The tourism and major events minister for Victoria State, Louise Asher, has revealed that she wants to keep the Australian Grand Prix in Melbourne but that a new deal would need to be agreed.

The city currently has a contract to run the race until 2015, but in the face of rising losses - borne by the taxpayer - the future of the race is very much in doubt.

Reacting to Lord Mayor Robert Doyle's suggestion that the city should turn its back on F1, Bernie Ecclestone said he was willing to tear up the contract after this year's event, a move which has clearly caused a certain degree of panic.

"We would like to extend the contract, but we will sit down and we will negotiate about it," Asher told Reuters. "There's no doubt about it that the Victorian government would want to secure the Grand Prix. It's just that we're not going to be bunnies in contractual negotiations."

The 2010 event saw a total loss of $49.4m AUD (£29.5m), and followed a loss of $40m for the 2009 event, indeed, the losses have been steadily growing since 2005 when the Albert Park event lost A$13m (£5.3m).

Speaking in January, Doyle said that it was time the city turned its back on Formula One, claiming that annual losses on the event could soon reach $70m AUD (£42.3m).

Asher, whose Liberal Party was voted back in in Victoria in November after 11 years of Labour government, puts the blame for the Grand Prix deal squarely on the previous administration.

"We inherited a contract that Labor has signed up to, and I just have to deal with it," she said, a comment with which readers in the UK will fully empathise. "So my opinion of what might be an acceptable loss is irrelevant because the event is contracted until 2015, so what we're trying to do is manage what we've inherited."

"When I used to run the event when I was minister previously these taxpayer subsidies were A$2-3 million, however, that was operating off a different contract. There are many reasons why the event lost so much last year. One is the contract, another reason was that attendances were down. Another reason was that revenues and sponsorships and elements like that were also down.

"The Australian Grand Prix Corporation will be required to demonstrate to government that it's doing everything to rein in costs," she added.

While debate rages over the value of the event to the local economy, Asher is in no doubt about the Grand Prix.

"Everyone's entitled to their opinion and they can say whatever they like, but there's a significant economic benefit to hosting the event," she said. "Victorian tourism's had to really fight for everything we've achieved. Sydney's got the harbour and Brisbane's got the Great Barrier Reef, and we've had to brand ourselves by events or being a city of things to do.

"Now we've got sporting events, cultural events and theatre events which are taxpayer-sponsored as well, so we've really had to work hard at brand Melbourne up. And particularly for internationals to know Melbourne exists and want to come to Melbourne and also for the interstate people to actually view Melbourne as exciting again."

Speaking yesterday, Bernie Ecclestone claimed that the Australian Grand Prix is as important to F1 as the Monaco Grand Prix. However, Pitpass sources claim that with slots required for Austin and Russia the Melbourne race is already doomed - certainly if its organizers are seeking a 'discount'.