Vic rejects Dutton's GST 'thought bubble'

The Victorian government has rejected prime ministerial hopeful Peter Dutton's idea of removing GST from power bills to make them cheaper.

Mr Dutton told Triple M radio in Melbourne he wanted to see the 10 per cent GST on household electricity bills removed.

"People would feel that impact straight away," he said on Wednesday, on the first full day of his self-admitted campaign to overthrow Malcolm Turnbull.

He also flagged a royal commission on fuel and energy companies, if he managed to win the top job.

But Victorian Energy Minister Lily D'Ambrosio described it as a "thought bubble".

"For us to make any commentary on thought bubbles coming out of federal parliament or federal government is not a healthy way for us to conduct our democracy," Ms D'Ambrosio said.

She said the recent goings-on in Canberra "vindicated" Victoria's stance against signing up to the National Energy Guarantee.

"What's happening federally is an absolute circus, it's a joke and it's a worldwide embarrassment," she said of the leadership tussle.

"The NEG never had a chance.

"Now you've got the wannabe prime minister who's throwing in other ideas about how to deal with energy prices."