And local residents, outraged by public land being handed to private developers for high-rise apartments, say the report calls into question how that deal was done.

Auditor-General John Doyle on Wednesday released his report into the management and oversight of the racecourse.

He said the needs of the community had not been balanced appropriately against the needs of racing.

The report found the Napthine government's Department of Environment and Primary Industry failed to properly oversee management of the 54-hectare reserve.

Nor had the trust responsible for managing competing interests of the public reserve and horseracing been run well, it found.

Established in the 1870s, the reserve's three purposes are for horseracing, public recreation and as a park.

But management of the reserve – left to trustees from the state government, the Melbourne Racing Club, and the local Glen Eira City Council – had seen only horseracing adequately looked after, the report found.

This was a result of clear conflicts of interest between the trustees and the racing club, the Auditor-General found.

And he found that, despite the Caulfield Racecourse Reserve being Crown land, much of it was not available for the community's use.

On a visit there, Mr Doyle found "public access areas were not welcoming or easily accessed, with poor signage both at entrances and within the reserve".

And despite a reported $1.8 million upgrade to the centre of the reserve, "public space within the reserve is not easy to reach and the recreational facilities are limited", he said.

Glen Eira mayor Neil Pilling said the racing club had been allowed "to do whatever it wants, to the detriment of the local community". He accused the state government of "not doing its job" in looking after the needs of residents against the race club.

"If we had an equitable arrangement with the racing club, we could have multiple sporting fields in the centre of the racecourse – we've been trying for years [for] that."

The report details a commercial development that includes 2000 apartments and retail space on a triangle of land now owned by the Melbourne Racing Club.

Chris Foley is a resident who lives adjacent to where at least one 20-storey apartment tower will be built on the land.

Mr Foley said the land swap of Crown land that had led to the development had been highly secretive and served the interests of the racing club, not the public.

"People did not know what was going on, and we'll be left with, on that triangle, an apartment block far bigger than anything in the area," he said.

Environment Minister Ryan Smith referred queries over the report to his department, which did not respond by deadline.

Opposition planning spokesman Brian Tee said the vision of previous generations for the land to be shared by the community and racing clubs had been "trashed" by the state government's neglect.