The state government approved regional grants used to help the expansion of a business run by a wealthy horse-racing partner of Premier Denis Napthine despite advice that use of the funds was inappropriate.

Documents obtained by The Age under freedom of information laws show that in November 2013, Dr Napthine was advised by the Department of Premier and Cabinet that it was "not appropriate" to use the government's Regional Growth Fund to finance the relocation of a Warrnambool City Council works depot. The relocation was proposed to allow the expansion of a neighbouring meat processor, Midfield Meat, on to council land.

Denis Napthine and Colin McKenna of Midfield Meat. Credit:Damian White

The document says: "Regional Development Victoria has advised that the fund is not appropriate to be used to relocate council infrastructure."

"Given Midfield Meats is keen to use the land in its expansion, it is appropriate for them to pay the relocation cost."