Prime Minister Christopher Luxon has criticised the Ministry of Health for failing to declare to minister Casey Costello that a staff member working on smoking regulation reformwas a relative of Labour’s Ayesha Verrall.

It comes as the ministry tells the Herald it is now reviewing its processes in light of the “oversight” of not alerting the Associate Health Minister of the conflict-of-interest.

That relative was described by Labour leader Chris Hipkins on Wednesday as a “distant” relation of Verrall’s. The individual is understood to be the sister-in-law of Verrall, Labour’s health spokeswoman, and Hipkins on Friday admitted he should have characterised that relationship differently.

The failure to disclose the conflict to Costello first came to light when New Zealand First leader Winston Peters told Parliament this week a relative of Verrall’s had been working on smoking policy and attending meetings with the minister without her knowing of the conflict.

The Ministry of Health — the relative’s employer — apologised to the minister on Thursday for not telling Costello of the conflict. Acting director-general Maree Roberts said the relative followed proper process, but it had been the ministry’s responsibility to inform the minister.

The Herald asked several questions of the ministry on Friday, including when the conflict had first been raised, whether it was flagged again following the change of Government, how it had been managed if the minister hadn’t been made aware of it, if the individual would still work on policy for the minister, and if the ministry would review its processes in light of the failure.

A spokesperson said its conflict-of-interest protocol “aligns with the standards set by the Public Service Commission”.

“We review this periodically and in light of these events, we will be again checking to ensure it is still fit for the purpose”.

It said it would not provide any further comment other than to remake those made by Roberts. That included that appropriate declarations were made by the worker to the ministry and that “management plans” were put in place, though what those were not specified.

Associate Health Minister Casey Costello speaking to reporters on the tiles, Parliament. Photo / Mark Mitchell

Luxon, speaking from Samoa on Friday, said the ministry’s failure to disclose the conflict was “incredibly disappointing”.

“It’s an obvious one, it should have been disclosed, it needs to be disclosed. "

Asked if there needed to be an investigation, he said: “I think 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 singled out Hipkins and Verrall.

“It’s on the Ministry of Health, they should have raised it with the minister. But, actually, Chris Hipkins and Ayesha Verrall would have known there was a conflict there, and they should have raised that, too. That’s what good leaders would do.”

Neither Verrall nor Costello would comment on the matter.

But despite the ministry’s statement on Thursday, Peters has continued to take issue with the worker herself for not declaring the conflict to the minister.

He’s also criticised Hipkins for describing the worker as a “distant” relative of Verrall’s, saying in an X (formerly Twitter) post that “no one with their head on straight would think that was even near the truth”.

Hipkins told the Herald on Friday that hadn’t been the best characterisation.

“I chose the wrong form of words there,” Hipkins said. “I will own that. It was an impromptu question from the media that I wasn’t necessarily expecting. I should have used a different phrase, should have said relation by marriage or some other description.”

While Hipkins said he hadn’t necessarily expected that question from media, he told reporters on Wednesday he had had a “brief” conversation with Verrall about the matter and had been told “there is no issue here”.

He also said on Friday this was a “conflict I was aware of before”.

“The individual concerned has appeared before select committee. The conflict has been declared,” he said.

Labour leader Chris Hipkins in Dunedin on Friday.

Hipkins said Peters was attacking a family member of an MP “with no justification” as the relative “has done nothing wrong”.

“They declared their conflict to the Ministry of Health as they are bound to do. If Winston Peters has gota beef, it is with the Ministry of Health, it is not with the individual concerned. As they are a member of the public service, they cannot speak publicly to defend themselves.”

He said Peters’ behaviour was “reprehensible” and believed Verrall had fully upfront.

“I think everybody in Wellington is aware that there are conflicts abound. I think Members of Parliament on both sides of the House have relatives who work 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.”

Newstalk ZB repeatedly asked Luxon whether it was appropriate for Peters to name the public servant. He wouldn’t specifically answer that question. The Herald hasn’t repeated Verrall’s relative’s name.

During a press conference on Friday, Peters said he didn’t regret naming the woman. He put the blame on Labour for not front-footing the issue.

“They had 24 hours to come out and come clean... they did not. That’sappropriate... Anything that is going to be corrosive of the proper function of democracy has got to be found out and I found it out.”

He also alleged, without any evidence being presented, that the worker may have leaked documents to Verrall.

“I want to know how many documents were leaked, how many conversations she had with her sister-in-law, that is the Opposition spokesperson on health,” Peters said.

“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.”

Asked whether he had any evidence. Peters said: “Oh give us a break.”

“Do you think we don’t do our homework. Unlike you I go to the House as a trained lawyer. I am not asking questions I don’t know the answer to. Stand back and watch.”

Pushed on whether that was a yes, Peters said: “Of course that was a yes”.

“We will have our proper investigation into that going forward.”

Peters has criticised Verrall over her interrogation of Costello’s decisions as the Associate Health Minister responsible for smoking regulation reform. Verrall has made claims that Costello’s actions as minister are benefiting the tobacco industry. That’s been repeatedly denied by Costello and the wider Government.

Earlier this week, Verrall requested the Auditor-General investigate the Government’s decisionto cut tax on heated tobacco products.

Jamie Ensor is a political reporter in the NZ Herald Press Gallery team based at Parliament. He was previously a TV reporter and digital producer in the Newshub Press Gallery office.