SWIMMING Australia's problems in and out of the pool are now hurting it financially, with the sport's federal funding being cut by almost 6%.

Australian Sports Commission chairman John Wylie announced the 2013/14 funding allocations on Monday, with almost $120 million to be dished out to the nation's peak sporting organisations.

About $100 million of that will go towards meeting the ASC's Winning Edge high performance targets, which requires Australia to be a top-five nation at the Olympic and Paralympic games, top 15 at the winter Olympic Paralympic games, number one at the Commonwealth Games and have more than 20 world champions each year.

The remaining money is to be invested in building sports participation.

Swimming Australia will pocket almost $8.78 million in the next financial year, which still makes it the highest-funded sport despite the reduction.

"The reduction in funding from 2012-13 reflects the Smith Review findings of significant administration overheads and the work swimming needs to do to demonstrate effective leadership and governance of the sport.

Athlete preparation support must not be reduced," the ASC funding allocation fact sheet explains.

Australia's second biggest Olympic sport, athletics, also had its funding cut.

Athletics Australia will receive $6.57 million in 2013/14, a drop of almost 4%.

Mr Wylie said each sport was asked to provide "sound evidence" how it could help Australia reach its targets.

"We have also asked that sports be more accountable for best practice governance and commercial performance under our investment approach," Mr Wylie said.

The Australian Rugby Union was one of the biggest winners with a 91% boost to its funding, although half of that money will be a one-off payment over the next two years to establish a centre of excellence to focus specifically on 7s rugby.

The other major beneficiaries of funding boosts were sailing (up $900,000), canoeing (up $620,000), water polo (up $550,000), rowing (up $325,000) and golf (up $150,000).

Sailing was the success story of Australia's Olympic Games campaign last year, with the sport bagging three gold and one silver medal.

Paralympic sports have also been rewarded for a strong showing in London, with a boost of more than $1 million, or $14%.

Mr Wylie warned sports not to read too much into the year's allocations.

"As this is the first year of our new approach, the impact of these decisions will be reviewed closely as the year progresses and sports that have their funding increased or decreased this year should not assume that's the likely case again next year - all sports have to justifying their investment each year," he said.

>> Click here to read the sports federal funding fact sheet

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