Bridget McKenzie told the investigator into the sports funding scandal she'd never seen the controversial spreadsheet drawn up in her office to allocate $100 million in grants ahead of the last election.
Late on Friday, Prime Minister and Cabinet secretary Phil Gaetjens released a statement spelling out why he concluded the former sports minister did not breach ministerial guidelines.
His statement says the spreadsheet was the work of an unnamed adviser in Senator McKenzie's office and she never saw it.
"The adviser's spreadsheet was developed by one member of staff in the minister's office," Mr Gaetjens said.
"Senator McKenzie advised me in response to a direct question that she had never seen the adviser's spreadsheet and that neither she nor her staff based their assessments on it.
"Her chief of staff also told the Department of the Prime Minster and Cabinet that the adviser had categorically stated she had not shown the spreadsheet to the minister."
The projects that were funded diverged from those on the spreadsheet, with 30 per cent of the applications listed as "successful" in the spreadsheet not approved, he said, bolstering the case that her decisions had not been based on the spreadsheet.
The statement sits alongside evidence from Audit Office on Thursday that there were about 28 versions of the spreadsheet, which changed frequently and was sent back and forth between Senator McKenzie's and Prime Minister Scott Morrison's office as projects were switched on and off the approvals list.
The spreadsheet was colour-coded according to which party held the electorate and according to which electorates the Coalition was targeting in the election campaign. Auditor Grant Hehir found grants were skewed towards marginal and targeted electorates, which were more successful than they would have been if funded according to merit. In the first funding round, for example, the 17 "targeted" electorates received 79 grants, instead of the 54 they should have received if decisions had been made according to the merit criteria.
But Mr Gaetjens disputed the finding, saying there was no evidence the process in the minister's office was "unduly influenced by reference to 'marginal' or 'targeted' electorates".
Over the three funding rounds, Sport Australia had recommended 180 projects in marginal and targeted electorates and Senator McKenzie approved 229. In other electorates Sport Australia recommended 325 projects and Senator McKenzie funded 451, he found. That amounted to a smaller percentage increase in the targeted electorates than elsewhere, he said.
Mr Gaetjens' submission does not deal with one of the problems highlighted by the auditor for the second round of funding. In this round, Sport Australia's recommendations were changed after the agency was told which projects the minister wanted to fund, confusing the definition of "recommended" projects.
Lists went back and forth between Sport Australia and Senator McKenzie's office over 10 days. Sport Australia initially put forward 204 projects. The minister came back with 236, only 73 of which were also on the agency's list.
A few days later, both had revised their lists, and by now the lists agreed on about half the projects. A few days later again, both the agency and the minister had come up with a list of 232 projects that matched.
- 'Eric Abetz's face said it all: Defence blown on sports grants
- Dozens of emails': Morrison's office played direct role in sports grants, auditor reviews
- Pauline Hanson changes her mind, saving Mathias Cormann over sports grant
- Senate threatens to strip Mathias Cormann of role over sports grant
- Deputy Nationals leader Bridget McKenzie gave grants to marginal seats, audit finds
- 'Unchecked' conflict of interest uncovered in Sport Australia audit
- Bridget McKenzie has nowhere to hide in sports grants scandal
- Phil Gaetjens accused of being Scott Morrison's 'butler'
- Phil Gaetjens rejects allegations of bias over sports rorts report
Mr Gaetjens said there were "significant shortcomings" in the grants funding, including the lack of transparency for groups applying for grants about what factors were being taken into account, the "disconnect between the assessment process run by Sport Australia and the assessment and decision-making process in the minister's office, and the "significant divergences between projects recommended by Sport Australia and those approved by the minister".
Senator McKenzie had told him that she had tried to ensure a fair spread of grants according to state, region, party, funding stream and sport, he said.