A Liberal backbencher has accused Prime Minister Tony Abbott and Treasurer Joe Hockey of lying about union conditions at SPC Ardmona.
Sharman Stone, the federal Member for the Victorian seat of Murray, says her senior colleagues are using excuses that are "wrong" to justify the decision to reject a bid for $25 million in government assistance from the food processor - which is based in her electorate.
Union conditions of workers have come under fire from the Government for being too extravagant, with pay well above the award.
In an extraordinary outburst, Dr Stone says the leaders of her party are deceiving the public debate.
"It's not the truth. That's right, it's lying," she said.
"The independent panel, their own independent panel, I understand recommended that this industry be supported."
This morning on AM, Dr Stone was pressed on her use of the word "lying" - and whether she believed Employment Minister Eric Abetz's statement that workers' allowances also represented a lie.
"Well, you could use that word if you like," she said.
She later added that "it is a complete furphy what is being said about the troubles of this last fruit-preserving industry."
The Prime Minister’s office has declined an ABC request for comment and Mr Hockey’s office has not yet responded.
Worker says $45k a year is fair for conditions in factory
Worker Sarah Ross-Edwards says employees are paid fairly to work in hot conditions in a factory that is not air-conditioned.
"Mr Abbott has got it wrong, we're on the proximity of $45,000 a year," she said.
"Of course, in the summer time when there is extra work, we work it, and we get paid accordingly for that."
Once again, an election could decide the fate of the food processor.
The Victorian Opposition has committed $30 million for fruit processor SPC Ardmona, should it win the November state election.