The University of Tasmania's $300 million Northern Transformation Program, which will build new campuses in Launceston and Burnie, has been added to a national infrastructure project priority list.
However, the Tasmanian government's Derwent River Crossing proposal, including the Bridgewater Bridge upgrade, was not added as a priority project as the business case failed to demonstrate the benefits of the project would outweigh the costs.
Infrastructure Australia's high priority list indicates infrastructure projects across the country which address major problems or opportunities of national significance.
Infrastructure Australia chief executive Romilly Madew said the Northern Transformation Project was a nationally significant investment opportunity that would drive better community outcomes by encouraging more local, interstate and international students to attend university.
"The proposed relocation will help to deliver vibrant, accessible and flexible campuses that will attract students, while also enabling the university to develop courses that better respond to existing skills shortages and the social, economic and technical needs of communities," Ms Madew said.
Acting Premier Jeremy Rockliff said the Bridgewater Bridge upgrade remained a priority initiative despite the business case failing to be approved by Infrastructure Australia.
The $461 million project is jointly funded by the Commonwealth and the state, with the Tasmanian government contributing $115 million.
Ms Madew said the costs of the state's proposal would outweigh its benefits.
"The business case also identifies a number of unresolved engineering issues that could add further costs to the project, including design issues and further maintenance requirements for the existing bridge," Ms Madew said.
"Infrastructure Australia recognises the strategic importance of crossing capacity over the River Derwent, which is why it retains its current status as a priority initiative."
An updated list of national priority initiatives released on Tuesday also cited Burnie to Hobart freight corridor improvements, improving irrigation schemes, sewerage infrastructure upgrades, and the Hobart Science and Technology Precinct as priority initiatives in Tasmania.
"Although Infrastructure Australia's assessment [of the Bridgewater Bridge business case] highlighted some areas to address, there continues to be strong support for a Derwent River crossing," the government said in a statement.
Mr Rockliff said this years' state budget locked in the funding for the project and the government would get on with the job of delivering it.
The federal government also reaffirmed it's commitment to delivering the project, with Deputy Prime Minister and Infrastructure Minister Michael McCormack saying the bridge was a vital commuter and freight link.
"The Bridgewater Bridge is a strategical important river crossing and a central pillar of the Hobart City Deal," Mr McCormack said.
Labor infrastructure spokesman David O'Byrne said the removal of the bridge from the priority list clearly showed the government had botched the business case for the project.
"The Liberals have been boastful about the bridge as the centrepiece of their infrastructure strategy and now Infrastructure Australia is raising fundamental question about the engineering, design and maintenance of the project," Mr O'Byrne said.
Mr O'Byrne said the government needed to respond to Infrastructure Australia's request for a revised bridge proposal, which addresses unresolved engineering and design issues, with urgency.
"There are now serious questions about whether the project will meet the 2025 completion date, which has already blown out from the original target of 2024," Mr O'Byrne said.