The Victorian Government has no intention of building a container island on Port Phillip Bay, Treasurer Tim Pallas says.
Documents prepared by the Treasury Department proposed an island in Hobsons Bay that would have the capacity to berth three container vessels.
The Port of Melbourne is Australia's busiest container port, servicing more than 3,000 ships each year.
Mr Pallas said the dock expansion plan was commissioned in secret by the previous Government in its dying days in office.
He said it was not part of government policy.
"It doesn't form any part of the port lease area and is not included in the capacity estimates for the lease transaction," Mr Pallas said.
"Departments consider many scenarios but it simply doesn't mean governments have to adopt them and we're not adopting this one."
But the former treasurer in the Napthine government, Michael O’Brien, said the claim was "complete and utter rubbish" and the first he knew about the plan was when the saw it in the newspaper.
"This was actually a Daniel Andrews plan, a secret plan, to expand the Port of Melbourne and increase traffic congestion by 50 per cent and it’s now been exposed thanks to a leak from inside Labor," he said.
"It is nothing less than dishonest for Labor to have kept this plan secret from Parliament while Parliament is debating Labor's legislation to privatise the Port of Melbourne for 70 years."
The committee examining the port privatisation plan is due to report back this week.
No need for 'drastic action'
The Government hopes to raise $5-6 billion from the sale of a 50-year lease to fund its election policy to remove the most dangerous railway level crossings.
Mr Pallas said it was not government policy because the Government did not believe there was a requirement for such "drastic action".
"We basically took the view we could deliver the capacity of the Port of Melbourne by protecting rail reservations and ensuring efficient transport movements into and out of port without the sort of "drastic action’ contemplated by the previous Coalition government," he said.
Mr Pallas reiterated that he was happy to negotiate with the Opposition on the port sale legislation, but said either way, the sale would go through.
"We're happy to work these issues through positively and productively," he said.
"But I'll be very clear: we have a mandate and I intend on proceeding with it whether through legislation and negotiation with the opposition or alternatively through the use of administrative powers."
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