Australia’s richest woman, mining magnate Gina Rinehart, has awarded Barnaby Joyce $40,000 for services to the agricultural sector.

At a gala dinner in Canberra on Tuesday, Rinehart gave the inaugural agricultural and related industries award to Joyce, describing him as a “champion of the industry”.

Labor immediately took aim at the award, with the opposition leader, Bill Shorten, labelling it a “$40,000 cash present”. Joyce has said he will refuse the cash.

The Nationals leader, a close personal friend of Rinehart and former agriculture and water minister, is currently battling for his political life in the New England byelection after the high court ruled him ineligible to sit in parliament because of dual New Zealand citizenship.

Rinehart thanked Joyce for taking “time out of your campaigning schedule to come here – to be here for the industry you love and support”.

“What a great voice for Australian agriculture,” she said.

“The agricultural industry is fortunate to have had such a dedicated, understanding and enthusiastic minister – one with years of first-hand experience – a real Aussie country boy and boy, do we hope you return.”

Footage of the event shows Joyce stood up to accept the award and giant cheque, before modestly exclaiming “hooley dooley – rightio”.

In addition to being the chair of Hancock Prospecting, Rinehart has extensive agricultural holdings and is the part owner of the $386m S Kidman and Co cattle company which has leasehold over 80,000 sq km in Australia’s north.

At a press conference on Wednesday, Shorten asked: “Why is a mining millionaire giving a Turnbull government minister a $40,000 cash present?

“This is very unhealthy for our democracy,” he said. “It doesn’t look right, it doesn’t smell right. This is very, very unusual and concerning conduct.”

A spokesman for Joyce told Guardian Australia he “literally had no idea” he would be receiving the award.

He dismissed Shorten’s criticisms as “completely irrelevant” because Joyce will decline the $40,000 cash prize.

Labor’s agriculture spokesman, Joel Fitzgibbon, said the award had turned the National Agriculture Day event into “the festival of Barnaby”.

“Gina’s agriculture award could have gone to many people in agriculture – our innovative farmers, entrepreneurs, scientists, environmentalists and those who add value to our products,” he said.

“But no, it went to Barnaby Joyce who is facing an expensive byelection in New England.”

In her speech, Rinehart praised Australia’s 130,000 agribusinesses, which employ 1.6m people, noting their contribution through “the income tax they pay ... company taxes, payroll tax, stamp duty and licenses”.

“If we didn’t have a sustainable agriculture industry, who would be paying the then missing taxes to support our defence, police, roads, airports, elderly, parks, public sporting facilities and much more.”