Maori Party co-leader Marama Fox said this arrangement ignored the other 58 iwi with quota rights in the proposed sanctuary. She said the minister had been "negligent" in not consulting with these iwi and argued that they should be compensated.
The Government is not offering compensation, saying that the fishing take was small -- around 20 tonnes a year -- and that Maori with quota rights had not fished the area in five years.
Act Party leader David Seymour also wanted compensation, saying that the fishery was worth $165,000 a year.
"We need to be concerned not only about environmental protection but also those who make their livelihood from the fishery," he said.
Mr Seymour also questioned whether the sanctuary would have any impact, because the migratory fish found at the Kermadecs could be caught elsewhere.
Dr Smith responded to this criticism: "On this basis ... you wouldn't protect any geographical areas."
The Green Party backed the bill, but said it conflicted with the Government's plans for offshore oil and gas drilling.
Environment spokesman Eugenie Sage called for more sanctuaries, especially in sub-Antarctic areas, and reforms which made it easier to establish marine reserves.
The proposed sanctuary covers 15 per cent of New Zealand's exclusive economic zone, and will increase New Zealand's ocean protection by 3000 per cent. Its biodiversity includes 39 species of sea birds, 35 species of whales and dolphins, three species of endangered turtles, and 150 species of fish, and its seafloor features trenches as deep as 10km and a series of underwater volcanoes.