Government bureaucrats have denied a Liberal-National MP's campaign director, whose wife won a $2.4 million grant to expand the family pharmacy business, had a conflict of interest.
Cairns-based MP Warren Entsch's one-time staffer Trent Twomey chaired a panel which recommended broad priorities for $20 million in grants.
A separate committee decided on the specific projects awarded money, with QRX Group 1 - which is one-third owned by Mr Twomey's wife Georgina - won $2,415,400 in funds to build a $5 million pharmacy distribution facility.
Under questioning from Labor senator Murray Watt, Regional Development Department secretary Steven Kennedy said he didn't believe there was a direct conflict of interest.
He said Mr Twomey's panel did not design the grants, but recommended sectors to invest in.
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"I am stunned that you don't think there's a conflict of interest here," Senator Watt told the Senate estimates hearing.
An Australian Federal Police investigation found there was no criminal offences linked to the grant.
Mr Entsch's son also works for the company, while Mr Twomey's business partner Leo Maltam is a director.
Senator Watt said there was a reasonable argument for a conflict of interest because the company given the grant was part-owned by two people close to Mr Twomey.
Committee chair Barry O'Sullivan said Senator Watt had failed to prove a conflict, before declaring Mr Twomey was a decent and well-respected figure in Cairns.
"I know Trent Twomey well and I'm happy to defend him to midnight," Senator O'Sullivan said.
The money was part of the $220 million Regional Jobs and Investment Package for 10 areas.
