Scott Morrison has asked his department head Philip Gaetjens to look at a $36,000 grant Senator McKenzie awarded to a shooting club of which she was a member.
The former sports minister didn’t disclose the membership on her register of interests.
A spokeswoman said a declaration was unnecessary because it was a gift worth less than $300.
Gaetjens will also take a broader look at the controversial program the grant was awarded under after a damning auditor-general’s report found most of the $100 million was spent in marginal seats.
The audit found McKenzie ignored Sport Australia’s advice on which organisations should get grants, with 73 per cent of the projects not recommended by the agency.
In a statement, the prime minister’s office said Morrison had referred the grants program to Gaetjens on Friday.
“The prime minister is awaiting the secretary’s advice and will continue to follow due process. The matters raised in the media today have also been referred,” a spokesman said.
Labor has accused the prime minister of showing a complete lack of leadership by flicking the investigation off to the public service.
“It’s his minister, it’s his ministerial standards,” shadow attorney-general Mark Dreyfus told the ABC.
“Bridget McKenzie should have resigned days ago, and if she won’t resign Mr Morrison needs to sack her. We already know all that any real leader should need to know in sacking this minister.
“The only reason she has lasted as long as she has is that Mr Morrison and his cabinet are all up to their necks in this.”
The pressure on McKenzie intensified after it emerged she awarded a $36,000 to the Wangaratta Clay Target Club in February.
“Round-two funding became available in December 2018 at MYEFO and funding decisions were made from that time,” McKenzie’s spokeswoman said.
Attorney-General Christian Porter, who is looking at legal questions raised by the auditor-general, defended having ministerial oversight on grant programs.
“What I fundamentally don’t accept is that ministers should not be involved in final approval for projects. That’s their job,” he told 6PR radio.
Want to comment?
Send us an email, making it clear which story you’re commenting on and including your full name (required for publication) and phone number (only for verification purposes). Please put “Reader views” in the subject.
We’ll publish the best comments in a regular “Reader Views” post. Your comments can be brief, or we can accept up to 350 words, or thereabouts.
InDaily has changed the way we receive comments. Go here for an explanation.
Make your contribution to independent news
A donation of any size to InDaily goes directly to helping our journalists uncover the facts. South Australia needs more than one voice to guide it forward, and we’d truly appreciate your contribution. Please click below to donate to InDaily.