Nuatali Nelmes appeared before a NSW upper house inquiry on government grant programs on Friday, a day after Premier Gladys Berejiklian's office recovered shredded documents at the centre of a pork-barrelling scandal.

The destroyed documents confirmed the premier's staff determined which projects would receive money from the Stronger Communities Fund.

The funds were originally intended for councils subject to mergers in 2016.

But more than 95 per cent of the $252 million handed out to NSW councils in the lead-up to the 2019 state election went to projects in coalition-held seats.

Ms Nelmes told the inquiry on Friday her city was frequently caught in a bind, ineligible for both regional and metropolitan government grants.

It had made numerous grant applications to the state government over recent years, including for enhancements to the Newcastle Art Gallery and the Port of Newcastle, but had repeatedly been knocked back or ignored.

Ms Nelmes attributed this failure to a lack of bureaucratic or political pathways, with almost all Hunter NSW MPs in the Labor opposition.

"It makes it exceptionally difficult if opposition seats don't have any access to any fair funding for projects that are outside the political process, (which would be) just really valuable for our communities," Ms Nelmes said.

"We're completely reliant on trying to go through that political channel which often falls flat because we don't have any local members in government."

The premier's notes cast light on the decisions behind grants allocations, and why the fund's guidelines were changed to make all councils that were subject to merger proposals eligible, not just successful mergers.

The change was made to make way for the allocation of $90 million - more than a third of the total funding - to Hornsby Council.

Both Labor and the Greens say this alteration constitutes corrupt conduct, and political interference in merit-based processes by public servants.

"Grants are not being determined based on guidelines that are set in a fair and transparent process, the premier indicated yesterday she has favoured certain coalition seats," Opposition Leader Jodi McKay told reporters on Friday.

Ms Berejiklian on Thursday said pork barrelling was "not illegal" and admitted her government had made grant commitments to "curry favour".

She insisted she had not personally given final approval for the grants.

NSW government frontbencher and Hornsby MP Matt Kean, whose local council received $90 million for projects, also denied government wrongdoing.

He said his local area had lost a third of its rate base due to 2016 mergers.

"Taxpayer dollars need to be spent judiciously and that's exactly what this state government has been focused on," Mr Kean told ABC radio on Friday.

"I wanted to make sure Hornsby Shire residents were not worse off."

Sarah Lau, an adviser to the premier, told a NSW parliamentary committee last month she had shredded records showing Ms Berejiklian had "signed off" on $141.8 million of the council grants and deleted electronic copies.

Ms Lau said it was normal record-management practice.

Australian Associated Press