The chairwoman for the Pacific Island Ministerial Advisory Council has quit over the controversial $5 million grant given to the Pacific Economic Development Agency (Peda).
Tagaloa Taima Fagaloa said she had a problem with the lack of transparency and contestability in the process.
"The issue for me is not so much the organisation, because there is little I know about the company."
Ms Fagaloa said it was not too late to reconsider the decision.
She said Pacific Island Affairs Minister Georgina te Heuheu should "do the right thing" and open the contract to a contestable process.
The advisory council had received no communications over the Peda grant which made it "difficult to respond to issues when our communities raise their concern", Ms Fagaloa said.
"It would have been appropriate to talk to us and seek advice on this matter," she said.
However, Deputy Prime Minister Bill English did not agree.
He said it was a budget matter which made it a government matter.
"I don't think we should get confused about the roles here."
Ms Fagaloa was on a committee and a member of the wider Pacific community but "we wouldn't expect them to be part of budget decisions any more than any other member of the wider community is", Mr English told reporters.
"We don't consult the wider public on every budget decision."
Mr English said he was not aware of any investigation to find out who leaked a document showing the Ministry of Pacific Island Affairs advised its minister Peda was untested, unproven, and a significant failure risk.
The document said the proposal for funding by Peda to Mr English briefly outlined five projects and was scant on detail about how money would be spent.
Today The New Zealand Herald said there was a witch-hunt to find out who leaked the document, which was given to Radio New Zealand.
"We certainly want to be sure that civil servants conduct themselves with integrity, but that's really a matter for the Minister of Pacific Island Affairs."
Mr English said the process around Peda's grant was "not exceptional in any way" and it was transparent.
"There'll be a contract, or a purchase agreement that sets out what's expected.
"The Government would want to know exactly where the money's going."
The Government had discussions with many community groups about ongoing funding arrangements and there was "nothing unusual about this one".
Mrs te Heuheu has been constantly grilled in Parliament by Labour's Su'a William Sio about the allocation to Peda.
She has said Peda had several discussions with Mr English about the funding and no money had gone to Peda yet.