The $560 million Major and Local Community Infrastructure Program has drawn sharp criticism from good-governance groups for funding promises made at the 2025 election.
It has been unclear who made the decisions behind the half-billion fund, which saw projects in Labor-held electorates and, in particular, marginal seats receive a disproportionate money share.
A $6 million upgrade to Marrickville Golf Club in Prime Minister Anthony Albanese's electorate, has come in for particular criticism.
But the government department responsible for infrastructure funding has revealed it played no role in determining recipients, which were hand-picked by Labor and announced on the campaign trail.
In a submission to a Senate probe, the infrastructure department said it was not involved in picking or deciding how much to fund each project in the invite-only funding round.
"The department had no role in identifying, selecting or recommending projects or applicants invited to apply under the program, nor determining project funding value," its submission said.
"The department did not provide any advice to government in relation to identifying, selecting or recommending applicants invited to apply at any point, and the government did not seek any such advice from the department."
Catherine Williams, the executive director of the Centre for Public Integrity, which blew the whistle on the grant round, said the revelation put the onus on the government to explain funding selection.
"It is incumbent upon the government to explain how that process occurred," Dr Williams said.
"A failure to explain would see serious integrity questions continue to swirl around how this half a billion dollars of precious public money was allocated."
The funding round will be examined in two days of Senate hearings later in October after a Greens push to launch the probe, which was supported by the coalition.
Greens deputy leader Steph Hodgins-May said the department's submission left unanswered the "obvious question" around selection.
"Signs are increasingly pointing towards an unprecedented level of ministerial and party discretion to allocate millions of dollars through a closed-off and shady grants process," she told AAP.
Ministers should break with tradition and turn up to the hearings to explain themselves, Senator Hodgins-May added.
"I expect anyone involved in this process, from identifying applicants through to actually handing out the money, to front up to our inquiry," she said.
"Increasingly, that appears to be senior ministers of this Labor government themselves."
Labor has defended the grant round as important to fund smaller promises made during the campaign, many of which were also promised by the coalition.
The Centre for Public Integrity and other good governance groups describe the closed-shop funding round as well below best-practice.
Constitutional lawyer Anne Twomey, who has also lodged a submission to the probe, called the funding "grey corruption", using a phrase previously deployed by Productivity Commission chair Danielle Wood.
"If federal politicians want to win elections by making promises about swimming pools, golf clubs and community centres in their electorates, then they need lessons in both federalism and integrity," Professor Twomey said.
"This is not about 'being a good local member'. It is about indulging in grey corruption and the misuse of public money at the public's expense."
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