The relationship between National and its support partner, the Māori Party, is under serious strain over the Kermadec Ocean Sanctuary.
The government is delaying the passage of the Kermadec Ocean Sanctuary Bill, after talks with Māori fishing representatives broke down.
Māori are accusing the government of being dishonourable and confiscating their fishing rights.
Te Ohu Kaimoana, which represents iwi fishing interests, is heading to court over the plans to create a huge sanctuary around the Kermadec Islands, saying the government has reneged on the 1992 Treaty of Waitangi fisheries settlement.
Prime Minister John Key Photo: RNZ / Cole Eastham-Farrelly
Prime Minister John Key said the government still had the numbers to pass the legislation with support from the Green Party.
"But we're very disappointed the talks with TOKM [Te Ohu Kaimoana] broke down at this point, what we've now decided is we're going to restart discussions with the Māori Party and see whether they can find a way through where they can support that, so it's just going to take a bit longer."
Mr Key said the Māori Party was not going to pull its support for the bill.
"What it wants to do is find a way forward that's acceptable for the Kermadecs - look we weren't that far away with TOKM and so maybe the more sensible way now is to sit down with the Māori Party and see if we can find a way through it."
Māori Party co-leader Te Ururoa Flavell was not prepared to make any assurances.
"What we've said is we'll assess this situation if it gets to that, and that we're pretty serious about it - obviously the breakdown in negotiations is pretty serious.
"Right here and right now we have the opportunity, given by the Prime Minister, to get back to the table and continue the discussions in good faith, we intend to honour that.
He said this issue was "right up there", when asked how this compared to other disagreements with National that made the Māori Party reconsider its support agreement.
Fear at potential treaty settlement precedent
Māori Party co-leader Marama Fox told Checkpoint with John Campbell the party would go back to the table and negotiate with the National Party.
"If the government can implement a piece of legislation that turns over a treaty settlement, they can do it here, they can literally do it with any settlement, and it would put all other settlements at risk," she said.
Earlier she told RNZ finding a solution for Māori and all New Zealanders was the most important thing.
"We don't want to get dissuaded or get side-tracked into a decision about whether we're going to walk out on the government right now as that's not the most important thing."
She said there were models around the world that would present a possible solution, where indigenous groups had fishing rights inside sanctuary areas that were recognised as "no-take".
"If you look at what TOKM have been doing, they have imposed a 'self-rahui' on their own accord around the Kermadecs, they already don't fish that area.
"But what they're saying is you can't just wipe that away with one piece of legislation because this goes to the heart of every treaty settlement that we have ever made."
Minister for the Environment Nick Smith told Checkpoint when it came to the crunch people wanted marine sanctuaries until it affected their own ability to take fish.
"Did the Māori fisheries settlement prevent the government from being able to create marine protected areas? The absolute assurance I was given in 1992 was that it did not" - Minister for the Environment Nick Smith
"And effectively that's where negotiations broke down with Te Ohu Kaimoana in that they said 'yes, [we] support the sanctuary but we want to both maintain our right to fish' ... and so my view was that would not give this sanctuary integrity.
"The moment you start having sanctuaries there but there are exceptions you actually undermine the very intent of having areas set aside for nature," Dr Smith said.
Green Party supports the bill, ACT withdraws
The Green Party was firm in its support for the bill.
Green Party MP Marama Davidson said it was possible to balance treaty rights with the environment.
"We think we can both protect marine preservation and uphold treaty rights, the Crown didn't get that right, they need to sort this out."
ACT Party leader David Seymour, however, said his party had pulled its support for the bill.
ACT Party leader David Seymour Photo: RNZ / Alexander Robertson
"It's based on the assumption that if someone's not using their property it's OK for the government to just take it.
"I think that's wrong, no matter how small the amount of fishing that was happening; fisherpeople, iwi or otherwise, have property rights, the government should just not take that away."
Mr Key recognised it would be a challenge, balancing treaty rights and environmental considerations.
"It's a very technical matter, you can go all the back to 1987 when we preserved the rights to have ocean sanctuaries, look very little's been caught there in the Kermadecs and none of it's been caught by Māori.
"You know, let's just take a step back, let cool heads prevail, lets have discussions with the Māori Party and see if we can find a way through.
Mr Key said the government had apologised for the lack of consultation with iwi.
"We did that, with TOKM, yeah, we've said sorry," Mr Key said.