ABC

A central Queensland conservation group says a failed proposal for a resort development on Great Keppel Island was too big for the area.

Environment Minister Peter Garrett yesterday knocked back Tower Holdings' proposal - which included a 300-room hotel, a ferry terminal, retail village, golf course and sporting oval - saying it is unacceptable because of the impact it would have on the World Heritage area.

Ian Herbert from the Capricorn Conservation Council says the plan was destined to fail.

"This proposal by Tower Holdings was likely to become the Cubbie Station of the Keppels, because it was just too massive too big a proposal for that area," he said.

"The damage that could've been done by building the marina would have been excessive."

He says the decision actually benefits the company.

"What Peter Garrett has done has actually done Tower Holdings a big favour, because he has saved Tower Holdings from spending millions of dollars in preparing an environmental impact statement.

"The result after the preparation of that environmental impact statement would've been a similar rejection anyway because the environmental impacts are too great."

'A big blow'

But a Great Keppel Island business operator says the decision is a blow to the community.

Gerry Christie says the resort would have been good for the area.

"It's a big blow to me personally," he said.

"I've been involved in helping to get the project off the ground and the same with some of the other business operators here.

"It is a big blow because we've studied the plan extensively and felt that it was a real workable thing and we think that the whole thing could've been done with minimal impact to the environment."

"With all the other things that are happening, the big coal ports being built on Wiggins Island and Gladstone, this was just going to be such low impact."