Victoria's plan for a specialised quarantine centre in Melbourne's north appears unlikely to get federal backing after a cabinet minister criticised the project.
The proposed 500-bed centre on Melbourne's northern fringe, , needs $200 million in federal funds, with the state chipping in $15 million for design and planning.
"I have seen some political smoke and mirrors over my time and I think this is right at the top of the list," Defence Minister Peter Dutton told the Nine Network on Friday morning.
Quarantine arrangements for returning Australians will be on the agenda at Friday's national cabinet meeting of premiers and chief ministers led by Prime Minister Scott Morrison.
Mr Dutton said aside from some "small blips", the existing hotel quarantine system had allowed 500,000 people to enter Australia safely during the global coronavirus pandemic.
"Hotels are working very well," he said.
"They are able to be scaled up. It gives us the ability to bring people in, quarantine them and send them back home to get on with their lives."
Hume City Council, which has the proposed Mickleham quarantine site in its area, has also raised concerns and requested an urgent meeting with the state government.
It wants to know what impact the centre will have on local residents.
"Council has not been consulted on the proposal prior to ... (the) announcement and seeks clarification about the ongoing management of the facility," it said in a statement.
Deputy federal Labor leader Richard Marles said the federal government had shirked its constitutional responsibility for quarantine.
"Hotels are not fit for purpose," he told Nine.
"Quarantine is the government's job. The federal government's job.
"They have had advice from the middle of last year that they should have purpose-built facilities to deal with quarantine."
Mr Marles noted hotel quarantine leaks had caused major state capitals to be shut down at huge economic cost.
'Strong and unexpected' COVID-19 fragments in wastewater
The debate comes after hundreds of 200 Victorians were told to get tested for COVID-19 after "strong and unexpected" fragments of the virus were detected in wastewater.
Some 246 people in Melbourne's western and northwestern suburbs have been contacted by authorities.
"This additional action is being taken due to the strength of the wastewater detection and because a known positive COVID-19 case, from flight QF778, has been in Victoria in the past 14 days," the health department said on Thursday.
But the Australian Medical Association's Victorian president Julian Rait said the detections did not necessarily mean people were infectious.
"It could mean they've had an infection recently and recovered, no longer potentially infectious and still shedding the virus," he told Nine.
The 246 people who were contacted include four close contacts of the positive case and 242 recently returned red and orange zone travel permit holders.
While they recently returned negative results but the department wants them tested again "out of an abundance of caution".
