Prime Minister Scott Morrison is under pressure to sack cabinet minister Bridget McKenzie over accusations she used a $100 million sports grants program as a slush fund.

A scathing report from the auditor-general found the former sports minister splashed most of the cash in seats being targeted by the coalition before last year's federal election.

Sport Australia assessed more than 2000 grant applications before making its recommendations to the government.

But three quarters of the projects Senator McKenzie approved were not recommended by the governing body.

"I don't think it's right these decisions are made outside a sporting structure, they really need to be made by people that are fully aware of the needs out there," De Castella told AAP on Wednesday.

"Sport Australia has a really significant role and should continue to be the driver - it should be taken outside the political arena.

"The needs will always outstrip the available resources for grassroots and community programs so it's really important the criteria is adhered to.

"These decisions should be based on needs and not other political issues."

The 1983 world champion and former director of the Australian Institute of Sport said it wasn't his place to give the prime minister advice on Senator McKenzie's future, but he believes she could be in trouble.

"In hindsight, it probably should have been handled very differently," De Castella told AAP.

"No doubt the political agenda sometimes might be a little bit different from Sport Australia's agenda and I think the minister is probably in a bit of trouble.

"When the decisions were made there was a lot of political desperation that came into it. The timing - before the election - I'd say self-preservation was a major driving force.

"Sport Australia are there to make those ruling at arms-length from politics."

Australian Associated Press