Money was awarded to clubs whose applications were submitted late, making them ineligible.
Money was awarded to clubs whose applications were submitted late, making them ineligible.

Nationals MP rejects grants 'technicality'

NATIONALS backbencher David Gillespie has dismissed damning evidence about a federal sports grants scheme as a mere "technicality".

More than 40 per cent of projects funded under the coalition's $100 million program were not eligible for funding despite the prime minister repeatedly claiming there were no ineligible grants.

Money was awarded to clubs whose applications were submitted late, making them ineligible.

"Look, that is a technicality," Dr Gillespie told Sky News on Friday.

Opposition Leader Anthony Albanese said the evidence proved Scott Morrison was "loose with the truth".

The prime minister claimed on at least 16 occasions that all the projects funded were eligible.

"Scott Morrison thinks that marketing and spin will solve every problem and that marketing is more important than telling the public the truth," Mr Albanese told reporters in Sydney.

An explosive audit uncovered blatant political pork-barrelling in the program, with grants awarded by the Morrison government based on colour-coded electoral margins.

A Senate inquiry has heard there were at least 28 versions of the spreadsheet, detailing which groups would receive funding and the electorate they were located in.

The document was shared with the prime minister's office and showed applications could swing from approved to denied within hours without explanation.

Auditor-General Grant Hehir gave evidence on the first day of public hearings into the so-called sports rorts affair on Thursday night.

Under questioning from Liberal senator Eric Abetz, audit office executive Brian Boyd revealed 43 per cent of successful applications were actually ineligible.

He said those projects were initially assessed by Sport Australia as eligible but circumstances had changed by the time the funding was signed off.

When asked after the hearing about his defence of the program, Mr Morrison said he was quoting the auditor-general's report.

"I haven't seen that (verbal) evidence, I haven't seen that statement, so I will review that," he told reporters.

Mr Hehir told the committee Mr Morrison's office made "direct and indirect" representations on behalf of clubs but those suggestions were not always approved.

Former sports minister Bridget McKenzie had the final say.

Mr Hehir said the parallel process run by Senator McKenzie's office alongside that of Sports Australia "was not informed by clear advice and was not consistent with the program guidelines".

"Potential applicants and other stakeholders have a right to expect program funding decisions will be made in a manner and on a basis consistent with published program guidelines," he said.

But Mr Hehir said there was no legal requirement for the minister to provide reasons why projects received funding.

Mr Morrison had the head of his department - his former chief of staff - conduct a separate review that absolved the government of any wrongdoing.

Philip Gaetjens' report has not been released, but according to Mr Morrison it found "no basis for the suggestion that political considerations were the primary determining factor".

The committee wants Mr Gaetjens to explain how he reached his conclusion.