National leader Simon Bridges says the inquiry the Government is setting up into the appointment of the deputy police commissioner is unsatisfactory and Tracey Martin should not oversee it.
Bridges said it should be broad enough to include whether proper disclosures were made to the Cabinet about Wally Haumaha's former association with New Zealand First.
Martin, the Minister of Internal Affairs, was a senior New Zealand First official and it was inappropriate that she be involved, he said.
"I think this is incredibly serious," said Bridges.
"Winston Peters has serious questions to answer to ensure that we can all have confidence in the police and they are not being politicised."
Acting Prime Minister and New Zealand First leader Peters announced a broad outline of the inquiry to be set up by his colleague. It will look at whether all relevant information was given to, or gathered by, the State Services Commission during the appointment in May, and if it was, whether all relevant information was provided to ministers.
Peters said Martin would release the terms of reference and name a suitably qualified independent person to conduct the Government inquiry. He said he saw no reason why the report would not be made public.
The Cabinet Manual says a Government inquiry usually deals with issues where a quick and authoritative answer is required from an independent inquirer.
The announcement of the inquiry followed revelations in the Herald about comments Haumaha had made in Operation Austin which investigated rape allegations made by Louise Nicholas. She was furious about his latest promotion.
Haumaha on Friday apologised for his comments, saying they did not reflect his values today.
Rotorua Daily Post archives from August 2005 show that Haumaha was announced as the New Zealand First candidate at a meet-the-candidates event in Rotorua. A short time later Fletcher Tabuteau, now the party's deputy leader, was named as the candidate.
It emerged the next month, after a suppression order against Haumaha's wife was lifted, that she had gambled away money set aside for his 2005 campaign.
According to the Post's report of the court case, she had stolen about $24,000 from the bank where she worked to replace the missing campaign funds.
Haumaha had been an inspector at the time.
Peters said Martin had been chosen to oversee the inquiry because it could not be done by the Minister of Police or the Minister for State Services — the appointment panel comprised the Commissioner of Police, the State Services Commissioner, and the Deputy State Services Commissioner.
Peters rejected the idea Martin was compromised: "She is not only a New Zealand First MP, she is a Cabinet minister well aware of her responsibilities."
Peters acknowledged Haumaha had pulled out of the candidate process "but a whole lot of people start and stop".
"I can recall [former Prime Minister] Geoffrey Palmer left the National Party to join the Labour Party and become the candidate for Christchurch Central a long time ago. No one thought he was compromised."
Bridges said that Martin should not be allowed to oversee the inquiry.
Bridges: "I believe we have now gone past this simply being about Operation Austin and what Wally Haumaha has said there because more has come out which means there are serious questions about Wally Haumaha's political affiliations and what role that has played in his appointment as deputy police commissioner."
Peters dismissed Bridges' suggestion that he should have told the Cabinet about Haumaha's former bid to stand for New Zealand First.
"A lot of people seek election and selections all over the country. That does not bind them years and years later like 13 years later, surely ..."
Peters did not believe it was necessary for Haumaha to stand aside while the inquiry went on.