In another blow to the central Queensland tourism industry, the state's Resources Minister says the developer set to take over the leases of Great Keppel Island does not have the financial capability to deliver the proposed development. 

Sydney-based developer Tower Holdings leased the 160-hectare resort off the Capricorn Coast for $16.5m in 2006, but it closed during the global financial crisis two years later.

A $600 million development masterplan including golf courses, shops, a casino and marina was approved in 2012, but issues were raised over casino licences and the land went up for lease in 2018.

Sunshine Coast-based developers Altum Property Group signed a contract to take over the lease in 2019. 

But Resourses Minister Scott Stewart released a statement today rejecting the new developer based on the findings of an independent financial and managerial capability assesment by Deloitte.

"This found that the company does not have, nor has it secured, the financial capability to deliver the proposed development," he said.

"For this reason the lease transfer to Altum will not occur.

"This government remains committed to seeing development on Great Keppel Island, which is why we have already committed $30 million for the development of common-user infrastructure on the island."

Developer not giving up

Altum director Rob McCready said the developer wanted to proceed with the project and was committed to working with the Queensland government and Tower Holdings.

He said "high-level meetings" would be held this week.

"Now the Minister has concluded that we don't have the financial capability to undertake the project but let me clarify … basically what that means is we don't have the $1.5 billion in our bank account to carry out the whole project."

Mr McCready said it was unusual to expect a developer to have all the money for a project of its scale before any land transfers took place. 

"They're a bit too focused on 'What money do you have in your bank account?' versus 'Do you have the ability to see this succeed?'" he said.

A new glamping proposal

Mr McCready said the company had spent months negotiating with the Department of Resources to plan the early stages of a "glamping tent hotel" at Fisherman's Beach, where the old resort building was.

"This will consist of 50 eco tents, a start to cleaning up the rubbish on the island, and provide passive surveillance to put an end to the vandalism and arson that has plagued the island over the past few years," he said. 

"The glamping tent hotel will give the island much-needed additional beds to cope with the boom in regional tourism while planning and design on the breakwall, barge ramp, and ferry terminal is completed.

"Once we're ready to build the hotel, the glamping tent hotel will be re-located."

Altum has put in a new lease transfer application, which it hoped would provide more certainty to the Queensland government about their financial capability.

"The glamping offer requires a straightforward approval from local government," Mr McCready said.

A rollercoaster ride

Accommodation operator Geoff Mercer has been on the island for more than 40 years and described the development as "a roller-coaster ride". 

"I'm a bit bewildered at this point in time that when [Altum] can build a $200 million product in Noosa and complete that ... how any development can't be seen in sections," he said.

"Nobody's going to go through and build a development of this size in one go.

Mr Mercer questioned the government's suggestion to "force Altum into some sort of sublease". 

"I'm surprised the government is pushing it that way to make Tower ultimately responsible for something that they've had in their hands since 2006," he said.

The state government announced another $4.4 million for the island in last week's budget.

Mr Mercer said he would meet with Tourism Minister Stirling Hinchliffe when he visited the island on Wednesday.

"I look at Altum, they're Australian, they're young men, they've got runs on the board — prior to that we had all sorts of messy stuff with overseas people wanting to come in," he said. 

"My comments [to Mr Hinchliffe] will be something needs to happen and these folk are the best contenders that we've seen."