Justice Minister Andrew Little faces renegotiating a law change designed to offer rent relief to businesses hit by the impact of Covid-19, three weeks after the Government announced it had a deal.
As the Herald revealed on Wednesday, NZ First pulled support for the Property Law (Leases Affected by Covid-19 Outbreak) Amendment Bill this week, at least in the form it is currently in.
The legislation was to set the terms under which tenants could force taxpayer-funded arbitration if landlords did not offer them adequate rent relief due to the impacts of Covid-19.
At the start of the month Little announced a deal had been reached to offer the law, with NZ First claiming it had helped negotiate a much better deal than what Labour had proposed.
But the situation changed this week. While the precise reasons were unclear, NZ First had come under heavy criticism from one of its donors, Caniwi Capital's Troy Bowker, who claimed the party had been "played" by Labour.
NZ First leader Winston Peters suggested the issue was around the difference between the Cabinet decision and draft legislation, concerns about intervening in contract law and concerns about foreign hedge funds.
"The issue is that what I originally spoke about and believed we would get home is now going to be getting home in the way we then agreed. It's the precision of the law," Peters told reporters in Parliament.
"To bust the contractual laws of New Zealand, where commercial properties are concerned, would be a seriously retrograde step and it would be unfair on everybody.
"And we're not going to finance $120 billion offshore hedge funds to get away with that in my country, it's that simple," Peters said.
Little confirmed that the issue was "still under discussion between Labour and New Zealand First" but would not say what in particular the issue was.
"They've raised a couple of issues. I'd have to say, they're not new but in any event, they wanted to continue discussions," Little said.
It was "up to others to judge" what had led NZ First to pull its support.
Little confirmed that a Cabinet decision was made. "That was consensus that day. Apparently this day is different," Little said.
The legislation could still pass if National was to support it.
Opposition finance spokesman Paul Goldsmith said he would wait to see if Labour would try to pass the legislation, but so far no one from the Government had asked if they would support it and the bill in its current form had problems.
"We haven't been approached by them. They certainly haven't asked that question and it's not at all clear that this would be the bill that the Government would come up with in the absence of New Zealand First," Goldsmith said.
"Presumably [the bill] had been mucked around with in order to make [NZ First] happy in the first place. Now that they're not happy, maybe there's something better [Labour] could come up with.
"All we can do is wait and see if they're going to pursue it further or whether they're just in sheer embarrassment, realising that after two months they've made no progress."