One Nation has rushed to explain to members why it used party funds to build a shed on federal director James Ashby’s private land to help launch the micro distillery business he co-owns with leader Pauline Hanson.

The party’s general manager, Kelvin Morton, told supporters in an email on Thursday night that while the Small Batch Brewing endeavour may appear unconventional, One Nation had approved a loan for the business to support future campaigns and the party’s expanding overheads.

Morton’s note was in response to reporting from The Guardian, which revealed Small Batch Brewing – privately owned by Ashby, Hanson and treasurer Alex Jones – had built the $56,000 shed on Ashby’s Queensland property. The outlet reported Ashby, until recently Hanson’s long-term chief of staff and key strategist, was living in the shed while his home was undergoing renovations. Ashby denied living in the shed, but declined to comment further.

One Nation’s finances have been closely scrutinised as the party soars in the polls and expands rapidly, fielding candidates in all seats in the looming Victorian election.

Morton said One Nation approved the “reinvestment package” to establish the brewery.

“In an effort to minimise costs, including commercial rent and outgoings, it was unanimously agreed that One Nation would loan Small Batch Brewing the establishment costs for a shed and distilling equipment, which could be placed on land owned by a member of the executive,” he said.

“As One Nation grows, so too does our need to increase staffing numbers and move into larger premises.”

He said the recently completed 64-square-metre Colorbond shed was built on Ashby’s property in Yeppoon because that was where the party’s master distiller was located.

Morton said Small Batch Brewing was awaiting liquor licence approval and final ATO requirements before beginning production next year.

“One Nation anticipates licensing revenue of between $400,000 – $500,000 per annum based on projected sales. This represents a significant increase in alcohol revenue from our average of $105,796 each year,” he said, pointing to the party’s Please Explain gin launched in partnership with Sunshine Coast distiller CAVU.

“The gin’s success provided the finances to launch One Nation’s hugely popular Please Explain cartoon series. Rum and vodka soon followed, providing One Nation a passive revenue stream of $528,983.79 in licensing arrangements,” he said.

Morton said the party was confident members would appreciate the business as an opportunity to fund future campaigns.

“While Small Batch Brewing may appear on the surface as unconventional, One Nation are not alone in our investment decisions. Labor have several investment arms, including licensed clubs with pokies and commercial premises,” he said.

“The Liberals have the Cormack Foundation and Parakeelia, which provides parliamentary offices with software and data management.

“The Greens, Liberals, Labor and Nationals have historically produced their own types of alcohol, however none as successful as One Nation.”

Those major party ventures are not owned by private individuals.

This masthead revealed earlier this week that the party failed to declare a $100,000 plane as a political donation, even after an investigation by the Australian Electoral Commission prompted the donor himself to make a declaration. The plane was registered in Ashby’s name. In a police statement seen by this masthead, one former staff member reported the matter as a possible misappropriation.

Brittany Busch is a federal politics reporter for The Age and The Sydney Morning Herald.Connect via email.