THE state government has denied claims it refused to put proceeds from the $460 million sale of the Rural Finance Corporation to projects in regional Victoria.
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The Labor government has committed $220 million from the sale to the Murray Basin Rail Project, with works to continue this financial year.
The remaining $240 million is yet to be allocated to specific projects.
Minister for Regional Development Jaala Pulford did not explicitly state the funding would be put towards regional projects under questioning during a Public Accounts and Estimates Committee hearing on Monday.
In a statement on Tuesday, she said the state government had not changed its position on providing the $240 million to regional Victoria.
"The Labor government has previously confirmed on the record that the proceeds will be used to fund projects in regional and rural Victoria," the statement read.
"This position has not changed.
"The Andrews Labor Government will use the proceeds of the sale of the Rural Finance Corporation to fund the Murray Basin Rail Project, with the remaining funds reinvested into regional and rural projects."
Ms Pulford said the Nationals had "been caught out misleading regional communities".
The Murray Basin Rail Project received bipartisan support in the lead-up to last year's State Election and maintenance works have started in the region from Maryborough to Yelta, on the Murray River.
Labor had waited on a business case for the project.
In this month's state budget, the government confirmed a $500 million Regional Jobs and Infrastructure Fund.
Nationals member for Northern Victoria Damian Drum said it was still unclear where the remaining money from the sale of Rural Finance Corporation would go.
"Quite starkly, Ms Pulford would not answer the question following repeated requests by PAEC member and Nationals MP Danny O’Brien," he said.
"Rural Finance Corporation was built on the success of our state’s farming sectors and regional communities rightly expect the money from its sale to be invested back into their communities - not into Melbourne-based projects, such as level crossing removals."