Scott Morrison said he would take “whatever action was necessary” once his department determined whether Nationals minister Bridget McKenzie had breached ministerial guidelines in her handling of a controversial $100m sports slush fund.
After maintaining that “no rules were broken” in the government’s administration of the community sports infrastructure program, Morrison said on Thursday that he would allow the secretary of his department, Philip Gaetjens, to “thoroughly assess” if McKenzie had breached her ministerial obligations.
The Coalition is under growing pressure over McKenzie’s handling of the grants program after a scathing auditor general report criticised the government for prioritising grants in marginal and target seats while ignoring a merit-based assessment process undertaken by Sports Australia.
Gaetjens, who is Morrison’s former chief of staff, has also been asked to look at McKenzie’s decision to award a $36,000 grant to a shooting club of which she was a member. The membership was not declared on her public register of interests.
Morrison said that was a “very, very different set of matters” to those contained in the auditor general’s report, and had been referred separately for investigation on Wednesday.
Amid mounting speculation that McKenzie could stand down by the end of the week, Morrison said his department needed time to examine her conduct, saying it was the “right thing to do”, and he did not want to prejudge its investigation.
“I’m not going to prejudice the outcome of that report,” he said. “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.
“I have allowed him to do it independently, and so I’m not putting any pressure on him one way or the other. He needs to do his job, that’s why he’s there.
“I have confidence and trust in his abilities. He will, I’m sure, get under this task as he has since last Friday, in a timely way. He needs to assess that thoroughly and follow proper process.”
Morrison said the investigation was needed to ensure that there was “a consistency of application and assessment” in relation to the ministerial code of standards.
He also confirmed he had dined at the Lodge on Wednesday with the Nationals leader, Michael McCormack, and the treasurer, Josh Frydenberg, but said McKenzie’s position was not discussed. McKenzie was not present, he said.
However, he also revealed that McCormack and McKenzie had “full knowledge” of his decision to refer McKenzie to the Department of Prime Minister and Cabinet last Friday.
While it was “normal” for his office to have advocated for various projects on behalf of MPs, the “program was administered by the minister and Sports Australia. Not the prime minister.”
In a statement on Thursday McKenzie dismissed suggestions she was stepping down.
“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 statement from her office said.
Earlier, the home affairs minister, Peter Dutton, strongly backed McKenzie, declaring Morrison was “not hanging people out to dry”.
“We’re not listening to the Twitter crazies,” Dutton said. “We are looking at the facts and we make decisions based on that.”