LEIGH SALES, PRESENTER: The Great Barrier Reef is one of the world's natural wonders, so a nearly half-a-billion-dollar funding boost to protect it should have been a political winner.

Instead, the Turnbull Government is still defending the huge grant it gave to a Queensland charity, as chief political correspondent Laura Tingle reports.

LAURA TINGLE, REPORTER: The Opposition has been relentlessly pursuing what it alleges is a political conspiracy — a half-billion-dollar commitment to the Great Barrier Reef.

(MEDIA MONTAGE)

AMANDA RISHWORTH, LABOR MP: Malcolm Turnbull and Josh Frydenberg handed over...

KRISTINA KENEALLY, LABOR SENATOR: ... half-a-billion dollars ...

TONY BURKE, LABOR MP: ... in a private meeting based on a lie.

ANTHONY ALBANESE, LABOR MP: They didn't ask for it. There was no tender process.

KRISTINA KENEALLY: The Turnbull Government's dodgy decision...

TONY BURKE: ... has been an inappropriate and dodgy use of taxpayer's money.

ANTHONY ALBANESE: This stinks!

LAURA TINGLE: Labor's prosecution rests on a meeting held in Sydney on the 9th of April this year.

In the room was John Schubert, the chairman of the Great Barrier Reef Foundation, Environment Minister Josh Frydenberg, and Prime Minister Malcolm Turnbull.

To the complete surprise of the foundation, Schubert was told they were getting a $440 million grant it had not asked for or applied for.

There were no public servants in the room.

LEIGH SALES: So, this must have been pretty gobsmacking news to receive.

ANNA MARSDEN, MANAGING DIRECTOR, GREAT BARRIER REEF FOUNDATION: Look — it was a complete surprise.

LAURA TINGLE: Labor's painted the funding as a conspiracy of epic portions.

JOSH FRYDENBERG, ENVIRONMENT MINISTER: The fact of the matter is, the foundation works closely with the CSIRO (Commonwealth Scientific and Industrial Research Organisation), with AIMS (Australian Institute of Marine Science), with the Great Barrier Reef Marine Park Authority — so much so, that when Labor was in office, Labor decided to provide money to the foundation.

LAURA TINGLE: Giving half-a-billion dollars in one lump to a small private-sector foundation certainly seems to break every rule in the government grant book.

But a commitment made to the UN body that oversees the World Heritage sites in 2015 to spend $716 million on the reef by 2020 may be behind the shock decision.

GEOFF COUSINS, BUSINESSMAN: If it wants to keep the World Heritage listing, it has to show that committee that it's made some substantial effort.

LAURA TINGLE: Environmentalist and businessman Geoff Cousins believes the grant was a bit of creative accounting, so the Government could show it was sticking to its $716 million commitment.

GEOFF COUSINS: The Government can now say, "We've spent the $444 million", because it's gone out of the government coffers.

Not a dollar of it, of course, has been spent on the reef, or will be spent — at least not much of it — by 2020.

I mean, it's really, I think, a piece of chicanery.

LAURA TINGLE: If we put the process questions aside though, many environmentalists welcome the large funding boost, but see challenges for the foundation to overcome.

SHERIDEN MORRIS, REEF AND RAINFOREST RESEARCH CENTRE: It's very difficult to hand out grant funds — to actually do it effectively, get good value for money, and still achieve the overall outcomes.

And the biggest danger is you don't get caught in creating another bureaucracy.

GEOFF COUSINS: I don't think anyone should be particularly critical of this small foundation. It has some modest achievements.

In terms of the big environment groups, it actually hasn't been all that successful in raising money, but what it's done, it's done fairly well.

LAURA TINGLE: The gutting of the public service has often left governments without the skills to actually run programs.

You might remember the pink batts fiasco of 2009. It became Coalition shorthand for mismanagement and waste.

The problem was the Environment Department wasn't equipped to run the program. It didn't know how to go about actually getting insulation into people's roofs.

The irony now is the department's given half-a-billion dollars to a private foundation, which in all likelihood will end up giving grants back to government bodies.

TONY BURKE: What the Government's done now is effectively privatise the role of the public service.

GEOFF COUSINS: That is the absurdity of what has happened here — that the Government has sent money to a foundation that gives money to the Government.