Ultimately, the controversy also led to her resignation from Parliament and, at the resulting by-election on 25 March 1995, the government lost the normally safe Labor seat of Canberra.
In December 1993, the Auditor-General complained about the manner in which the Department had administered A$30 million of grants under the Community Cultural, Recreational and Sporting Facilities Program, which had been initiated by Graham Richardson in 1988.
The Auditor-General reported that he could not find any documentation explaining the rationale for grants made by Kelly's department, and therefore could not assess her decision-making procedures.
The opposition, led by John Hewson and Peter Costello, claimed in Parliament that the money had been directed into marginal Labor-held electorates before the 1993 federal election as a pork barrelling exercise.
Initially, she avoided answering questions on the matter, but she relented following threats by the Australian Democrats to vote for a Liberal proposition establishing a Senate inquiry if she did not give evidence to a House of Representatives committee.