Tim Nicholls walked out of the “the most productive treasurer's meeting I have attended” with a smile and a sketch of the plan the Commonwealth had set out for the states.

The federal government is encouraging the states to sell their assets and recycle that money into new, economy-boosting infrastructure in exchange for access to funding from the federal government.

“The treasurers have agreed to proceed with the proposal,” Mr Nicholls said. "It is a good proposal in that it allows the states to sign up but to opt in whether they take up the offer or not.

“It acknowledges that different states have different needs. In Queensland of course, we still have to go back and seek a mandate should we go down the path of recycling capital, and we are having that discussion now.

“It certainly gives us hope that the federal government wishes to invest in infrastructure.

But Mr Nicholls said Mr Hockey had “made it clear that funding is reliant on the money being recycled into infrastructure, so it is not available for debt reduction” which would factor into the Queensland government's final decision.

Since the Peter Costello-led commission of audit, Mr Nicholls has stressed the need for the state to pay down the “$80 billion black cloud of Labor debt”, in order to move forward. The government is aiming for a debt reduction of $25 billion, which would help restore Queensland's AAA credit rating, reducing its interest payments.

It is the reason the government put asset sales back on the agenda late last year, but it has repeatedly vowed not to act without a mandate – a win at the next election.

“The incentive basically is to provide a 15 per cent component of anything that is sold back into a productive infrastructure project,” Mr Nicholls said.

“In Queensland, where we know the tyranny of distance is important - the Bruce Highway.

“In Brisbane, the Bus and Train Tunnel that we are talking about, those types of projects, could potentially benefit if the state chose to go down that path.”

The Queensland government plans to announce its decision on asset sales post budget. It will then build a case to take to the next election, expected to be held in February next year.