The Hunter region's four largest road projects would not proceed in their current form under a shake-up of transport infrastructure funding announced on Tuesday.
The federal government said its new infrastructure policy would focus on funding "nationally significant land transport projects" which involve a federal commitment of at least $250 million, involve the government-defined National Land Transport Network and support national priorities such as housing, defence, critical minerals and addressing Indigenous disadvantage.
Infrastructure Minister Catherine King's office said the policy would not apply retrospectively to projects under way.
The policy statement says the government's funding for nationally significant land transport projects "will be provided on a 50:50 basis" with state governments, a criteria which would have affected the M1 motorway extension to Raymond Terrace, the Muswellbrook and Singleton bypasses and the Newcastle Inner City Bypass had they not started or already secured funding commitments.
"This ensures more proportional risk sharing and allows the Commonwealth to contribute to a greater number of projects across jurisdictions," the statement says.
The policy suggests the states will be required to provide significantly more funding than they do now or some road and rail infrastructure projects will not go ahead.
Committee for the Hunter chief executive Alice Thompson said the federal government's stance could be traced back to former prime minister Malcolm Turnbull's "we are not simply an ATM" jibe at the states in 2017.
"Having worked as infrastructure adviser to a prime minister and Infrastructure Australia, it is no surprise that after years of being gamed by states and political parties the Commonwealth has tightened criteria around infrastructure funding," she said.
The federal government is paying for 80 per cent of the $2.1 billion M1 extension and 80 per cent of the $450 million inner-city bypass, both of which have started construction.
The Commonwealth has also agreed to fund 60 per cent of the $452 million Muswellbrook bypass and 80 per cent of the $700 million Singleton bypass, but both are on hold while the government reviews transport infrastructure projects in the investment pipeline.
Transport for NSW deputy secretary Camilla Drover told a state budget estimates hearing last week that the department had not gone out to tender yet on the Muswellbrook bypass "because it's subject to that federal infrastructure review".
Ms King's office said the outcome of the national project-by-project review would be made public "soon".
Ms Thompson said the Hunter "should be well positioned for future investment under the criteria outlined in the infrastructure policy statement".
"That's because of our scale and strategic significance in delivering national priorities, including defence, sovereign manufacturing, net zero and clean energy, and our role in the national freight network and global supply chains," she said.
"Targeted investments building from existing infrastructure in the Hunter will deliver more returns quicker and cheaper than many other regions and cities.
"The committee has consistently advocated for the Commonwealth to invest in major, catalytic infrastructure and precincts that increase productivity and the capacity of the Hunter economy.
"That's the right role and focus for federal funding in our region's development."
The Singleton, Muswellbrook and M1 projects are all on the National Land Transport Network. The inner-city bypass is not on the network but connects to it at Sandgate.
The proposed Mandalong Road upgrade at Morisset, priced at about $100 million, does not meet the new benchmark minimum spend of $250 million but appears to be safe given Labor promised before the last election to fund the lion's share of the project.
The NSW government committed $4.5 million in the September budget to planning for the project, and Transport for NSW staff are starting six weeks of field investigations this week.
The Newcastle Herald reported in March that a cost blowout and uncertainty over funding had delayed the upgrade.
Ms King said on Tuesday that Commonwealth infrastructure spending under the Coalition had "focused on electoral rather than national benefit", resulting in the national Infrastructure Investment Program expanding from about 150 projects in 2012-13 to nearly 800 in 2022.
