He said the money was essentially being used to fund family reunions.
"I think it's an appalling waste of taxpayers' money and every hard-working Maori taxpayer will think the same thing."
In a Whanua Ora information document published last year, Wellington hairdresser Johni Rutene was profiled as a potential applicant for Whanau Integration, Innovation and Engagement Fund grant as he sought to "reconnect his 180-strong family with each other and their Wairarapa turangawaewae, strengthen their bonds and improve their overall whanau ora".
Mr Peters asked why Mr Rutene, who had "three successful businesses" should receive the money to fund his family's reunion.
"We'd all love that but that's not what hard-earned taxpayer's money should be about."
The grants were an example of money being "allocated for purposes which fall far short of helping Maori to make a full economic and social contribution to this country".
In a recent fact sheet, Whanau Ora Governance Group chairman Sir Mason Durie describes the funding as assisting "whanau-led development" which "supports whanau to engage with each other and with other whanau, communities and providers".
The fact sheet states $5.44m in funding was approved under the programme last year.