Bridget McKenzie set for fresh scrutiny over $100 million 'slush fund' role

Coalition cabinet minister Bridget McKenzie is poised to face fresh parliamentary scrutiny over her role in administering a $100 million government "slush fund", amid growing calls for the Nationals deputy leader to stand down.

The opposition stepped up its attacks on the federal Agriculture Minister on Friday. Labor leader Anthony Albanese labelled her position "untenable" after a scathing audit office report found a community sport infrastructure grant program was "biased" in directing cash towards must-win seats ahead of the election campaign.

The Greens, One Nation and Centre Alliance have offered support to establish a Senate inquiry into the saga when Parliament returns next month, with senators Pauline Hanson and Jacqui Lambie both demanding Senator McKenzie's resignation.

The Australian National Audit Office is also set to probe the decision-making process of another $450 million government program overseen by Senator McKenzie's office, which has funded 195 projects to support natural resource management and sustainable agriculture.

Senator McKenzie has defended her conduct and described calls for her resignation as "absolutely ridiculous", claiming all grants were within the rules, and Labor seats had benefited from her personal intervention.

Home Affairs Minister Peter Dutton threw his support behind the embattled minister, citing the audit had found no rules were broken.

Bridget McKenzie is poised to face more scrutiny.Credit: Alex Ellinghausen

"None of those clubs that have received that money have been found ineligible to receive that money," Mr Dutton told the Nine Network.

"The money has gone out – not against recommendations, not to clubs that weren't deserving of it."

Mr Albanese said Labor would further pursue the issue through Senate Estimates and would seek the support of the upper house for an inquiry.

"This is outrageous behaviour by a government that really believes that it has a right to do whatever it likes, whenever it likes, wherever it likes," Mr Albanese said.

"The truth is that her position is untenable as a minister."

Greens leader Richard Di Natale said Senator McKenzie had "lost the moral authority to remain in cabinet" and it was time for her to resign.

Senator Hanson, who has been engaged in a long-running dispute with the Victorian over her handling of a dairy industry code of conduct, said she didn't think she was "up to doing the job".

"I thought she was hopeless in dealing with the dairy industry and this is another case in point. I call for her resignation, that she should step down in any portfolio as minister."

Independent MP Zali Steggall demanded the government push ahead with a national anti-corruption body, comparing the sports grants scandal to the Australian cricket team's ball-tampering disgrace.

The Warringah MP and Winter Olympian said the politicisation of the program was "disgusting", with a $500,000 grant given to the Mosman Rowing Club as the Coalition tried to save former prime minister Tony Abbott from defeat.

"She's completely lost if she doesn't think she needs to acknowledge that there's something wrong with cheating kids and community sports clubs ... I just think it's disgusting," Ms Steggall told ABC radio on Friday.

Ms Steggall took aim at Prime Minister Scott Morrison and compared him to former Australian cricket captain Steve Smith, who served a one-year ban for failing to stop cheating within his team.

"We saw the outcry with the cricketers, and they took responsibility, they acknowledged where they had gone wrong and where their standards had slipped," she said.

"The standards of the members of your team, they're a direct reflection on the standards of you as a captain. It's just quite concerning that is what they think is acceptable conduct."

The program awarded $100 million to 684 projects across three rounds in the months before the election out of a total of 2056 proposals seeking almost $400 million.

Nine marginal electorates in NSW received a share of more than $8.08 million in grants out of a total of $18.45 million awarded across the state, including $1.4 million for 10 projects in the seat of Gilmore.

In Victoria, more than $1.1 million was poured into the ultra-marginal seat of Corangamite for five projects, with 55 projects awarded $6.7 million across other marginal and targeted seats.

Auditor-General Grant Hehir's report found the successful applications were "not those that had been assessed as the most meritorious in terms of the published program guidelines".