"These decisions were made during an election year, on a government policy that was controversial, remains controversial, and has been the subject of much debate," she said.
Fellow Labour MP Clayton Cosgrove said that as a National Party member, Mr McElrea had a bias where government policy was concerned.
"I would presume a person in Mr McElrea's position may be quite disposed to a programme that was positive about a government policy, and maybe less disposed to a programme that was somehow negative about the government policy ... that's an absolute conflict of interest," he said.
"In order to protect the credibility and integrity of Mr McElrea, the Prime Minister, and more importantly your organisation, that should have been declared and more especially the other board members should have had foresight to raise the issue."
Ms Wrightson disagreed, saying she did not think there was a conflict of interest because the content of the documentary was not known when the decision to fund it was made.
She argued that NZ on Air was an autonomous Crown entity and did not care what the politics of the day were.
"We are trying to make opportunities for documentary makers to make documentary stories. We don't care what angle they take as long as they're well made documentaries."
Ms Hoey also defended the neutrality of the board, saying Mr McElrea was just one of six members making decisions.
"I think that over 20 years we have had board members with almost every range of political view you could imagine around the table."
Labour also took issue with Ms Hoey's appointment as chairwoman given that she was also the owner of television production company Cinco Cine, which has received NZ on Air funding.
Ms Hoey said her appointment was appropriate given her length of time serving as a board member, and that she always complied with the"extremely strong and robust conflict of interest rules" at NZ on Air.