THE state government has rejected the City of Greater Bendigo’s funding request for the redevelopment of Hargreaves Mall, casting doubt over the project’s future.

The Bendigo Weekly can reveal the government has denied council’s request to fund at least half of the $5.5 million project.

The funding was one of nine projects on the council’s state election wish list.

Member for Bendigo West and new police minister Bob Cameron confirmed the request had been rejected.

"We weren’t impressed," he said.

"We weren’t taken with it. Maybe they will come back later, but it is now essentially a council project."

In June, mayor David Jones said the project was dependent on government funding to proceed.

"We would be relying on state government funds," he said.

The Weekly unveiled the new plans, which focussed on a modern design, in October.

Almost immediately the CBD traders came out against the proposal, although there was little they could do as council had already voted to proceed with the plans.

Council presentation and assets director Jos Duivenvoorden denied the state government’s rejection was based on the design.

"It was trying to prove the benefit that would accrue as under state policy," he said.

"Because of the other significant building projects in the CBD, such as the Bendigo Bank, it was extremely difficult to quantify those gains.

"It doesn’t mean that the government said we are not going to get the money, it means we have to look more carefully at the benefits that are accrued."

Mr Duivenvoorden said it was up to the council where the project went from here.

"Council has allocated $1 million this year to develop the concept and detailed design," he said.

"From our point of view, council will determine if it is going to go the next step and commit more money."

Mr Duivenvoorden said the project was too important to lose.

"My view is it will proceed even if there are no funds from government," he said.

"It is important the project continues even if we have to fund the project from elsewhere.

"It is the cornerstone in our CBD strategic plan. We have to do it.

"Council sees this as a key strategic development to make sure Bendigo grows."