Wedged between Sydney Harbour Bridge and Luna Park, the North Sydney Olympic Pool has been an icon of the harbour for 84 years.

Key points: North Sydney Council was awarded a $10 million Federal Government grant to upgrade the North Sydney Olympic Pool

North Sydney Council was awarded a $10 million Federal Government grant to upgrade the North Sydney Olympic Pool The Federal Government awarded the grant out of the Female Facilities and Water Safety Stream aimed at regional areas

The Federal Government awarded the grant out of the Female Facilities and Water Safety Stream aimed at regional areas North Sydney Mayor Jilly Gibson says the North Sydney Olympic Pool is "definitely a regional facility" as people from all over the state use the pool

But the pool is ageing. It is in need of a major redevelopment, and structural problems have recently caused concerns.

"We're going to extraordinary lengths to preserve the heritage of the pool," North Sydney Council Mayor Jilly Gibson told 7.30.

In April 2019 Treasurer Josh Frydenberg and local MP Trent Zimmerman announced a $10 million election commitment to contribute to the pool upgrade.

Got a confidential news tip? Contact Paul Farrell using the Signal secure messaging app on +61457262172, or at paulfarrell1@protonmail.com or using the ABC's SecureDrop server.

But two weeks ago, as the Federal Government faced increasing scrutiny over the use and application of several different Government grant schemes, it emerged that the pool funding had been secured from a program that targeted regional and remote areas.

So how did this iconic pool end up with a $10 million federal grant that was originally earmarked for regional and rural groups?

Female facilities fund used for pool redevelopment

The North Sydney Olympic Pool is heritage listed and considered 'historically rare'. ( Supplied: Facebook )

The Female Facilities and Water Safety Stream was created in March 2019 and announced by the Federal Government as a measure to "remove barriers" for women participating in sport "in our regions", and to develop and upgrade community pools in remote and regional areas.

An incoming Government brief states that the fund's stakeholders were "regional and remote communities" and that its impact would be "support for women's participation in sporting activities in our regions and strengthening regional sustainability, capacity and diversity".

When the program was unveiled, the Morrison Government said in a statement that "further details on the change room and swimming facilities fund will be released later in 2019".

But no further details were ever released to would-be applicants.

Two weeks ago the Department of Health released a partial list of grant recipients, which revealed that about $131 million of the total $150 million was awarded to 41 organisations as part of a "closed non-competitive" process.

A spokesman for the Sports Minister Richard Colbeck told 7.30: "These are all projects our Government took to the people at the last election and we're delivering on our promises."

One of those 41 recipients was the North Sydney Council to contribute to the North Sydney Olympic Pool redevelopment.

The grant gave effect to the election commitment announced by Mr Zimmerman and Mr Frydenberg months earlier.

The council is still in the early stages of gaining approval for the redevelopment.

'We're not regional'

Visitors relax at North Sydney Olympic Pool overlooking the harbour. ( ABC News )

The source of this federal funding now sits uneasily with some members of the local council.

Independent councillor Zoe Baker had moved a motion in council in 2015 requesting that council write to Mr Zimmerman for funding for the pool redevelopment. The motion was supported by the entire council.

But it was only three weeks ago that the council learned the female facilities fund was used to bankroll the federal contribution.

She told 7.30 that while she supported the need for a redevelopment of the pool, she was shocked at where the funding had come from.

"I think there's an expectation from all communities that funds that are set aside for a particular purpose, that they'll be allocated for the maximum benefit of those in need," she said.

"We're not regional. There are no real issues about the need for women's changing facilities as part of our project.

"My real fear here is that we did win a lottery from the regional sporting facilities fund when we didn't really buy a ticket."

The independent mayor of North Sydney Council, Ms Gibson, defended the awarding of the grant under the scheme.

She told 7.30 in an interview that North Sydney Olympic Pool was "definitely a regional facility".

"We have people from all over the state coming to use our pool. It has a history of being a regional pool, also it's a tourist attraction," she said.

Swimmers at North Sydney Olympic Pool. ( ABC News )

"The female change rooms at the North Sydney Olympic Pool have remained the same since 1936. They are totally inadequate for modern needs, and they really need to be redeveloped desperately, so I think that funding is appropriate, yes."

She said the $10 million federal contribution was a "relatively low amount" considering the council would need to borrow a significant portion of its own contribution.

"We don't have pools of money just sitting around waiting to be splashed out on various projects," she said.

"This is not just a suburban swimming pool. This is an iconic Sydney pool.

"Every day of the week we have local visitors, visitors from interstate, and a lot of overseas tourists going through the turnstiles."

She says she was unaware of the process around the grant.

"I'm an independent mayor, I have no inside knowledge about how the Liberal Party distributes their money. That's not my job to know that. And I think those are questions you'd need to ask our federal member."

The local member, Mr Zimmerman, told 7.30 in a statement: "I'm proud that during the Federal Election campaign I was able to secure a Coalition election commitment to contribute $10 million to North Sydney Council's project. Our Government honours our commitments."

"This followed a submission from North Sydney Council that outlined the case for funding, the scale of works and estimated costings."

Regional clubs would have welcomed chance for a grant

The oval used by Bendigo Thunder has one female toilet shared by the whole team. ( Source: Bendigo Thunders VFLW webpage )

The Federal Government's decision to award the 41 recipients grants in a closed, non-competitive process has frustrated some regional clubs that were never given a chance to apply.

The Bendigo Women's Football Club, also known as the Bendigo Thunders, has struggled to find a home ground with adequate female facilities.

The oval they currently use has a single female toilet shared among the team. They share change room facilities with male teams that also use the ground.

"The change room facilities for the ladies at Bendigo Thunder are a very small shared space, and it is shared with junior and senior males through the cricket and current football club users," club treasurer Melissa Harrington told 7.30.

As a women's football club in a regional area, they appear to have been a prime target for the grant.

Ms Harrington said the club would have taken up the opportunity to apply for the grant scheme if it was publicly opened.

"Being a sports club in a regional area can make it really difficult to be noticed," she said.

"If we had the opportunity to apply for the grant we would have absolutely been in there.

"To have grant funding from a scheme like this would provide us with the ability to build a home ground with female facilities, to accommodate all ages."

Questions remain over female facilities scheme

The Federal Government has faced significant pressure over how it administers Federal Government grants following a scathing audit report into a separate sports grant program administered by then sports minister Bridget McKenzie.

Some of the grant recipients clearly were in great need of upgrades to female facilities, and were located in regional areas.

A number of questions remain over the female facilities club scheme, and what process each of the invited recipients have been made to follow.

"Money does have to actually be spent fairly," AJ Brown, of Griffith University's Centre for Governance and Public Policy, told 7.30.

"As far as we know there were never any guidelines, never any clear policy or clear criteria. So that opens up a whole range of questions about what really was the purpose for this money.

"The idea that you would give a grant without an application, without any criteria, without any assessment, without consulting the stakeholders, is pretty much anathema to every principle of good public policy and administration."

A spokesman for the Health Department told 7.30: "To administer the program, the department leveraged off the approach outlined in the Community Development Grant Programme Guidelines."

In a statement, Deputy Prime Minister Michael McCormack said, "This kind of infrastructure in regional areas has long been funded through other programs such as the $841 million Building Better Regions Fund, where more than $100 million has been invested in sporting infrastructure and the National Stronger Regions Fund before it.

"We are focused on delivering for every single community in Australia and that's why we have funded a range of programs to support local infrastructure upgrades right across the country."