Mr Dutton's home affairs department recommended funding a list of 70 projects using a merit-based assessment under the third round of the Safer Communities program, according to documents obtained by the ABC.

Among the $17.5 million in projects were lighting, security cameras, walkways and drones for local councils.

But the ABC found on January 31, 2019, Mr Dutton reduced funding for 19 of the highest-scoring grant applications, in a handwritten note, by a combined total of $5.59 million.

He then redirected the funding to other projects of his choice, at least one of which was in his Brisbane electorate.

Labor's government accountability spokeswoman Kristina Keneally wants the auditor-general to probe what happened.

"(Mr Dutton) had electoral considerations, not community safety considerations, in mind when he made those decisions. That's what these documents suggest," she told reporters in Canberra on Thursday.

"The auditor-general can get to the bottom of what was, if anything, the minister's criteria in assessing these grants.

"How can the Liberal Party be looking after you when they're so busy looking after themselves."

Two of the recipients of the redirected funding - Waratah-Wynyard Council and Burnie City Council - scored 49.25 and 50.5 out of 100 respectively on an industry department ranking list.

Mr Dutton's own department also had its concerns, telling him: "The applications do not represent value for money in accordance with the grant guidelines."

However, the minister said the low-rated projects would improve community safety.

Mr Dutton was allowed to redirect the funding under the guidelines.

The ABC's 730 program also reported the Queensland Liberal National Party had accepted a $1500 political donation from a retailers association which received a $880,000 grant eight days later.

"This looks on the face of it worse than the sports rorts scandal that saw the resignation of then minister Bridget McKenzie," Senator Keneally said.

Mr Dutton told 730 in a statement: "The baseless suggestion that I have or would be influenced by a lawful donation to the LNP is false and highly defamatory. The suggestion that the government has done anything other than support projects worthy of support is nonsense."

It comes as former cabinet minster Bridget McKenzie will on Friday front a parliamentary inquiry into the sports grants scheme she oversaw.

Labor won a bid in the Senate late last year forcing Senator McKenzie to front the inquiry into the scheme.

Australian Associated Press