'Incredibly disappointing': PM turns up heat on Ministry of Health failing to disclose conflict of interest

Prime Minister Christopher Luxon has turned up the heat on the Health Ministry for failing to tell minister Casey Costello that one of its staffers working on tobacco reform was related to Labour's Ayesha Verrall.

Luxon has also congratulated his deputy, Winston Peters, for uncovering the conflict, while refusing to say whether Peters' personal attack on the public servant was appropriate.

Labour said it was "reprehensible" Peters was attacking a public servant who had "done nothing wrong" and could not defend herself.

But Peters said he had "no regrets at all".

On Thursday, Peters told Parliament that one of Costello's officials was the sister-in-law of Labour's health spokesperson Ayesha Verrall. Peters named the staffer and said she had never disclosed that conflict to Costello, despite meeting with and advising her.

In a statement later that afternoon, the Health Ministry came to its employee's defence and took the blame itself for failing to notify Costello. It stressed that the staffer had followed all the right rules and processes.

In a further statement to RNZ on Friday, the ministry said it would be reviewing its conflict-of-interest protocols in light of this week's developments to ensure they were fit for purpose.

Prime minister disappointed in Health Ministry, defends Peters

Speaking from Samoa on Friday afternoon, Luxon said it was "incredibly disappointing" the ministry did not disclose the conflict.

"It's an obvious one. It should have been disclosed. It needs to be disclosed."

Asked whether the oversight warranted an investigation, Luxon said: "That's a question that the Ministry of Health should be asking itself as to why it didn't flag to the minister that there was such an obvious conflict taking place."

Luxon also turned the questions back on Labour: "It's also a question, frankly, for Chris Hipkins and the Labour Party as to why they didn't flag it."

Luxon was repeatedly asked if it was appropriate for Peters to name the official in question, given the ministry said she had followed the correct procresses, but he refused to answer.

"I'd just say Winston Peters is doing an exceptionally good job," he said. "Good on him for ... highlighting a conflict that should have been brought forward by the Ministry of Health."

Both Luxon and Peters are in Apia to attend the Commonwealth Heads of Government Meeting (CHOGM).

Labour calls Peters' behaviour "reprehensible"

Speaking in Dunedin, Labour leader Chris Hipkins told reporters Peters had attacked an MP's family member and public servant with absolutely no justification.

"Attacking someone who he knows cannot speak back, attacking someone without figuring out what the facts were first, because this person's done nothing wrong, is reprehensible behaviour from the deputy prime minister of New Zealand."

Hipkins said he was already aware of the conflict as the individual had appeared before select committees before and properly declared it.

He said it was common for MPs on both sides of the house to have relatives working in the public service.

"As a minister, I had a sibling of a former National Party minister regularly in my office, attending meetings. That was never declared to me. It didn't need to be, because I already knew who they were. They were an incredibly professional public servant, and I never had any reason to doubt their professionalism."

Asked why he had described the official as a "distant relative" of Verrall earlier in the week, Hipkins said he misspoke when answering a question he wasn't expecting.

"I should have used a different phrase, I should have said a relation by marriage or some other description."

Peters doubles down, says he has 'no regrets'

Also in Samoa, Peters scoffed at Hipkins' claim that he had misspoken: "You could hardly use the wrong words. Either you knew or didn't know. Sister-in-law? That's pretty close, in every respect."

Peters said he had "no regrets at all" over naming the public servant and reiterated his belief that the woman should have notified the minister of the conflict herself.

"For 11 months she did not. I'm not going to have this sort of behaviour going on."

Asked whether it was appropriate for him to name the worker given the power imbalance, Peters said that was "absolute nonsense".

"They had 24 hours to come out and come clean. I gave them 24 hours between the time I first raised it until I disclosed it in the House."

Asked for evidence backing his attack on the public servant, Peters said: "Give us a break. Do you think we don't do our homework?"