The Major and Local Community Infrastructure Program has drawn continued criticism from integrity experts since an analysis revealed it disproportionately supported projects in government-held electorates.
The scheme, set up to fund promises made during the 2025 election campaign, included a $6 million grant to a golf club in the prime minister's Sydney electorate.
Infrastructure Minister Catherine King confirmed on Sunday that Labor's party office played a role in deciding which electorates were eligible for grant funding while defending the scheme.
"It's an election commitment process - it's a political process ... that is done through the party machinery, not through government machinery," she told News24.
"That is no different to what has happened previously.
"Every single time you have an election, people put forward election commitments ... a political party wins and they then have to deliver on those election commitments."
Ms King suggested any pork-barrelling criticism of the program needed to be part of a broader debate about how election commitments were funded.
It was previously unclear who made the decision on which projects would be included in the half-billion-dollar fund after officials in the minister's department said they had no role in determining recipients.
Liberal frontbencher Ted O'Brien said he wasn't surprised to learn Labor's head office was "calling the shots on taxpayer money".
"It needs to be investigated," he said, adding he would leave it to others to decide whether it should be probed by the National Anti-Corruption Commission or another body.
The grants scheme first came under scrutiny after a report from the Centre for Public Integrity in September found roughly 73 per cent of funds for 220 projects went to Labor electorates.
Analysis shows that funding was tilted towards marginal seats and Labor-held seats.
The party holds just under two-thirds of seats in the lower house.
Officials from the Department of Infrastructure on Thursday told a Senate inquiry into the grants process that every invited organisation still had to submit an application to meet eligibility requirements.
But integrity advocates have raised concerns with political parties only applying due process after a promise is made, instead of making announcements based on need.
Constitutional lawyer Anne Twomey called the spending "grey corruption", while anti-corruption commission acting chair Kylie Kilgour told the inquiry some aspects of the program had piqued her interest.
The final report from the senate inquiry is due to be published in mid-November.
