The Department of Regional NSW says its grants assessment process is based on merit after Labor and the Greens raised questions over $5.5 million allocated for the Wagga clay target centre.
NSW Premier Gladys Berejiklian requested Wagga's clay target centre grant application be reassessed in 2017 after it failed the criteria for the grant, newly released documents revealed on Monday.
Ms Berejiklian was in a close personal relationship at the time with then Wagga MP Daryl Maguire, who had spent years campaigning for funds to build a new function centre for the Australian Clay Target Association.
Labor MLC John Graham has called for Ms Berejiklian to provide more details about her involvement, claiming it appears she had a conflict of interest.
Ms Berejiklian has said claims she had a conflict were "ridiculous" and said proper processes were followed.
A Department of Regional NSW spokesperson said the cost benefit analysis for grant applications, such as the for clay target centre, were based on the project's merit.
"Ministers are not involved in the assessment process," the spokesperson said.
"The business case and related assessment materials were independently reviewed by Infrastructure NSW and NSW Treasury against the Restart NSW Fund criteria."
Deputy Premier John Barilaro's office did not respond to questions about why its staff members started communicating with the clay target centre's project engineer after the first business case was rejected.
Wagga MP Joe McGirr said he did not think a referral to the Independent Commission Against Corruption (ICAC) was necessary.
"ICAC should already be aware of this issue and taking appropriate steps," he said.
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