Bridget McKenzie says she is not resigning after Prime Minister Scott Morrison referred the sports grants scandal engulfing the cabinet minister to the head of his department.

Scott Morrison has asked secretary of the Department of Prime Minister and Cabinet, Philip Gaetjens to review the former sports minister’s oversight of the scheme amid potential conflicts of interest.

The investigation will look at a $36,000 grant the Nationals' deputy leader awarded to a shooting club, of which she was a member.

Speaking at a press conference, Mr Morrison wouldn't be drawn on Ms McKenzie's future.

"I referred those matters for the consideration by the secretary, that process is important … I await that advice and I await that report."

"I'm not going to prejudice the outcome of that report, I think that would be unfair to that process and to the

secretary, I'll let him do his job, and then I will look at that advice and take what ever action is necessary."@ScottMorrisonMP awaiting Dep Sec report 🏸@SBSNews pic.twitter.com/XzTjLs61NB — Jamie Travers (@JamieTravers) January 23, 2020

The Nationals' deputy leader has resisted mounting pressure to resign after auditor-general Grant Hehir found evidence the $100 million in grants favoured marginal seats in the lead up to the last election.

"The Minister is not resigning. She is actively engaging in the process and is confident there has not been a breach in Ministerial standards," a spokesperson for Senator McKenzie said.

AAP

READ MORE Sports grants scandal: Prime Minister orders investigation into Bridget McKenzie conduct

Senator McKenzie has refused to apologise over the affair, insisting all projects that received funding were eligible and it was “highly successful”.

READ MORE Scott Morrison defends deputy Nationals leader amid sports grants pressure

But Labor has demanded “she has got to go”, with its legal affairs spokesperson Mark Dreyfus accusing the PM of shirking his responsibility.

“There has been a complete lack of leadership from this prime minister ... it’s his ministry – it’s his ministerial standards,” he said.

"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."

AAP

READ MORE Constitutional questions loom over $100 million community sports grants

The pressure on Senator McKenzie intensified after it emerged she awarded a $36,000 to the Wangaratta Clay Target Club in February, of which she was a member.

A spokesperson said a declaration was unnecessary.

Ethicist and public sector integrity sector expert Howard Whitton co-authored the ministerial standards under former Prime Minister, Kevin Rudd.

He said the buck stops with Mr Morrison to enforce them.

“Ultimately this is a reputational issue for the prime minister having promulgated enforceable standards,” he said.

“If there is a serious claim to make against Minister McKenzie either on the basis of legality or propriety – then it will be for the Prime Minister to do something.

“Or explain why he is not prepared to do something about the standards of which he is the custodian of.”

The auditor general found Senator McKenzie’s office ran a “parallel assessment process”, which ignored merit-based recommendations made by government agency Sport Australia.

SBS News

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.

"Having a minister authority and oversight on those things I think is completely fair and reasonable."

With additional reporting from AAP