FORMULA One boss Bernie Ecclestone faces a tough battle to keep the Australian Grand Prix in Melbourne with the Baillieu Government vowing to strike a better deal for taxpayers.

Major Events Minister Louise Asher yesterday announced the Government's biggest subsidy of the race since it was brought to Victoria in 1996, and said she was "not comfortable" with the payment.

The cost to taxpayers of hosting the Melbourne Grand Prix will continue to rise at record rates for at least three years despite the Government contributing an unprecedented $56.7 million to this year's event.

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If Victoria was to keep the race beyond its contract expiry in 2015, Ms Asher said, she would pursue a better deal when negotiations for a new contract started, probably next year.

"My aim is to negotiate something that will cost the taxpayer less."

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Ms Asher would not say what she thought was a reasonable cost and refused to disclose a secret annual fee paid to Mr Ecclestone.

She blamed the cost blowout on an "escalator" clause in the race contract signed by the previous Brumby Labor government in 2010, that saw its cost to the public rise above the rate of inflation every year.

The cost to taxpayers of hosting the 2011 Australian Motorcycle Grand Prix was $6.5 million.