The Nationals are investigating claims their party’s federal treasurer failed to spend $850,000 in drought-proofing subsidies, which were meant to be used for saving water.

Nationals leader Michael McCormack is personally examining allegations Peter Schwarz did not use the funds from Goulburn Murray Water.

But he is confident Mr Schwarz, who is also running for the Nationals in the upcoming Victorian election, has done “everything right”.

Mr Schwarz was given the money by Goulburn Murray Water in 2011.

But after a long stand-off, the Shepparton-based farmer has only now agreed to use the funds for water savings measures.

Goulburn Murray Water told Fairfax Media the issue is “substantially resolved” but no work has been conducted.

Mr McCormack says he confident the Victorian branch of the National Party, who believe there’s “nothing untoward” about the matter, will investigate it properly.

He intends to make inquiries himself on Friday but doesn’t doubt the integrity of Mr Schwarz.

“Peter Schwarz is a good fellow,” Mr McCormack told the ABC on Friday.

“He certainly has his community front and centre of everything that he’s ever done in his life,” he said.

Former Nationals leader Barnaby Joyce said he is concerned about any misappropriation of funds, but intends to give Mr Schwarz the benefit of the doubt.

“I didn’t hear any criminal conviction or anything like, and certainly for an amount of money like that, if it was that bad there would be,” Mr Joyce said.

“I’m going to give the guy the benefit of the doubt and say that this is some sort of bureaucratic impasse and it’s something that’s going to be resolved.”

-AAP