Transport and Infrastructure Minister Andrew Constance rejected speculation that the funding was to cover a cost blow-out, and said the announcement was new money. Mr Constance told a Property Council of Australia meeting on Friday the government would spend a total of $650 million on upgrades in the CBD.

Most of the money, $75 million, would be used to create public open spaces and upgrade walkways and cyclepaths, while $40 million would be spent on extra road works in the CBD. Meanwhile, $35 million would be spent on streetscape improvements and freeing the light rail of poles and wires – which was previously announced, unfunded, in April.

“This additional $150 million will mean we won’t see council coming back in five or 10 years time doing improvements,” Mr Constance said. “We are going to do this in one hit, disrupt once and get out of the road and allow businesses to flourish.”

But Newcastle MP Tim Crakanthorp said the announcement produced more questions than answers.

He argued that it showed the cost of the CBD revitalisation had blown-out.

“The government needs to release the business case, and show us exactly what we are paying for,” Mr Crakanthorp said. “They have not been honest about this project from the beginning.”

Hunter Development Corporation chief executive Michael Cassel, who is also the Revitalising Newcastle program director, said the money was “a tremendous outcome”.

“When the rezoning goes through, now we’ve got funding to deliver great public spaces, we’ve got a commitment from government that we are upgrading footpaths all along Hunter Street and Scott Street where it’s needed,” he said.

“It means all the feedback we’ve got from the community about how they want it to look and feel from Worth Place, all the way down to Newcastle Station, we’ve got the funding to do it.”

Lord Mayor Nuatali Nelmes said the funding was “a big win” for the city. She said Newcastle City Council’s decision to put draft plans for the re-zoned rail corridor on public exhibition had been instrumental in securing the funding.

“This council has held this government to account every step of the way and has successfully championed vast improvements in public domain and public transport outcomes for the future benefit of all Novocastrians,” Cr Nelmes said.

Hunter Business Chamber CEO Bob Hawes said the money was “vital to ensure we get a first-class job and not outcomes that leave us short-changed”.