The government scrapped the $18 million grant to the Australian Future Leaders Program, supported by Governor-General David Hurley, following an examination of the coalition government's budget.

The funding was allocated by former prime minister Scott Morrison following lobbying by Mr Hurley.

Mr Albanese told parliament the scheme was scrapped as part of the government's ending of "rorts and waste".

"In terms of the scrutiny of the details that were there ... (it) was not worthy of proceeding with," he said on Thursday.

"The fact is that we have have inherited $1 trillion of Liberal Party debt, and so therefore, we have had to make some difficult decisions."

The government had faced pressure to scrap the grant after media reports emerged the foundation had not run any leadership programs, had no website or staff and did not go through a competitive process to receive the grant.

The prime minister said he had told the governor-general of the decision to axe the grant.

"I make no criticism of the governor-general whatsoever and I indeed informed the governor-general of my government's position as a matter of courtesy to him and out of my respect for him," Mr Albanese said.

Treasurer Jim Chalmers said scrapping the grant was necessary.

"This grant obviously doesn't pass muster and we took the time to look into the $18 million, which was proposed here and we can't see that it delivers value for money," Dr Chalmers told reporters in Canberra.

"Our responsibility is to go through the budget line-by-line, to make sure that there's genuine value for money and we couldn't see value for money here."

Australian Associated Press