Associate Health Minister Casey Costello says the Ministry of Health recognises it “dropped the ball” by not informing her that a staff member working on Costello’s smoking regulation reform was a relative of Labour’s Ayesha Verrall.

In her first public comments on the matter, Costello also criticises the ministry’s initial efforts to aid her work on smoking regulations, claiming she was given outdated advice and citing one instance of a document being leaked to media.

While the NZ First MP says it has distracted from her goal of Smokefree 2025, Costello is defending party leader Winston Peters’ decision to name the staff member, who is Verrall’s sister-in-law, and argues Peters was responding to Verrall’s consistent targeting of her.

The ministry last week apologised to Costello for not telling her about the conflict. Acting director-general Maree Roberts said the relative followed the proper process, but it had been the ministry’s responsibility to inform the minister.

Associate Health Minister Casey Costello has been a target of some Opposition MPs in the House. Photo / Mark Mitchell

Appropriate declarations were made by the worker to the ministry and “management plans” were put in place, according to Roberts. The ministry was currently reviewing its conflict-of-interest processes in light of the incident.

“It’s just one of these things that I think that’s just been a massive distraction,” Costello told the Herald.

“We had issues from the start in terms of leaked documents and the quality of advice that we were getting.”

In February, the Ministry of Health said a staffer who allegedly leaked a document showing Costello had asked for advice on freezing the annual increase in tobacco tax was no longer employed by the ministry. The staffer was not Verrall’s relative.

On advice quality, Costello claimed her office was supplied information based on 2019 data instead of 2023 data.

“Everything that we were given was out of whack with what should have been.

“Collectively, I don’t think the ministry has served the programme of work well, but in saying that, I think there has been a significant shift and a recognition that they dropped the ball.”

The Herald has contacted the Ministry of Health for comment.

NZ First leader Winston Peters named the staffer while speaking in the House last week. Photo / Mark Mitchell

In a media stand-up days after Peters named the staffer in the House and criticised her for not declaring the conflict herself, Peters linked the staffer to leaked documents.

“I am just shocked that you don’t understand that someone was sitting there for 11 months who was inside and getting information they should never have got and then we had leaks going on everywhere,” he said.

After repeated questioning, Peters claimed he had evidence of such leaks but refused to produce it.

Costello told the Herald she wasn’t aware of Peters’ comments about alleged evidence of leaks.

Costello said she was happy with how the matter had been handled, despite Peters calling for an investigation, and said there had been no change to the staffer’s involvement in smoking regulation reform.

“There [are] a bunch of advisors that are involved in the process and I’m not going to discredit an individual who’s working to achieve the same goal that I am, it’s the ministry that didn’t disclose the conflict and that’s where the responsibility should sit.”

Peters had criticised Labour leader Chris Hipkins for initially describing the staffer as a “distant relative” of Verrall’s, something Hipkins later accepted wasn’t a fair description.

Hipkins had hit back at Peters, saying the NZ First leader’s behaviour had been “reprehensible” and he believed Verrall had been fully upfront.

Costello argued Peters was “making a stand” against Verrall’s latest effort to scrutinise her – asking the Auditor-General to investigate the Government’s decision to cut tax on heated tobacco products.

She claimed Peters’ comments were “definitely targeted at the ministry”, despite Peters’ remarks directed at the staffer.

Labour health spokeswoman Dr Ayesha Verrall was the Health Minister in the previous Labour Government. Photo / Mark Mitchell

Costello also denied Peters had contributed to the “massive distractions” from her smoking regulation work, instead claiming Hipkins had inflamed the debate by describing the staffer as Verrall’s “distant relative”.

Verrall has refused multiple requests for comment since last week. A Labour spokeswoman responded to the Herald’s request today with comments from Hipkins last week.

Adam Pearse is a political reporter in the NZ Herald Press Gallery team, based at Parliament. He has worked for NZME since 2018, covering sport and health for the Northern Advocate in Whangārei before moving to the NZ Herald in Auckland, covering Covid-19 and crime.