Prime Minister Helen Clark had defended her husband's role in a row over Marsden Fund panellists getting money for their own projects.
The Sunday Star-Times yesterday reported that Helen Clark's husband Peter Davis received a $600,000 award for a three-year research project into modelling social change by using census figures in 2004.
Professor Davis had told the fund he had a grant application in the pipeline when he was asked to join the panel.
Helen Clark said he had not done anything wrong.
"Neither my husband nor anyone else who has received research grants from that fund has ever sat in adjudication on themselves," she told Newstalk ZB this morning.
"There are very clear conflict of interest rules. Not only can you not be present for consideration of your own grant but I understand you can't be there for consideration of a grant from your department either."
The fund's latest round of grants was announced last month with nine panellists getting $6 million worth of funding.
The Sunday Star-Times reported that grants from 2001-2005 showed panellists received more than $21 million.
The National Party questioned whether taxpayer money was being put to the best use but Research, Science and Technology Minister Steve Maharey said the projects were given funding on their merits.
Helen Clark said the system was set up so the best people made decisions.
She said: "Of course in a small research community like the New Zealand one, if you are going to say that no-one who was ever going to apply for a grant can sit on these committees you will end up frankly having only, in my view, second-raters sitting on the committee judging other people.
"We're not the United States with a vast pool or researchers; we're not even Australia with five times the research population. We have to do the best we can with good conflict of interest rules."
She said the idea of getting in overseas experts to make decisions was worth considering.
"But I would certainly like to think that our academic and research community in New Zealand is a reputable one and that where there are conflict of interest rules those are observed," the Prime Minister said.
Last month New Zealand Association of Scientists president Dr Hamish Campbell said the decision-making processes were sound and robust.
"In a small country such as ours, with a pool of about 7000 scientists, it is inevitable that real and apparent conflicts of interest will arise," he said.
"Our 'science system' has a history of managing this situation with integrity and has learnt to do so as transparently and objectively as is possible."