Coalition's regional 'rorts' program scrapped, Labor govt promises $1b in fresh grants

Two new regional grants programs will instead be funded over the coming three years as Infrastructure Minister Catherine King promises to "restore integrity" to funding processes.

The Australian National Audit Office released a damning report in July showing almost two-thirds of grants given from the Building Better Regions Fund, a $1 billion regional infrastructure program, were against department recommendations.

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Ms King announced the sixth round of grants program would not go ahead and instead be replaced by the Growing Regions and Precincts and Partnerships programs, which focuses on delivering for regional and rural communities.

She also dismissed criticism from the National Party, who signed off on many of the questioned funding decisions, pointing to the audit office's findings.

"Despite all the evidence, the National Party continues to defend the fund and, what is worse, tries to tell people their applications were funded under round six of the BBRF," Ms King said.

"What they are defending are decisions to preference their own electorates, to ignore anything resembling proper process and in some cases hand out funds to people who never applied and didn't know they had got the money."

The Labor frontbencher said the Community Development Grants program, which was a closed fund based on a 2013 election promise, would also be de-funded.

Nationals leader David Littleproud, who sat on two of the ministerial panels, defended his party's decisions while in government, saying his members knew better than Canberra public servants.

"Just because a bureaucrat in Canberra thought a priority in one part of the nation was more important than another - we didn't think [that] was the right way to decide how ... that money should be distributed," he said on Monday.

"I don't want a bureaucrat telling me what should happen in Thargomindah in that compared to what's happening in Roma."

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The audit office's report into the former Coalition government's Building Better Regions Fund has revealed 65 per cent of 1293 projects awarded funding were not put forward by the Infrastructure Department as the "most meritorious".

The Auditor-General found the overall program's awarding of grants, which was overseen by former Coalition infrastructure minister Michael McCormack, was "partly consistent" with the guidelines.

But the report also noted "an increasing disconnect" between the assessments put forward by the department and the grants issued by the minister as the program progressed through the five rounds.

The use of a ministerial panel, which consisted of Coalition members, was found to have increasingly relied upon "other factors" in the decision-making progress, inconsistent with departmental advice.