Despite ongoing criticism over the amount of money being thrown at the event, Victoria state premier Ted Baillieu insists that Melbourne wants to keep its F1 grand prix.

Recent reports suggested that organisers were attempting to seek a rethink on the cost of staging the race [ see separate story], but Baillieu insisted to reporters that the situation had been misunderstood, claiming that the grand prix was an essential part of the city's social fabric.

"There are three more races under the current contracts and we will see out those and commence discussions at an appropriate time," he told reporters, "I am very confident that the grand prix has been good for Melbourne and Victoria, [and] will be good for Melbourne and Victoria. We intend to do whatever we can to ensure our major events calendar remains strong, and the grand prix has been a part of that and we look forward to it being a part in the future."

Figures uncovered by a local newspaper fanned the flames of annual concern over the amount of money being spent to stage the grand prix as, according to the Melbourne Herald Sun, the state is shelling out more than $30m a season under its current five-year agreement for the race in Albert Park. The fee is set to increase by five per cent with each successive event under the escalator system imposed by Bernie Ecclestone and Formula One Management, which handles race contracts.

The report also claims to have seen documents detailing the escalation figures previously unreleased by state governments, and reveals that the fee for the race is set to rise from $31m at the start of the deal in 2011 to around $38m by its end in 2015. Last year's race cost organisers $32.5m, but Baillieu maintains that the report had misrepresented the nature of the fee.

"Those fees cover the arrival, the production of the grand prix itself - all of the equipment and personnel that is brought here - and they go to the company which runs the grands prix around the world," he pointed out.

"Meanwhile, the benefits [to Melbourne] are very substantial. We need to weigh up the benefits and we will endeavour to get the best possible deal we can."

Having already endured threats to its future after being asked to run into the dark to satisfy European television audiences - a compromise was struck that saw recent races end at dusk - Baillieu is well aware that Australia's race is not entirely secure on the calendar, particularly with other countries queuing up to join the show, but he obviously intends it to remain.

"I say again [that] the grand prix has been good for this state, good for this city and is a key part of our major events calendar - and that calendar gives Victoria a competitive edge," he stressed.

Australian Grand Prix Corporation chief executive Andrew Westacott recently confirmed that talks on a new contract would begin later this year, despite there being time to run on the existing deal.

That deal was struck by the previous state government.



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