Water Resources Minister David Littleproud has requested a forensic audit of drought assistance funding after $1 million was given to a local council that does not need it.
But Prime Minister Scott Morrison insists he is not bothered by the curious case of the drought cash.
"I'm not going to feel at all troubled about the fact we are doing everything we possibly can to help rural communities affected by drought," he told reporters in Sydney on Monday.
"If we're being accused of being too supportive, too generous, too much on the front foot in helping rural districts when it comes to supporting them in the drought, well I'm happy to take that criticism."
The Moyne Shire Council, in southwest Victoria, received the surprise cash injection last week but councillor Colin Ryan said the area was not drought-affected.
"We don't need the money for drought reasons and I believe it should be redirected to more deserving areas of Australia," he told ABC radio.
Mr Littleproud has asked for an audit of the selection criteria, but has defended the process, saying it is based on drought mapping by the Bureau of Meteorology.
"I'll be asking for a forensic audit by the bureau to make sure that data collection was right, but that's the science we predicate our decisions on," he said.
"It shouldn't be a politician's decision, it should be predicated off the best science, and the bureau are the ones that provide that to us."
The prime minister said the weather bureau advised that almost two-thirds of the Moyne Shire was in drought.
"If that shire, in particular, doesn't want to participate then we can have a look at that - they can obviously share that news with the farmers and their own rural communities," Mr Morrison said.
"But what we're trying to do with this program is trying to keep ahead where we can."
Labor's agriculture spokesman Joel Fitzgibbon savaged the funding allocation.
"It's inconceivable the money could be given to a council which itself says it doesn't need the money," he said.
Mr Littleproud will tour drought-affected northern NSW and southern Queensland later this week after the coalition pledged an extra $100 million for communities affected by the dry spell.
Ahead of his three-day trip, the minister is ramping up pressure on the states to build more dams.
"It's time that the states start to partner with us," he said.
"They've been asleep at the wheel."
Australian Associated Press