The Refresh and Renew Grants program was for tourism businesses to improve facilities and gave out grants up to $10,000 over 2020 and 2021.
Labor says 70 of the 103 grants went to businesses in coalition electorates.
The grants were for regional operators, and more than half of those eligible were in electorates held by Labor and crossbenchers.
This comes despite guidelines stating grants have to be awarded based on an "objective assessment basis".
One of the grants went to a cafe owned by the director of Destination North Coast, a government-appointed position.
The director beat out 141 other applicants for the $10,000 and was "favourably assessed" by Destination North Coast.
Labor says it has seen documents showing staff were "aware of the conflict" before awarding the grant.
Grants can be awarded based on subjective evidence including whether businesses received positive reviews on crowd-sourced websites including TripAdvisor or Google Reviews.
It's the latest in a series of government pork-barrleing accusations, including the revealation last year that 95 per cent of the $252 million Stronger Communities Fund was awarded to coalition-held electorates in the lead-up to the 2019 election.
A report from the NSW auditor-general on the integrity of grant program administration published on Tuesday found the process to assess and approve funds "lacked integrity" and grants were often given without merit.
The government has also been criticised after analysis found 75 per cent of ClubGRANTS funds were funnelled to coalition seats.
Premier Dominic Perrottet says his government has "zero tolerance" for pork barrelling and has committed to "complete transparency" over government spending.
Shorlty after becoming premier last year he ordered a review of how government grant schemes were distributed.
"I've said that strongly from the outset, I will take on any of those recommendations," he told reporters on Wednesday.
"I've also said and this is incredibly important."
However, he says government grant programs have played an "important role in supporting local communities", building playgrounds and open spaces for children.
Labor has proposed a bill that would require politicians to explain, in writing, why they have ignored bureaucratic advice the awarding of funds.
"Yet again the NSW government has been caught treating public funds like its own piggy bank," NSW Labor leader Chris Minns said.
"Thousands of eligible small businesses outside of coalition electorates have missed out on a fair share of grant funding."
"Dominic Perrottet needs to put the community ahead of his political party and mates. He should back Labor's bill and end the grant rorts in NSW."
14°C