java.util.concurrent.atomic=ALL-UNNAMED -Xmx2048M -Dfile.encoding=utf8 -Duser.country=US -Duser.language=en -Duser.variant -cp /Users/inonit/.gradle/wrapper/dists/gradle-7.4.2-bin/48ivgl02cpt2ed3fh9dbalvx8/gradle-7.4.2/lib/gradle-launcher-7.4.2.jar org.gradle.launcher.daemon.bootstrap.GradleDaemon 7.4.2
Please read the following process output to find out more:
-----------------------
Unrecognized VM option 'MaxPermSize=512m'
Error: Could not create the Java Virtual Machine.
Error: A fatal exception has occurred. Program will exit.

	at org.gradle.launcher.daemon.client.DaemonGreeter.parseDaemonOutput(DaemonGreeter.java:38)
	at org.gradle.launcher.daemon.client.DefaultDaemonStarter.startProcess(DefaultDaemonStarter.java:181)
	at org.gradle.launcher.daemon.client.DefaultDaemonStarter.startDaemon(DefaultDaemonStarter.java:137)
	at org.gradle.launcher.daemon.client.DefaultDaemonConnector.doStartDaemon(DefaultDaemonConnector.java:222)
	at org.gradle.launcher.daemon.client.DefaultDaemonConnector.startDaemon(DefaultDaemonConnector.java:216)
	at org.gradle.launcher.daemon.client.DaemonClient.execute(DaemonClient.java:164)
	at org.gradle.launcher.daemon.client.DaemonClient.execute(DaemonClient.java:99)
	at org.gradle.tooling.internal.provider.DaemonBuildActionExecuter.execute(DaemonBuildActionExecuter.java:44)
	at org.gradle.tooling.internal.provider.DaemonBuildActionExecuter.execute(DaemonBuildActionExecuter.java:30)
	at org.gradle.tooling.internal.provider.LoggingBridgingBuildActionExecuter.execute(LoggingBridgingBuildActionExecuter.java:60)
	at org.gradle.tooling.internal.provider.LoggingBridgingBuildActionExecuter.execute(LoggingBridgingBuildActionExecuter.java:37)
	at org.gradle.tooling.internal.provider.ProviderConnection.run(ProviderConnection.java:222)
	at org.gradle.tooling.internal.provider.ProviderConnection.runPhasedAction(ProviderConnection.java:183)
	at org.gradle.tooling.internal.provider.DefaultConnection.run(DefaultConnection.java:245)
	at org.gradle.tooling.internal.consumer.connection.PhasedActionAwareConsumerConnection.run(PhasedActionAwareConsumerConnection.java:56)
	at org.gradle.tooling.internal.consumer.connection.ParameterValidatingConsumerConnection.run(ParameterValidatingConsumerConnection.java:62)
	at org.gradle.tooling.internal.consumer.DefaultPhasedBuildActionExecuter$1.run(DefaultPhasedBuildActionExecuter.java:78)
	at org.gradle.tooling.internal.consumer.DefaultPhasedBuildActionExecuter$1.run(DefaultPhasedBuildActionExecuter.java:70)
	at org.gradle.tooling.internal.consumer.connection.LazyConsumerActionExecutor.run(LazyConsumerActionExecutor.java:143)
	at org.gradle.tooling.internal.consumer.connection.CancellableConsumerActionExecutor.run(CancellableConsumerActionExecutor.java:45)
	at org.gradle.tooling.internal.consumer.connection.ProgressLoggingConsumerActionExecutor.run(ProgressLoggingConsumerActionExecutor.java:61)
	at org.gradle.tooling.internal.consumer.connection.RethrowingErrorsConsumerActionExecutor.run(RethrowingErrorsConsumerActionExecutor.java:38)
	at org.gradle.tooling.internal.consumer.async.DefaultAsyncConsumerActionExecutor$1$1.run(DefaultAsyncConsumerActionExecutor.java:67)
	at org.gradle.internal.concurrent.ExecutorPolicy$CatchAndRecordFailures.onExecute(ExecutorPolicy.java:64)
	at org.gradle.internal.concurrent.ManagedExecutorImpl$1.run(ManagedExecutorImpl.java:48)
	at java.base/java.util.concurrent.ThreadPoolExecutor.runWorker(ThreadPoolExecutor.java:1136)
	at java.base/java.util.concurrent.ThreadPoolExecutor$Worker.run(ThreadPoolExecutor.java:635)
	at java.base/java.lang.Thread.run(Thread.java:833)

Sample project:
https://github.com/davidpcaldwell/slime

Use the linked slime sample project with Java 17 and inspect the Gradle synchronization path named in the trace, starting at GradleProjectImporter and the daemon command. Reproduce the failure, identify where the obsolete VM option enters the launch configuration, and verify that the project imports successfully without the Java 17 error.