THE Deputy Prime Minister has dismissed critics blasting the government for using $620 million worth of grants categorised for "regional development" to fund projects in major cities.
An Australian National Audit Office analysis found more than half of the federal government's regional development grants awarded since 2018 went to postcodes classified as major city areas.
Of the more than 6600 grants awarded, almost 3700 went to postcodes classified as major city areas, representing $624 million or 27 per cent of the total value of the grants from the start of 2018 until June 30 this year.
Of the more than $60 billion in total grant funding, just eight per cent, or $161m, was allocated to remote or very remote areas.
Labor regional development spokesperson Catherine King said the Coalition "talks a big game" when it came to regional development, but the report showed it continually favour projects based in major cities.
"It's one thing for the Morrison-Joyce government to namecheck regional towns, it's another for them to actually invest in them," Ms King said.
"Regional grants funding should go to projects in Singleton, Cloncurry, Gladstone or Launceston - not to Surry Hills, Carlton or inner-city Brisbane."
Deputy Prime Minister and Nationals leader Barnaby Joyce said many of the projects funded in cities benefited rural people, such as Ronald McDonald Houses and the Royal Far West children's society.
"Overwhelming, of course this does benefit people in a regional area," Mr Joyce said.
City-based recipients of regional grants included Collingwood Football Club ($16.5m), Randwick City Council ($400,000) and Manly Warringah Football Association ($550,000).
According to the ANAO analysis, 42pc of grants were awarded through a closed non-competitive process.
A spokesperson for Mr Joyce said by ANAO's own admission the report lacked credibility, because it had not tested the integrity of the underlying data and did not provide "any assurance in respect of the reliability of the data".
"The categories used in the reporting don't always reflect the individual aims of specific funding programs," the spokesperson said.
"Programs included in the 'regional development' category for reporting purposes are not always aimed exclusively at regional communities.
"Additionally, the report does not take into account that grant applicants with a state-wide or national presence may lodge grant applications using a capital city address. This does not necessarily reflect where the work and community benefit will occur."
Agriculture Minister and deputy Nationals leader David Littleproud said he was disappointed, but yet to see the details of the report.
"Obviously, as a National Party member, we want to see our fair share in regional Australia," Mr Littleproud said.
The ANAO analysis is the latest in a series of reports that raises concerns about the way the Coalition government distributes grant funding.
A review of the latest round of the Building Better Regions fund found that almost 90pc of grants were awarded to Coalition or marginal seats.
In the lead up to the 2019 election, car park funding and sports grants were also awarded in a lopsided manner to Coalition-held or marginal seats.
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