In Australia's largest island national park, taxpayers will be forced to spend $1.3 million cleaning up a resort in ruins while the Queensland Government courts companies to build more eco-accommodation on the other side of the island.

Key points: The first phase of the clean-up and removal of the dilapidated resort is due to happen by the end of the year

The first phase of the clean-up and removal of the dilapidated resort is due to happen by the end of the year Locals have raised suspicions about the coincidence of the timing of the restoration with the introduction of 60-year leases to build eco-accommodation

Locals have raised suspicions about the coincidence of the timing of the restoration with the introduction of 60-year leases to build eco-accommodation The proposed eco-accommodation could include glamping, cabins, huts and retreats and operators have also been asked to provide commercial activities like tours and equipment hire

On Hinchinbrook Island, the burnt-out remains of a failed State Government lease lie abandoned, a scar on the otherwise pristine island environment and World Heritage-listed area.

Cape Richards resort was the only accommodation on the island, but over the past nine years it has been smashed by Cyclone Yasi, looted by vandals and destroyed by fire.

Now the site is covered in burnt-out buildings, electrical wiring, sewerage equipment, a decaying pool, and according to north Queensland residents, asbestos.

The company that owned Cape Richards resort — the Williams Corporation — collapsed after the global financial crisis, and the decrepit resort and sewage treatment plant accumulated about $800,000 in debt to state and local governments.

Queensland Tourism Minister Kate Jones confirmed $1.3 million would be used to return the "crumbling eyesore" to Hinchinbrook Island National Park.

The resort has been abandoned for years. ( ABC News: Josh Bavas )

In October last year, the State Government opened expressions of interest for private businesses to build eco-accommodation on 60-year leases at three sites along Hinchinbrook's Thorsborne Trail, a wilderness hike on the other side of the island.

There was a backlash from conservationists and Cassowary Coast councillors who said no further leases should be made available on the island until the 8-hectare Cape Richards site was cleaned up and rehabilitated back into the national park.

The Minister denied the two issues were linked.

"So what happened was the lease for the resort finished at the end of December last year and we had to make a decision as a Government about what we wanted to do," Ms Jones said.

"When the lease expired … we made a decision that we would return it to national park, not seek to have another resort operator come in and develop that island."

The Cape Richards resort building on Hinchinbrook Island. ( Supplied )

But the ABC can reveal the lease did not "expire" on its own terms, as it was a 75-year-lease due to expire in December 2052.

The lease was disclaimed as onerous property by the liquidators, which required the Government to initiate the termination of the lease.

"We understood that the market could not correct this on its own," Ms Jones said.

"We think that the best way forward for Hinchinbrook Island is to not only increase the national park, but also to provide new eco-tourism experiences, not going back to the old resort."

Electrical systems sit neglected as nature slowly reclaims the resort. ( Supplied )

The Environment Department will put a contract out to tender for the restoration project, with the initial clean-up and removal of resort materials planned before the end of the year.

Perth businessman Adam Tree was in negotiations last year to take on the lease and turn the site into a "glamping" venture, but withdrew the contract in December.

Old buildings remain on Hinchinbrook Island. ( Supplied )

60-year leases within the national park draw fierce criticism

The ABC understands three companies have been shortlisted for the contracts to commercialise and build accommodation in three Queensland national parks.

The leases up for grabs include Hinchinbrook, Whitsunday Islands National Park and the Great Sandy National Park along the Fraser Coast.

Marketed as "eco-accommodation", this could include building cabins, retreats, huts or glamping.

Private companies are also invited to provide commercial activities, tour guides, and equipment hire.

The State Government is looking to give companies a fast-tracked "coordinated approvals process" and could offer rent abatement during that time.

Sorry, this video has expired Video of Hinchinbrook Island, courtesy of Wanderstories.

Nature conservation laws were amended in 2013 by the Newman government to allow for private development in Queensland national parks.

The Government has faced stiff opposition to the proposal, including from within its own party.

The Townsville branch of the ALP passed a motion in late 2018 calling on the Labor Premier to not give approval for any accommodation, facilities or management control in any national parks.

Locals say timing is 'bit suss'

Hinchinbrook Island attracts hikers from all over the world. ( Supplied: Steven Nowakowski )

Cassowary Coast Councillor Glenn Raleigh was not told about the change of the lease but had heard rumours.

"The consequences of leaving it like it is, in ruins for years and years, may have something to do with political timing, but I believe we should be concentrating on cleaning it up and not focusing on short-term political gains," he said.

"The lease was in a national park and it is the responsibility of the State Government to make sure they are clean and safe. It's taken far too long."

Protesters rallied against development on Hinchinbrook Island late last year. ( ABC News: Laura Gartry )

Margaret Moorhouse from the Save Hinchinbrook Island Alliance has campaigned for decades to have the Cape Richards lease converted back to national park.

But she said she could not celebrate the win given the timing was "a bit suss".

"The purpose for national parks is for conservation. There is no consistency with these leases, given what is happening on the other side of the island," she said.

"They have been sitting on that lease for so many years, and all of sudden they have a PR disaster, so they are dangling a carrot.

"Festering Cape Richards always had to be fixed, it is very co-incidental that it is being fixed right now, when they are introducing 60-year leases," said Steven Nowakowski from Friends of Hinchinbrook.