Federal Labor has seized on the "staggering revelation" the 2013 election defeat of former high-flying Liberal MP Sophie Mirabella cost a Victorian regional hospital $10 million in funding.
Opposition Leader Bill Shorten said the decision smacked of political corruption and vowed to have his senators pursue the issue in parliamentary hearings the week after next.
In a live television debate with independent Indi MP Cathy McGowan on Thursday night, Ms Mirabella claimed she was ready to announce a $10 million grant for Wangaratta Hospital the week after the 2013 poll.
"That is $10 million that Wangaratta hasn't had because Cathy got elected," she said.
Ms Mirabella intimated the only way the electorate would get federal funding was if she was returned to parliament as a member of the coalition government.
Mr Shorten was scathing of the former MP's comments, saying the decision to withhold funding was unethical behaviour.
"It is not the Australian way to say to a section of the population that if you don't do what we say, that we will punish you and withdraw vital healthcare," he told reporters in Townsville.
"That's the sort of thing you see in a banana republic, not a functioning democracy."
Mr Shorten called on Prime Minister Malcolm Turnbull to explain why the funding was cut.
Treasurer Scott Morrison was reluctant to buy into the row as he campaigned with Ms Mirabella on Friday, telling reporters the funding was never publicly announced.
Feelings are running high in Indi, where Ms McGowan is attempting to stave off a challenge from Ms Mirabella and junior coalition partner the Nationals.
A local newspaper in the electorate claimed the former MP pushed her successor out of a photo opportunity last week.
It's a claim denied by Ms Mirabella who used the television debate to call on Ms McGowan to confirm there was "no push".
A recent opinion poll shows Ms McGowan holding a 10 per cent lead over Ms Mirabella on primary votes with the Nationals a distant third.
In 2013, the margin between the two was just 439 votes in an electorate with nearly 100,000 voters.
It was the only time since 1931 the north Victorian seat was won by someone other than a conservative party candidate.
Ms Mirabella was destined for a cabinet position in the Abbott government before her defeat by Ms McGowan in a grassroots campaign labelled the "Orange Revolution".
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