This isn't surprising. The mandate of the government was to cut costs and capital projects were always going to be on the cards, save for the Olympics where they just had to be savage and force a decision rather than more feasibility studies.
The consultation report (yes, NIMBYs) was likely an easy settler to can the project. Why risk a cost blow-out and ****ing off a bunch of residents (significant or otherwise) when a bandaid solution is easier, cheaper and quicker (not on the ground, but you get what I mean)?
Personally I think extending the train service to the airport is a better idea than the tram, as the latter will not serve people well who patronise up the line due to the mass of traffic converging around especially Surfers Paradise. The trams will just be too crowded and there will be much annoyance when baggage-toting passengers start occupying valuable space (and seats). Travel time will be pretty wanting, too, even from Broadbeach South. The problem with the train idea is that the line is far away from the main action on the coast, and sure a bus links the two but then that gets coughbersome and undermines the (expensive) line extension.
Besides, until OOL actually starts pulling in some serious traffic, there really isn't an incentive to change the status quo now, especially when fraught with issues. People will put up and deal - just depends on which crowd you prefer to annoy (or risk their next vote for your party).