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NSW Premier Gladys Berejiklian should halt Sydney’s $16.8 billion WestConnex road project after a national auditor-general’s report found major flaws in the way the project was funded, opponents say.

The Australian National Audit Office report, released on Tuesday, found that an upfront payment by the federal government and the approach to agreeing milestones for later payments "did not adequately protect the Australian government's financial interests".

Both Labor and the coalition in Canberra committed at least $1.5 billion in grant funding towards the WestConnex project before the September 2013 federal election.

The newly-elected Tony Abbott government pledged a further $2 billion in the form of a concessional loan in May 2014, which the auditor-general's report said did not achieve its objective of fast-tracking the project by about two years.

WestConnex Action Group spokeswoman Pauline Lockie, whose St Peters house is being demolished for the project, said the report vindicated everything her group had been saying for years.

"The only right thing for Premier Berejiklian to do now is to halt construction works on WestConnex and conduct a full and open review into how this secretive, expensive and destructive project was allowed to go ahead," Ms Lockie told reporters.

But federal Urban Infrastructure Minister Paul Fletcher says the report only examined the approval and administration of commonwealth funding for the project.

"Nothing in this report raises any questions about WestConnex's design, the construction program, or the benefits that WestConnex will deliver to millions of people in western and southwestern Sydney," he said in a statement.

Federal opposition infrastructure spokesman Anthony Albanese, who wrote to the auditor-general in early 2016 requesting an investigation, said the report confirmed the coalition misled Australians when it promised not to invest in major projects without proper cost-benefit analysis.

"It is clear that when it comes to infrastructure, this government was prepared to spend billions of dollars of public money towards toll roads with no evidence as to whether they represented value for money," Mr Albanese said in a statement on Tuesday.

The audit found funds were paid in advance of project needs and a May 2014 decision to make a $500 million advance payment led to the project being approved "without there being any documented analysis and advice to ministers that the statutory criteria for giving such approvals had been met".

Further, the linking of payments to milestones wasn't effective as a control because in some cases milestones were agreed to after the event had occurred.

Alternatively milestones were simply amended if NSW hadn't met them so federal payments weren't delayed.

 
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