Pouring hundreds of millions of dollars into the Latrobe Valley is the right response to the closure of the Hazelwood coal mine, the state government insists, even though axed workers will pocket $330,000 each on average.
Premier Daniel Andrews on Friday revealed a $266 million support package, a day after French majority owner Engie announced the mine and power station would close by the end of March 2017.
"There are many reasons you would never give up on this community and I simply won't," the premier told ABC radio.
Businesses will be lured to the valley with stamp duty incentives and financial government support in a bid to create alternative jobs in the region.
The premier said the government would consult with the community on projects to be built from a $174 million Community Infrastructure and Investment Fund.
They could include road, rail, school and health upgrades.
A $50 million economic growth zone will cover three local government areas within the Latrobe Valley and includes provisions for stamp duty concessions for companies that want to grow or move into the region.
Prime Minister Malcolm Turnbull on Thursday vowed to work with Mr Andrews in a "collaborative way" to support the community.
But the PM's Energy Minister Josh Frydenberg had already taken the gloves off by Friday morning.
Mr Frydenberg said Labor had "traded away blue collar jobs in the regions in order to win green votes in the cities".
The state government tripled coal royalties which cost Engie $20 million, the federal minister said, adding Hazelwood's closure would lead to retail price increases of $1.65 a week in Victoria.
That's almost double the 85 cent figure put forward by state Labor.
The federal energy minister also said the shutdown would invite more instability into the national electricity market with Victoria going from a net energy exporter to a net importer.
The Victorian premier said he was "disappointed" Mr Frydenberg was playing politics with the issue.
"I'm not interested in playing these games," he said.
Engie on Thursday stated it was "no longer economic to operate" Hazelwood.
About 750 workers, including contractors, will be directly affected by the closure in an area where eight per cent of the population is already unemployed.
Engie has set aside $150 million for entitlements - an average of $330,00 per worker.
The Hazelwood station is more than 50 years old and provides more than 20 per cent of Victoria's electricity.
The federal government on Thursday announced $43 million in assistance.
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