Clare Curran has been sacked from Cabinet and stripped of her open government portfolios after not disclosing a meeting set up using her personal email account.
The February meeting with entrepreneur Derek Handley was over his interest in the vacant Chief Technology Officer role.
It was held at 8pm in Curran's Beehive office with nobody else present, and was not put in her diary.
The next month Curran responded to a written question from National but failed to disclose the meeting.
It was her second strike, after a similar omission in relation to a meeting with former Radio NZ boss Carol Hirschfeld earlier this year.
"That's not good enough, and that's why she's been removed by Cabinet," Ardern said at a press conference at her electorate office in Morningside this afternoon.
The omissions created an "impression and perception that lacks transparency and is not something I will tolerate, particularly from a Minister for Open Government".
Curran has been stripped of her open government and government digital services portfolios, but will hold on to her broadcasting and ACC roles. She will no longer be in Cabinet.
Act leader David Seymour said the punishment was the equivalent of a "slap on the wrist with a wet bus ticket", and showed the Prime Minister was "weak".
"Jacinda Ardern should have fired someone that has been dishonest with her, the public, and the Parliament."
Ardern maintained it was a serious demotion and was proportionate to her mistakes.
"I do not want any questions raised over the issue of Chief Technology Officer.
"This issue is about the fact it simply wasn't recorded in a written question. That was the offence at hand. The fact she had the meeting in itself is, again, not the issue.
"It is, of course, a message to all members of my Government around the expectations that we have of them. Minister Curran has lost two portfolios she cares deeply about."
The Prime Minister was told of the issue on Monday, which was when Ardern said Curran realised her mistake.
The issue came up during the final stages of the appointment process for the CTO job vacancy.
"I believe it was a conversation working through when the Minister had first ever had contact with one of the candidates.
"It was not malicious … she simply cannot recall the reason why it was not included in her diary. That's not good enough, that's why she has been removed from Cabinet."
The State Services Commission will examine the CTO appointment process to ensure the Handley-Curran meeting had no bearing on process or outcome. The SCC will report back before the appointment is made.
Handley remains a candidate for the CTO position. An appointment is expected to be made shortly.
The meeting was the first time Handley and Curran had met, Ardern said.
Ardern said the issue was entirely about Curran's conduct, not Handley's.
"I want to express my sincere apologies to Mr Handley who has been brought into this issue through no fault of his own".
Speaking in Dunedin, Curran said she was very sorry.
"I've let myself down, I've let the Prime Minister down, I've let my Government down.
"I take full responsibility for not following proper process. The meeting with Mr Handley should have been in the diary and my staff should have been informed."
She vowed to continue in Parliament, saying: "I just want to put my head down now and focus on my portfolio."
She would also continue to represent her electorate.
"I think the people of Dunedin South know that I work pretty hard on their behalf and I hope that I can continue to do so and have their trust"
Asked if she hoped to return to Cabinet she said she was just focused on "doing the best job I can in the portfolios I have".
She said "to the absolute best of my knowledge" there were no other undeclared meetings.
"As with any MP and any Minister mistakes get made.
"The most important thing is to be as accountable as possible and I think I am certainly being accountable and paying a fairly heavy price today."
Megan Woods will now be Minister of Government Digital Services and Curran's open government responsibilities will go to State Services Minister Chris Hipkins.
Correspondence released by Curran's office shows Handley messaged Curran on Twitter on February 13 about his interest in the CTO role. The February 27 meeting was later set up using Curran's Gmail account.
In March and in response to a message from Handley, Curran texted through an Mbie email address where applications could be sent.
- Additional reporting Otago Daily Times