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Questions asked about failed deal as jobs are cut at Cadbury factory -

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KIM LANDERS: It doesn't seem long ago that Tasmanian-based chocolate maker Cadbury was talking about expanding and setting up a tourism centre.

But today it's announced it's sacking 80 workers. The company says the job cuts will improve efficiency.

Now questions are being asked whether the $16 million once promised by the Federal Government for Cadbury's abandoned tourism venture could be revived.

Felicity Ogilvie reports from Hobart.

FELICITY OGILVIE: During the last federal election campaign, a plan to build a new tourism facility at the Cadbury chocolate factory in Hobart was a big ticket item.

The Coalition controversially promised $16 million for the project.

Fast forward 18 months and that project's been scrapped and the factory is sacking 80 workers.

The Prime Minister Tony Abbott is in northern Tasmania today.

He says that today's job losses are not the result of the $16 million tourism deal falling over.

TONY ABBOTT: The company has made that absolutely crystal clear. They are becoming more efficient and this slimming down of their work force is part of the efficiency drive inside the company.

We're disappointed that the proposal that we announced during the election campaign was ultimately withdrawn by the company. We thought it was a very good proposal. It was a tourist infrastructure proposal at least as much as it was a business proposal. But sadly, in the end, Cadbury's decided not to go ahead with it.

FELICITY OGILVIE: The factory's owners say they withdrew from the deal to build a visitors' centre because the Government grant was contingent upon developing a new export opportunity and the company couldn't meet that criteria.

But a spokesman for Cadbury says the decision to let go 80 workers had nothing to do with the tourism deal.

The Federal Government is still promising to spend the $16 million on other tourism projects in Tasmania.

And the Trade Minister, Andrew Robb, promised at the start of April that a decision on where that money would be spent would be made "in weeks, not months."

But there's still no indication of who is going to get the money.

The Cadbury factory is in the electorate of the independent Federal MP Andrew Wilkie. He wants the money that was allocated to Cadbury to be spent locally.

ANDREW WILKIE: The State and Federal Government are quick to intervene elsewhere in the state when there's mass lay-offs. There is a role for them to intervene in this case, starting with a commitment that the $16 million that was originally to go Cadbury: that that money still be spent in the local area.

FELICITY OGILVIE: The CEO of the Tourism Industry Council of Tasmania, Luke Martin, wants to know if the $16 million development at Cadbury's could be revitalised.

LUKE MARTIN: Take the parameters around the manufacturing outcomes for a tourism grant, which is essentially what was the reason given for the project not proceeding. Take that parameters out of the business case, see if the option's there to revitalise the visitor experience and see that money spent to good effect to ultimately create jobs in tourism in a part of the state that most need it.

FELICITY OGILVIE: And what would this experience be? And how many visitors was it expected to attract a year?

LUKE MARTIN: Look, my understanding is the business model is it's suggested around 300,000 to 400,000 visitors per year, which, put in context, would surpass the numbers at MONA and Port Arthur. So we're talking about potentially Tasmania's biggest tourist attraction.

FELICITY OGILVIE: A spokesman for Cadbury says any new deal to develop a new tourist attraction at the Hobart chocolate factory is a matter for the Federal Government.

KIM LANDERS: Felicity Ogilvie reporting.