A new convention centre has been a key project at the centre of the Government's City to the Lake proposal, and was to be a linking building between London Circuit and Commonwealth Avenue.

It was announced as one of the key big infrastructure projects in the June Budget, but has now been pushed back on the agenda as the Government rearranges its budget to pay for the Mr Fluffy asbestos demolition and clean-up.

The deferral has upset the business community, with the Master Builders Association and the Property Council saying the convention centre should be a higher priority than other projects.

The Canberra Business Council's David Marshall said the convention centre would generate hundreds of millions of dollars and should be a top priority. The current convention centre needed replacing within four years, he said.

But Mr Barr said the current convention centre was suitable for a city of Canberra's size.

"The reality is that we have a convention centre that is suitable for a city of 385,000 people," he said. "There are those who aspire to a convention centre that has national capital status. Without Commonwealth government support is it is unreasonable and unrealistic to expect this community … to fund a piece of infrastructure equivalent to a community five times larger."

And he said Mr Marshall's claims that a convention centre would generate hundreds of millions of dollars were yet to be tested by a business case.

In the Budget, the Government announced the convention centre as a project with the potential to "provide a truly world class convention facility that will allow the ACT to attract more business tourism and grow our economy".

But Mr Barr insisted this week the deferral of the convention centre would have no impact on projected visitor numbers and there had never been a commitment to build the convention centre, which would cost $400 million to $500 million, but just to get it to an investment-ready state – a commitment it would keep.