A report by the NSW Auditor-General revealed former deputy premier John Barilaro's office intervened in the program and inexplicably created a $1 million minimum for fast-tracked bushfire recovery projects.

That threshold cut all applications from Labor electorates from the $100 million first round, including the badly-affected Blue Mountains and Tenterfield regions.

The audit, tabled in NSW parliament on Thursday, showed 21 fast-tracked projects worth more than $95 million were in coalition seats and one worth $12.5 million was in an independent electorate.

Labor leader Chris Minns has threatened to refer the issue to the Independent Commission Against Corruption if the ex-Nationals leader fails to answer questions about the program.

Mr Toole said he would not comment on potential referrals to ICAC, but it was important to look at the total amount awarded over each funding round.

The audit showed both Blue Mountains and Tenterfield received funding for projects totalling more than $16 million in the final round of the program, eight months after the first grants were awarded.

"As part of those programs, there was significant funding that was rolled out the door to those communities that were impacted by bushfires," Mr Toole told reporters in Orange on Friday.

He said the government had reviewed grant guidelines and implemented changes.

"I'll continue to invest and support those communities that are government seats and non-government seats."

Mr Minns said he will request a formal investigation into decisions by Mr Barilaro's office.

"There needs to be an explanation - if there isn't, we will refer it to the ICAC," he told reporters on Friday.

Mr Minns said it couldn't be that a damning report by the auditor-general could disappear from view "as if it had not been written in the first place".

Mr Barilaro has not commented publicly on the report.

The $541.8 million Bushfire Local Economic Recovery program was jointly funded by the state and federal governments and administered by NSW.

Prime Minister Anthony Albanese said disaster relief should always be distributed based on need.

"We all have a responsibility to deliver where it's needed, not to deliver politically," Mr Albanese told reporters after the national cabinet meeting in Canberra.

Premier Dominic Perrottet said the state government implemented new grant allocation guidelines.

Former coalition minister and Bega MP Andrew Constance said he was "incredulous" that party politics appears to have stopped urgent bushfire grant funding being distributed to some communities.

In Bega Valley Shire, a Liberal-held area where 500 homes were lost, the only fast-tracked project was a $3 million proposal with neighbouring Snowy Valley.

"I'm incredulous and I know fire communities will be incredulous," Mr Constance told 2GB.

"The report cites Labor areas but the point I make is there were places like Bega Valley that weren't fast-tracked. But money in subsequent rounds did flow."

Mr Constance, who retired in 2021, said Mr Barilaro had led the state's recovery and taken necessary steps but now needed to explain himself.

The auditor-general found the fast-tracked first round of the bushfire recovery program lacked integrity and transparency.

The report acknowledged most of the worst-affected regions were held by coalition MPs but ravaged areas were among those excluded.

"This is a disgrace of the highest order," Blue Mountains mayor Mark Greenhill told AAP.

Australian Associated Press