The NSW government will not proceed with Princes Highway upgrades unless the leasing of Port Kembla port goes ahead, Treasurer Mike Baird has said.
Speaking in Parliament on Wednesday, Mr Baird said the funds raised from the leasing would "help free up billions of dollars to help fund a critical backlog of infrastructure across the state" and keep the state's triple A credit rating.
These projects included the Princes Highway upgrade as well as WestConnex and the Pacific Highway.
"Without this transaction those projects cannot proceed," Mr Baird said. "That is why the government is determined to complete the transaction on behalf of the people of NSW."
Legislation enabling the lease of Port Kembla and Port Botany passed the state's lower house this week.
Mr Baird said the long-term lease of Port Kembla was a "win-win" for the Illawarra.
"The new lessee, having invested a substantial sum to acquire the lease of the port, will continue to invest in its future growth and development," he said.
"There will be more jobs and a boost to the local economy, and at the same time the legislation contains appropriate protection measures for employees. If ever there was a win-win for a community, this is it."
He also said that any lessee of the port "will be required to make an annual contribution to improving road and rail landside logistics".
As a sweetener for the proposed 99-year-lease of Port Kembla, the NSW government has promised that $100 million of the expected $500 million windfall from the lease would be spent on infrastructure in the region.
However Keira MP Ryan Park told Parliament this "one-off payment" wouldn't go very far.
"For those on the government side who are not very experienced in infrastructure, I will give them a little lesson in how small $100 million is and how little it buys," Labor's new roads spokesman said.
"A three-kilometre stretch of road in my electorate called Memorial Drive cost approximately $115 million.
"Even if the government is as fantastic and as wonderfully efficient as it says it is in delivering projects, it would not get such a road a lot cheaper."
Mr Park also said offering a 99-year lease was effectively selling the port.
"Technically it is [a lease] but my two-year-old son will be 101 years old when that so-called lease expires," he said.