Aside from a pleasant array of useful amenities that satisfy almost every consumerist craving one could ever experience – Ikea, Zara, Costco, Jamie's Italian – Canberra is noted for having the highest attendance rate, per capita, of cultural venues. But alongside this much-quoted statistic is the less-noted qualifier, that these venues are mainly galleries and museums. Art lovers in the capital don't have nearly as many options when it comes to the theatre.

But this may well be about to change. Plans to build a new, 2000-seat theatre suitable for a broad array of shows, including ballet, opera and large-scale concerts, are well underway, with the current ACT government giving in principle support to such a project going ahead as a longer-term objective.

All that's needed now is a decision about a site, a large amount of money and a detailed cost-benefit analysis that demonstrates unequivocally how much revenue such a venue would bring to the city.

The last task, at least, should be straightforward, according to the chief executive of the Cultural Facilities Corporation, Harriet Elvin.

"A feasibility study was done back in 2009, and that certainly showed that a venue of about 1800 to 2000 seats was a viable proposition for Canberra," she says.

"The work we're focusing on at the moment is on updating that information, and really making the business case to justify this, so that when we go into the capital works bidding process, we've got a very solid business case that we can show."

The starting point, of course, is that Canberra is a city rich in major collecting institutions – libraries, museums and galleries – but distinctly lacking in performance venues on the same scale.

"We know that there is a whole raft of high-end performing arts experiences that people are currently missing out on," she says.

Not that there's anything wrong with the theatre we already have. The 1200-seat Canberra Theatre turned 50 last year and continues to run an intensive annual program of shows ranging from edgy modern theatre to high-tech acrobatic spectaculars. The ACT government has spent almost $9 million in recent years on upgrades and refurbishments.

But the once-state-of-the-art venue, opened by the Australian Ballet in 1965, is no longer adequate for a population that is now more than four times the size it was when it was built.

As Canberra Theatre Centre director Bruce Carmichael knows all too well, theatre performances are becoming ever more extravagant and high-tech, and Canberra's premier venue is frequently unable to offer an incentive for productions to tour here.

Elvin points out it's not just theatre-lovers who are losing out – it's the entire ACT economy.

"It's interesting when you look at that sort of demand, we know that some of that's being met out of Canberra at the moment. We know that people are going to particularly Sydney, but also Melbourne, for that sort of larger-scale theatre experience, so we know that the ACT economy is losing tens of thousands of people each year," she says.

Carmichael points out that increasingly, the Canberra Theatre is pushing its marketing into the regions, from Wollongong to Bega.

"Our catchment area is around 900,000, which easily is enough of a market for a large theatre, and to sustain some longer-running shows in a big venue," he says.

There's also the case that large theatre companies bring their own dollars to town with them.

"I always say that when a large company comes to Canberra, it's like a conference being held here in terms of the bed nights they need and the food they need to eat and personal services and so on and so forth," Elvin says.

When discussing the project, terminology is important; just three years ago, all the talk was of a new lyric theatre in the centre of town. Not anymore, although the shorthand alternative – a multi-function theatre – isn't much better.

"We've moved away from the expression 'lyric theatre' because nobody knew what it meant and it also sounded elitist, I think," Elvin says.

"And while certainly we'd like to bring ballet and opera into this theatre, it's got a much broader appeal – major musicals, and there's a big concert-type market out there."

She doesn't mean classical concerts either, but comedy shows and even rock concerts.

"We know that there's pressure on Sydney venues, and of course with all the costs involved in Sydney, it makes a lot of sense for promoters to bring a product here," says Elvin.

"I think they've estimated that 10 per cent of attendances in Sydney are from that region that we could draw on, so it makes a lot of sense to actually provide that here."

Carmichael says the lack of concert-specific amenities at the Canberra Theatre is a long-term issue.

"We're constantly talking to promoters but we either haven't got dates, or it's not quite viable for them. And so what we're finding is that we have to start to offer incentives for them to come, whereas really we want to make it commercially viable for them to come, so they'd come under their own steam," he says.

"There's a big shortage of performing arts venues in Sydney, and they just can't get enough, and it's really difficult for promoters to get dates in Sydney, and so they are really keen for a venue in Canberra."

So, the economic benefits seem clear, and even more in light of the recent announcement of flights to and from Singapore from the not-quite-yet-international Canberra Airport.

One person who doesn't need convincing that a new theatre is a project worth backing is the current ACT arts minister, Chris Bourke. In fact, while he stops short of dollar amounts – Elvin says we're looking at about $120 million – he's willing to put a timeframe on it.

"I think we're at the point where within the next five to 10 years this is something that we'll be doing and it's really something to look forward to," he says.

And so, the $120 million question – where will this much-needed venue go?

The government has identified a preferred site, and it's just visible from Elvin's office window – a patch of grass behind the Playhouse, bordered by the daily traffic thoroughfare of Vernon Circle and the entry to Northbourne Avenue. It sits behind what is currently an open-air carpark, slated for commercial development.

And, if we're being honest, it's also pretty, well, small. But it is ideal if Canberra is to have anything resembling a vibrant cultural centre in the heart of the city. Civic today falls well short of the ideal, especially around the Canberra Theatre and Canberra Museum and Gallery, a virtual dead zone when it comes to foot traffic at most times of day.

Chairman of the Cultural Facilities Corporation and prominent developer, John Hindmarsh, thinks the matter goes beyond Canberra's need for a new theatre – it's the entire precinct that needs to be addressed.

"What I'm really on about is to have people recognise that Canberra hasn't really got a decent cultural precinct," he says.

"Other places in the world do, and they all seem to be places where people like to gather."

While the preferred site will require careful planning, it has the potential to change the way the city centre – and by extension, Canberra as a cosmopolitan city – is presented.

"Apart from being a gathering place, I hope that it will help define Canberra and its people as a place that does embrace culture, because most people in Australia see the city as Parliament House and pollies and the big institutions," Hindmarsh says.

"But it would be wonderful if at the entrance, so to speak, of Canberra, we make a statement about our own personal cultural interests and capabilities."

And yes, the site should definitely be bigger.

"My personal view is that it will finish up taking up part of that carpark, and I would hope that the government doesn't decide to go and build two whopping great office buildings in front of it, which would then completely conceal it," he says.

"What would be unfortunate would be to build a wonderful building and have it, first of all, crammed onto a site and then concealed by other buildings in front of it so that there's no presence to the building, it disappears.

"So the site is good, it could be iconic, but it needs to be thought about as an opportunity to display, I think, some great architecture and a great sense of the community's interest and embracing of cultural events."

Like Elvin and Carmichael, Hindmarsh is unequivocal that the government needs to come to the table with funding, and get the project right on the first go.

"We need to take the design, and that whole precinct has got to be designed properly as part of it, not just the theatre," he says.

"If you do that in isolation, we won't have any better result than we've got now."

Bourke is also adamant the project, rather than being rushed into being, needs to be done right.

"I think it's very important when we're asking the community to invest in a facility that is popular but may not be attended by everybody ...that this is actually going to bring a benefit to Canberra, regardless of whether you as a ratepayer use it or not, that this is something beneficial to all of us," he says.