A "complete failure of regional planning" meant only one of two competing inland port proposals in Otago was considered for an $8.2 million loan by the government, a local MP says.

"It should never be for the government to have to step in and pick a winner," Associate Regional Development Minister Mark Patterson, of Lawrence, said yesterday.

The up to $8.2m loan from the government’s Regional Infrastructure Fund to develop a rail connection between Port Chalmers and the proposed Southern Link Logistics Park, in Mosgiel, was announced days after construction giant Calder Stewart publicly debuted its own inland port proposal — the $3 billion privately funded Milburn Quadrant development, in South Otago.

The fund, which is valued at $1.2b over three years, is administered by the government’s Kānoa — Regional Economic Development & Investment Unit.

On the day of the loan announcement, Regional Development Minister Shane Jones told the Otago Daily Times he might have been informed earlier this year about "another proposition bubbling away", but would need to take advice before commenting further on Calder Stewart’s proposal.

"I've never been briefed about it ever, so I just don't know enough about it," Mr Jones said.

The formal process to apply for the fund was "widely advertised" and he had to rely on it given the amount of taxpayer money involved, he said.

Clutha District Mayor Bryan Cadogan said yesterday he was "surprised and saddened" by last week’s loan announcement.

He was "shocked" Calder Stewart’s proposal — which the company had consulted with the Clutha District Council on for more than a decade, and for which all the requirements under its district plan were met — "wasn't even thrown in the hat and considered", he said.

"There's so few things [that] come along for the Clutha district of this magnitude. In fact, this is the one for our lifetime.

"And instead of being given due consideration, we haven't been given any consideration, it seems.

"If the limited resources are going to be allocated, shouldn't it be all things considered and then go to the best?"

Mr Patterson said he understood Mr Cadogan’s views.

"But he needs to look at his regional colleagues and that's where the finger needs pointed."

He confirmed a "reconnaissance mission" including himself, Mr Cadogan, Dunedin Mayor Jules Radich and Otago Regional Council chairwoman Gretchen Robertson had been held to discuss the two proposals.

There was some hope at the time there could be some agreement as to what was the best way forward, he said.

But only one project was formally proposed to the government.

"The Calder Stewart proposal, although they have been in contact with KiwiRail and Kānoa, they haven't made any formal requests for funding of the like from Kānoa", Mr Patterson said.

"So, from our perspective, there was only one proposal on the table in terms of requiring funding."

It was a "complete failure of regional planning" and regional leaders had failed to coalesce around a single proposition, Mr Patterson said.

"The local councils and the regional transport committee, if indeed they wanted one proposal coming forward, that should have been reflected in their plan and that should have been cohesively communicated to government.

"That's what happens in every other region that we're asked to look at funding these types of projects.

"We're comfortable with the investment we've made, but if there's any regional blowback on that I think the various stakeholders would need to look in the mirror."

It did not preclude Calder Stewart from advancing its plans or making its own proposal in the future, Mr Patterson said.

Both Mr Cadogan and Mr Radich have previously stated their preferences for the Milburn and Mosgiel developments respectively.

tim.scott@odt.co.nz