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Vic port sale starts govt funding stoush

AAP logoAAP 21/09/2016 Helen Velissaris

Victoria is being short-changed by the federal government after securing the $9.7 billion lease of the Port of Melbourne, the state government says.

Victoria was expecting to receive about $1.4 billion dollars in funding incentives from the federal government as part of its asset recycling scheme.

The scheme gives back 15 per cent of the price of the asset sold if the cash is allocated to new infrastructure investments.

But the federal government claims Victoria didn't apply or get approval in time before the June 30 deadline.

Victorian Treasurer Tim Pallas sent a letter to his federal counterpart on June 29, but Treasurer Scott Morrison said it did not give the government enough time to assess the proposal.

"Your letter sent during the caretaker period before the election ... and gave the Commonwealth no opportunity to assess your counter proposal before this deadline," Mr Morrison said in a letter to the treasurer on Tuesday.

Victorian Ports Minister Luke Donnellan lambasted the federal treasurer on Wednesday, accusing him of changing the rules.

"What we've got from the federal treasurer is now a person who is changing the rules along the way to suit the problems in his budget," Mr Donnellan said.

"To put it mildly, this is an absolute disgrace."

Mr Pallas also said the federal government was "short-changing Victoria".

"This money is owed to Victorian taxpayers and must go to Victorian projects," Mr Pallas said on Tuesday.

Mr Morrison has said $877.4 million which was initially offered in April as part of the asset recycling scheme will still be available.

It will go to support the construction of the Melbourne Metro Rail Tunnel and the Murray Basin Rail projects, he said.

But Mr Pallas had asked the government in his June 29 letter to allocate the Port of Melbourne lease sale funds to the state's level crossing removal project and not the Metro Tunnel project, as it had been already funded by the state.

But the government declined.

"The level crossing removal program was not included in your proposal ... and no substantial business case has been provided to the government," Mr Morrision wrote in the letter on Tuesday.

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