Thursday 1 November at 12:10 : 24 hours after escalating losses were revealed, the state government has refused to rule out abandoning Melbourne's Australian grand prix.

Victorian premier John Brumby, who inherited the race from his predecessor Steve Bracks, questions whether an event that loses $34 million annually is "good value for money".

Negotiations with F1 officials will need to begin shortly if the government wants to retain the race beyond 2010.

"I think the two tests post-2010 (are) firstly, does it remain a good event for the state, and secondly, can we secure good value for money?" Brumby said outside parliament, according to the Herald Sun newspaper.

He added to ABC Radio: "So that's the test and we will be examining these things in much more detail next year."

The Albert Park event was already under pressure, with Australian grand prix chief Ron Walker jetting to London on Wednesday to ratify plans for a more Europe-friendly 2008 start time of 3.30pm.

Former premier Jeff Kennett, who successfully campaigned to transfer the Australian grand prix from Adelaide to Melbourne in 1996, said he believes the current government is manoeuvring the axe the race.

"My bet will be that the Labor government will renege on this contract in 2010," he told Southern Cross Broadcasting.