The comedian offered to buy the nearly six-foot-tall artwork, called Fallen Fruit, for $10 and donate $10,000 to a local food bank.
He made the offer on his hit HBO show Last week tonight ‘at night.
However, Yarra City Council declined the offer and invited Oliver to come to Australia to see it in person.
As a sweetener, Oliver offered his gag of crocodile statue as a substitute.
“Since the people of Melbourne seem to think their money has been thrown away, I may have a solution for you, because I’ll be happy to take that banana off you,” Oliver told viewers.
“What could be more Australian than a dangerous animal telling anyone who comes near it to fuck itself?”
Food Bank Victoria responded to the offer via social media.
“If you know where this giant banana is, $10,000 (20,000 meals) could help us feed Victorians who are now struggling! So to speak,” the post said.
The nearly six-foot-tall statue was commissioned by the city of Yarra by artist Adam Stone.
The $22,000 installation was created by artist Adam Stone and was commissioned by the municipality through a Transport Accident Commission.
The image is currently safely kept in storage.