Mr McCully earlier revealed that he had advised two National MPs against hosting the independence leader after they had proposed co-sponsoring the West Papuan in a public forum at Parliament Buildings.
He said New Zealand had a constructive relationship with Indonesia, and Government MPs hosting a member of the independence movement was not a "good fit" with this relationship.
Speaker David Carter later refused permission for Mr Wenda to speak at a function at Parliament.
The Green Party felt Government was more interested in protecting its $1 billion trade agreement with Indonesia than seriously confronting its human rights breaches.
Mr McCully said he met a wide range of people "from within and outside" the Indonesian Government. He always engaged Indonesian ministers and senior officials on the issue of human rights in West Papua.
"The background to human rights matters in West Papua is not a good one. While the Indonesian Government has worked very hard in recent years to improve the human rights position, it is fair to say that even they would agree that the position is far from perfect."
The minister also noted that New Zealand gave the region $5 million in aid each year. But Mr Wenda claimed this aid did not help West Papua's indigenous people.
Speaking at a Victoria University building next to Parliament yesterday, he said the money was siphoned off by the Indonesian military.
Asked about this claim, Mr McCully said there was no credible evidence that aid had been misdirected in the region.
Mr Wenda is in New Zealand as part of a tour to promote self-determination of West Papua, which is under Indonesian control.
He spoke of horrific abuses at the hands of the military, including the rape of two family members.
The freedom fighter was accompanied by human rights lawyer Jennifer Robinson, a legal adviser for Wikileaks founder Julian Assange.
Ms Robinson told media that she and Mr Wenda were used to being censored, but not in a free and democratic country. The Speaker's office decided not to allow them a public forum under direction from Parliamentary Relations, which had advice from MFAT.
The guidelines for use of Parliamentary facilities said that when events had party political connotations, they would be considered on a case-by-case basis.
