The attorney-general's department has revealed $4 million was redirected to the home insulation royal commission.
But the government says the amount came from "savings" in the department's capital budget and from money allocated but not used by the child abuse royal commission for witness legal costs.
"The royal commission will have sufficient funding to complete its inquiry," a spokesman for Attorney-General George Brandis said on Wednesday.
In response to questions asked at a Senate estimates hearing in February, the department said some of the savings came from its 2013/14 capital budget.
Another $2.7 million came from the royal commission's budget for witnesses.
Federal Labor says the government needs to explain why the money was taken away.
"We need to know that this government is standing fully behind the royal commission," Shadow attorney-general Mark Dreyfus said.
The Australian Greens labelled the decision as "unjustifiable".
"It seems the government is prepared to play politics with anything," deputy leader Adam Bandt told reporters.
If it had an impact on the operation of the royal commission, people should speak out, he said.
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