A federal independent commission against corruption would get to the bottom of the sports grants scandal, according to Tony Harris, who was the auditor-general of NSW for seven years.

Key points: The Federal Government awarded $100 million of sports grants just prior to the election

The Federal Government awarded $100 million of sports grants just prior to the election Former NSW auditor-general Tony Harris says he would have referred the matter to the ICAC had it happened in his jurisdiction

Former NSW auditor-general Tony Harris says he would have referred the matter to the ICAC had it happened in his jurisdiction There is no federal body with the powers of an ICAC to investigate corruption

Mr Harris said if the sports grants case came across his desk during his tenure as NSW's chief accountability officer he would have referred it for an investigation.

"I would be obliged to advise the Independent Commission Against Corruption about the matter," he told the ABC's PM program.

"I would expect them to have an inquiry into the matter."

A federal auditor-general's report released this month found $100 million worth of sports grants were awarded by the Federal Government just prior to the last election, with marginal seats targeted by then-sports minister Bridget McKenzie during the selection process.

Senator McKenzie has defended herself by saying she had every right to involve herself in the process.

"Ministerial discretion was actually written into the guidelines for a purpose," she said.

"What that actually meant was that there were more projects supported and funded in Labor seats than if that ministerial discretion had not been deployed."

There is no dedicated anti-corruption body at the federal level the Commonwealth auditor-general could refer the matter to, according to Mr Harris, who said the Government had resisted creating a strong independent watchdog.

"They know that their actions would come under greater scrutiny," he said.

The NSW ICAC was the first commission of its kind in Australia. ( Supplied: Sydney Criminal Lawyers )

Instead, the Government's Attorney-General Christian Porter has proposed a Commonwealth integrity commission, which would not be able to hold public hearings and would not be able to investigate corruption unless it thought a criminal offence had occurred.

Greater powers are needed, according to former counsel assisting the NSW ICAC, Geoffrey Watson.

"We do not need a weak-kneed body like that presently proposed by Mr Porter," he said.

"We need a properly resourced body with powers of compulsion, just like there is currently in all states and territories.

"This is not a party political issue; it is the Coalition today, but it will be Labor tomorrow."

Who ultimately decided where funds went?

During the scheme 684 sports grants were awarded across Australia and the auditor-general found 73 per cent of the approved projects had not been recommended by Sport Australia, the independent body meant to oversee the program.

If Senator McKenzie was the ultimate decision-maker instead of Sport Australia, according to Mr Harris, she may have acted unlawfully.

"There's nothing wrong with the Minister making suggestions to the sports commission," he said.

Prime Minister Scott Morrison has dismissed calls for Senator McKenzie to resign over the matter. ( ABC News: Matt Roberts )

"There is nothing in the law that allows her to be the decision-maker."

He said putting aside the legal matter, if Senator McKenzie had acted as the decision-maker it was a grave misuse of her powers.

"This, in my view, is a worse case than the Ros Kelly whiteboard matter, because the Minister overrode the views of an independent statutory authority that was given the power by the Parliament to allocate those grants," he said.

Ethical standards questioned

The Prime Minister has remained supportive of Senator McKenzie and on Monday repeated his view that the grants were awarded for the benefit of the community.

"These grants came in and made these projects a reality on the ground, now people are going to argue the toss about this one versus that one," he said.

An ABC analysis of the grants revealed a soccer club in Mr Morrison's electorate of Cook received a $200,000 grant through the scheme.

Mr Harris said he was stunned to hear the Prime Minister's defence of Senator McKenzie.

"The Prime Minister's defence is just unfathomable, it suggests he doesn't understand what ethical behaviour is or he doesn't have the power to impose an ethical format on his own Government," he said.

"If it is acceptable behaviour, then help us all."