Asecond bus tunnel project has been scrapped in Brisbane, Australia because of a row over compensation for parking spaces.

The dispute in Brisbane has torpedoed plans for a tunnel linking the city’s central business district with the inner northern busway. One project has already been built in the city (see feature).

The new tunnel would have run from Queen Street Mall station to the Roma Street transit centre.

It would have passed through the lower floors of the King George Square car park.

Queensland’s transport minister Steve Bredhauer confirmed that the tunnel was scuppered after Brisbane City Council demanded A$25M ($15M) compensation for the loss of earnings from the car park.

Bredhauer said the cost of the project would have soared to more than A$100 million if compensation was paid.

He said: "Queensland Transport decided to terminate the alliance contract with Transfield." Brisbane City Council opposition transport spokeswoman Margaret de Wit said the latest display of "incompetence" by the State Government and Brisbane City Council had thrown the public transport system into further disarray.