Federal Environment Minister Tanya Plibersek has indicated she will refuse the controversial $1.4 billion Toondah Harbour development, acknowledging the Moreton Bay site as a recognised wetland of international importance.
Ms Plibersek has invited comment on the "proposed decision" before making it final.
Walker Corporation applied to develop a mixed-use residential, commercial and tourism precinct, including 3,000 apartments, a 400-berth marina, hotel, and retail outlets.
Construction was proposed to occur through dredging of the wetland, with the sediment obtained to be used for a process of land reclamation over 15 to 20 years.
Ms Plibersek's interim decision found the removal of 58.7 hectares from the internationally protected wetland was an "unacceptable impact".
She also found the development would have a significant effect on a range of threatened and migratory species, including loggerhead and green turtles, the eastern curlew, and the grey-tailed tattler.
Dugongs, dolphins, and other shorebirds would have also been impacted.
"These wetlands are rare, unique and important to prevent the extinction of animals like the eastern curlew and loggerhead turtle," Ms Plibersek said.
She said she considered relevant assessment material, visited the site, and met with Walker Corporation representatives, as well as local residents, businesses, environmentalists, and members of the Quandamooka people.
Ms Plibersek said more than 26,000 people commented on the development when a draft environmental impact statement (EIS) was released to the public.
"I am making my proposed decision public so that the tens of thousands of people who have made public comments on this have a chance to respond," she said.
"I want to hear from them before I make my final decision."
Walker Corporation has 10 business days to respond.
Minister for State Development and Infrastructure Grace Grace said the Labor state government's position on the development was that "it had to meet the highest environmental standards".
Speaking to reporters in Gladstone, Ms Grace said the state government would await Ms Plibersek's final decision.
'Clearly unacceptable'
The proposal to redevelop Toondah Harbour — the gateway to Moreton Bay and its islands — was first mooted by the Newman government in 2013, with the region declared a priority development area within Redland City Council's bounds.
Walker Group was selected by the state and council in 2014 to lead the proposal.
In 2018, then federal environment minister Josh Frydenberg ordered the company complete a full EIS, after his department informed him the development was "clearly unacceptable".
The Australian Conservation Foundation (ACF) has welcomed Ms Plibersek's draft decision.
"This draft decision is a testament to people power," ACF CEO Kelly O'Shanassy said.
"Some places are too precious to be left vulnerable to the pressures of politics."
