VICTORIA'S financial watchdog will be asked to investigate a state government grant that was used to help the expansion of a business run by one of Premier Denis Napthine's former racing partners.
In an election-eve blow for the Coalition, Labor will request the Auditor-General inquiry after The Age revealed on Saturday that the regional grants were approved - despite advice that the use of the funds was inappropriate.
Documents obtained under Freedom of Information laws found that in November last year, the Department of Premier and Cabinet had advised Dr Napthine it was "not appropriate" to use the state's Regional Growth Fund to finance the relocation of a Warrnambool council works depot, as part of a proposed expansion on Midfield Meat on to council land.
Midfield Meat is owned by Colin McKenna, a wealthy businessman in Dr Napthine's Southwest coast electorate, with whom the premier used to own a racehorse called Spin The Bottle.
The FOI documents also confirmed that DPC had a proactive role in the expansion, despite it being a local issue of little relevance to the department.
Opposition scrutiny of government spokesman Martin Pakula described the matter as "smellier than ever" and said Labor would ask the Auditor-General to investigate.
"We've got the Department Premier and Cabinet involved in something that's got nothing to do with them; we've got the Regional Growth Fund being used improperly; we've got advice from RDV (Regional Development Victoria) being ignored - all to the benefit of the Premier's mate and his former racing partner in his electorate, and I think he needs to explain exactly how all this happened," Mr Pakula said.
When asked about the latest revelations on Saturday, Dr Napthine described it as a "recycled story" and "scurrilous nonsense."
He said Labor had referred the matter to the anti-corruption watchdog several months ago "but there was simply no substance to it whatsoever."
"I sought DPC advice when I met with Midfield Meats in November last year, and I followed the advice of the DPC absolutely to the letter, and that is why IBAC said this is an absolute nonsense," Dr Napthine said.