A parliamentary committee has urged the Barr government to retain a key Canberra site for a future convention centre, despite acknowledging the proposal is unlikely to proceed in its current form.
Grand designs for the Australia Forum were unveiled in 2015, as part of the City to the Lake project.
But with costs reportedly blowing out to $900 million, Chief Minister Andrew Barr placed the plans on hold in 2017's mid-year budget update, citing a lack of interest from the Commonwealth government.
A Legislative Assembly committee began looking at the demand for a new convention centre last year, as well as the state of the existing Canberra Convention Centre and the level of funding needed to take the project to an investment ready stage.
In a report tabled in the Assembly on Tuesday, the committee recommended stakeholders acknowledge the centre was "unlikely to be constructed in its proposed form".
It said the desire for an "iconic design", "Centre for Dialogue" concept and high security requirements had "escalated costs beyond what was feasible", particularly as the Mr Fluffy buyback had forced government to scale back its planned infrastructure projects.
"The notion of the Australia Forum being a facility where 'world leaders and key dignitaries will gather in safety' must be regarded against the reality of the cost involved in delivering such a venue and the frequency with which this might occur," the committee said.
However the committee recommended preserving the site set aside for the convention centre - a 24,132 square-metre government car park on London Circuit, between Constitution and Commonwealth Avenues - while the scope of the project was refined.
"With the new government office block under construction and possible changes related to light rail stage two and the Canberra Theatre Centre this is an area of Civic undergoing significant change," committee chair Jeremy Hanson said.
The committee recommended taking the project forward in a staged way.
It said the government should finesse the proposal over the next five years, and decide the future of other infrastructure projects like the stadium.
In the next five to 10 years, the government should look to the private centre for help building the first stage of the new convention centre, including a function and exhibition space. The rest of the new centre should be finished in the decade after that, the committee said.
The existing convention centre should be maintained until then, and sold once the new centre is completed.