THERE was $1.4 billion in available funding left unspent on Victorian services including hospitals, schools and public transport at the end of the last financial year.
But, apart from the Department of Health, no department could demonstrate it had an appropriate strategy to use the money.
The total amount of money receivable by departments was $3.7 billion as of June 30, 2011, including $2.3 billion in accrued employee entitlements and payables.
Auditor-General Des Pearson said of the remaining $1.4 billion available for spending on infrastructure and services, almost half was held by the Department of Health, which planned to use the funds for capital works over coming years subject to approval in future state budgets.
"However, none of the 10 remaining portfolio departments had plans to use the remainder of their SAU (state administration unit) funds," he said in a report tabled to parliament on Wednesday.
Managers told the auditor-general the main reason the money was not spent was because it needed the treasurer's approval.
"Oversight arrangements should not hinder portfolio departments from planning and delivering additional public services or infrastructure for legitimate purposes," Mr Pearson said.
Comment was being sought from Treasurer Kim Wells.
Opposition treasury spokesman Tim Holding said Premier Ted Baillieu and Mr Wells had perpetuated a myth that deep spending cuts were necessary to balance the budget.
"The auditor-general has busted that myth and found that not only is $1.4 billion sitting idle, but also that there are no plans for 10 government departments to use this money to deliver services and infrastructure to Victorians," he said.
The auditor-general also recommended an overhaul of the guidelines for ex gratia payments to public servants.
He noted that during 2011/12 a large payout was made to an individual leaving the public service.
"Disclosure of details and circumstances of ex gratia payments made to individuals, to both Parliament and the public, is limited and also results in inconsistent disclosures across the public sector, as entities are able to exercise significant discretion over what they choose to disclose," Mr Pearson said.
The auditor-general recommended the Department of Treasury and Finance change its reporting rules to mandate the nature, purpose and amount of ex gratia payments made by public sector bodies.
Earlier this year it was reported former director of public prosecutions Jeremy Rapke, QC, was paid out about $8 million and former Victoria Police chief commissioner Simon Overland $2 million.
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