A Senate inquiry has heard evidence regarding the $660 million Urban Congestion Fund, following a scathing auditor-general report that found the scheme was not effective or merit-based.

The inquiry examined the role of the prime minister's office in choosing which projects would be allocated funding and whether the administration of the funding met standards of governance and accountability.

None of the 47 commuter car park sites selected by the government before the 2019 election were picked by the infrastructure department.

Twenty-seven of them were approved the day before Prime Minister Scott Morrison called the election.

The auditor-general's written submissions to the inquiry said the Department of Infrastructure, Transport, Regional Development and Communications' approach to selecting car park projects was "not appropriate", finding it was "not designed to be open or transparent".

Departmental advice did not show the projects were picked on merit, adding "the projects selected reflected the geographic and political profile of those given the opportunity by the government to identify candidates for funding consideration".

Senior Australian National Audit Office official Brian Boyd told the committee Treasury had pushed for an open tender process but this was rejected by the infrastructure department, with electorates on a "top 20 marginals" list asked if they had projects for funding.

Chair of the Centre for Public Integrity Anthony Whealy said he "reeled back in horror" reading the audit report.

Australian Associated Press