Prime Minister Christopher Luxon says he plans to speak to Trade Minister Todd McClay over comments he made towards Green MP Ricardo Menéndez March in the House.
During Question Time on Tuesday, Menéndez March raised a point of order to say McClay had said words to the effect of "you're not in Mexico now. We don't do things like that here".
Menéndez March was born in Mexico.
After a suggestion from the speaker that he withdraw and apologise, McClay did so.
On Wednesday, Luxon agreed the remark was not appropriate.
"I haven't had a chance to talk to him, but it was good to see him apologise quickly and I'm sure it'll come up in our next conversation," Luxon said.
Menéndez March said the withdraw-and-apologise was not enough, because it did not address where the comments came from, and questioned whether the National Party had an issue with anti-migrant sentiment.
"There are some questions for the National Party over whether such overt and unchecked forms of racism are acceptable. Those questions are for Christopher Luxon, because in my time in Parliament I have yet to see, at least towards migrant communities, such an overt form of xenophobia displayed in the House," he said.
Menéndez March said the onus should not be on him to chase McClay up for an explanation.
"I want to make it really clear that this is not about how those remarks made me feel. It's about the harm that those remarks cause on migrant communities across the country, and it emboldens people who are already targeting people across Aotearoa."
Labour leader Chris Hipkins said the comments were unacceptable.
"I think we need to understand what underpins that, because if that's what Todd McClay actually feels, then a fairly disingenuous withdraw-and-apologise isn't really going to solve the issue. I think it suggests an attitude towards migrant New Zealanders which has no place in modern New Zealand," Hipkins said.
"He's offended all Mexicans, he's probably offended all migrant New Zealanders as well, and he's out there supposedly trying to get better trade deals for New Zealand around the world. Those two things are utterly incompatible."
Hipkins questioned McClay's suitability to still be trade minister, and doubted whether any explanation would be acceptable.
"I think the question for Todd McClay really, is the one the prime minister should ask him: 'What were you thinking?' Because I think the answer to that will very much determine whether he should still be a minister or not."
A spokesperson for McClay said they had no comment.