Chief Minister Andrew Barr discouraged federal investment in a new convention centre by failing to endorse a funding push by the Canberra Business Chamber, chief executive Robyn Hendry said.
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During a hearing of an inquiry into the proposal to build a new convention centre, Ms Hendry said Mr Barr had "proactively, in a soft way, advocated against" a business chamber submission to the Liberal party about it in the lead up to last year's federal election.
The chamber had been invited to put the case for new infrastructure projects to the party in February 2016.
They asked for $250 million investment from the federal government, less than half of the expected $600-740 million build.
Ms Hendry told the committee Mr Barr made it clear in a letter to Prime Minister Malcolm Turnbull the ACT government did not endorse the business chamber's proposal.
"The Canberra Business Chamber and other stakeholders did a significant amount of work, including the National Capital Authority in conveying the importance of this sort of development and infrastructure spend so we did get that opportunity that was positive," Ms Hendry said.
"What isn't positive is that the ACT government in response to the federal government did not necessarily support that investment.
"The Chief Minister Andrew Barr wrote a letter that essentially handed the baton to the federal government and said 'we'd support this in the city of course but only if you fund it entirely'. That was disappointing.
"What was equally disappointing is that as we understand, the current government has not included this particular investment in their city deal priority infrastructure.
"We're told by federal government if that's the case, it's really unlikely that it will attract federal government infrastructure support."
However Mr Barr said the convention centre was still on the list, but was "far from the number one priority" as it was not a 2016 election commitment.
"I have been very clear for years that it is not the number one infrastructure priority for the ACT government," Mr Barr said.
The Legislative Assembly inquiry is looking at the demand for a new convention centre, the appropriate source of funding and the level of priority it should be given in relation to other infrastructure projects in the ACT.
Work on the project was shelved in the mid-year budget update in February, because of a lack of federal government interest, Mr Barr said.
Mr Barr said the ACT government would happily provide the site it had reserved in Civic for the convention centre if a future federal government showed interest in the project.
Committee chairman and Liberal politician Jeremy Hanson asked whether the convention centre should be put on hold with investment funnelled into the existing convention centre in the meantime.
"I'm fearful we're running down the existing facility by chasing a dream no government would support," Mr Hanson said.
However Ms Hendy said redeveloping the existing centre to a decent standard would be disruptive and would not result in a facility on par with other convention centres.
Mr Hanson questioned the need for the ACT taxpayer to fund a centre of the calibre that had been raised, given the primary beneficiaries would be members of the business chamber.
Liberal MLA Mark Parton said it would be hard to convince a "sparkie who lives at Conder" of the merits of a massive infrastructure spend "that has nothing to do with him because he's never going to use it" .
Ms Hendry said the benefits would be felt more widely than that, flowing onto a wide range of goods and services and creating more jobs.
The ACT Tourism Industry Advisory Council and the Professional Conference Organisers Association will give evidence when the inquiry picks up again on August 29.
