A $10 million federal grant awarded to the City of Launceston has been labelled “pork barrelling”.

Questions have been asked about the Federal Government’s decision to award Launceston, in Tasmania's north, a $10-million drought recovery grant to help build a “creative precinct” in the city's CBD, while an east coast council suffering through one of its driest years on record received nothing.

The City of Launceston was one of three local government areas to receive the maximum $10-million grant under the Building Better Regions Fund infrastructure grants program.

Applicants for the funding are required to show economic benefit in areas that were either drought declared, suffered a significant decline in rainfall, or could demonstrate economic or employment decline because of drought.

Launceston received the money for a new creative precinct on a car park in the city's CBD.

Independent Member for Clark Andrew Wilkie said giving the drought grant to the City of Launceston was a “rort”.

He said other councils had been told that only the Glamorgan Spring Bay and Break O'Day councils on Tasmania's east coast were eligible within the state.

“Launceston sits in the Bass electorate and clearly the Government thinks it's OK to unashamedly pork barrel to try and ensure the Liberal member's [Ms Archer] re-election,” Mr Wilkie said.

“You'd think they would have been scared off from doing this, for a while at least, by the scandalous embarrassment caused by sports rorts.”

Bass is a particularly volatile electorate, having changed hands at eight of the last 10 federal elections.

Deputy Prime Minister Michael McCormack said the creative precinct project would be able to bring a “direct benefit”.

“This project was one of 163 funded through $207 million of available funding,” the deputy PM’s spokesperson said.

“As individual applications are considered commercial-in-confidence, any specific enquiries about the application submitted by Launceston City Council should be directed to the council.”

The City of Launceston chief executive Michael Stretton has defended the funding too.

“The application for funding was made through a collaboration between the Coordinator General's Office and the City of Launceston in December 2019, and was required to meet a range of eligibility criteria,” he said.

“At the time of the submission, Launceston and the wider northern region were identified as areas of severe rainfall deficiency, with waterway flows consistent with those seen during the millennial drought.”

Lyons Labor MHR Brian Mitchell, whose electorate includes Tasmania's east coast, said the drought funding decision was “absolutely scandalous and outrageous”.

“There are plenty of areas in the state that could do with drought funding for worthy projects,” Mr Mitchell has told the ABC.

“This is just a feel-good project for a marginal Liberal seat.”

Mr Wilkie has written to Mr McCormack seeking clarification on why Launceston received drought funding, claiming the City of Hobart was told not to apply.

“Not only did the Government misuse $10 million in one electorate, it also told the mayor in another electorate to not even apply for a grant, which had the effect of not only favouring one electorate but explicitly disadvantaging another,” Mr Wilkie said.