Labour Party leader Chris Hipkins says Winston Peters 'running the show' in new government

Labour Party leader Chris Hipkins says it was right for New Zealand On Air board member Andrew Shaw to stand down - but the new prime minister needs to pull his deputy into line.

Shaw resigned on Tuesday after posting comments to social media critical of Deputy Prime Minister Winston Peters.

"He's not truthful. He's not accurate. He's malicious and he is here on behalf of international tobacco," Shaw wrote on LinkedIn. "His return is the worst of this gang of thugs."

Shaw was responding to comments from Peters on Monday, in which he accused state-owned media of a lack of independence from the previous government.

He said TVNZ and RNZ were not truly independent, and could not "defend $55 million of bribery" - a reference to the Public Interest Journalism Fund (PJIF), a three-year $55m contestable fund for journalists initially set up to shore up public interest media during the Covid-19 pandemic, which was wound up in July. Political coverage was exempted from eligibility, and the fund was accessed by private media organisations too, not just TVNZ and RNZ.

Peters made further comments at the new government's first Cabinet meeting on Tuesday afternoon, advising journalists they should "tell the public what you signed up to, to get the money. It's called transparency, okay?"

Hipkins told Morning Report while he had sympathy for Shaw's views, they were not appropriate in the context of his role on the board. NZ On Air administered the funding.

"As a member of the NZ On Air board, I think it's very important that Andrew Shaw upheld sort of the independence of NZ On Air, the political independence of New Zealand on air as an entity. So I think he's done the right thing in standing down."

But he said Peters' recent comments about media independence and journalism funding were outrageous, considering he was part of the coalition government that established the PJIF.

"In fact, he was the deputy prime minister in it. [The PJIF] was established during the period of, you know, Covid-19 instability and uncertainty to ensure that the media could continue to do a very, very important job, which was to scrutinise the actions of government - and at all levels, including local government - at a very extraordinary time for the country."

He said Peters' accusation of "bribery" was "totally baseless".

"The person who needs to do something about it is Christopher Luxon - this is his deputy Prime Minister making very serious allegations without any basis and without any facts to back them up.

"You know, ultimately Christopher Luxon is in charge, he is responsible for ensuring that ministers uphold the standards of being ministers. Winston Peters is not and I think Christopher Luxon should do something about that…

"He should certainly be pulling Winston Peters into line, although at this point, it seems like Winston Peters is running the show rather than Christopher."

Hipkins said he had "absolutely no idea" what specifically Peters was referring to when he said journalists should "tell the public what you signed up to, to get the money".

"I've long since given up trying to second-guess what Winston Peters is saying."

He noted former Broadcasting Minister Willie Jackson in an interview this week said it was NZ On Air that established the criteria for funding, not the government.

Hipkins, who was prime minister up until Monday, said he saw no evidence the fund "compromised" newsrooms' ability to scrutinise the government.

Luxon on Tuesday told Newshub he had not seen Peters' comments, despite the widespread news coverage.

Elsewhere in the interview with Morning Report, Hipkins called the government's decision to help fund its tax cuts by cutting smokefree efforts as "morally reprehensible", and said Labour's new shadow Cabinet would be announced later this week.