Key Points:

The National Party is crying political interference after the Environment Ministry contracted a communications adviser with Labour Party links while Madeleine Setchell was sacked for her connections to National.

The ministry hired Labour Party activist Clare Curran after Climate Change Minister David Parker suggested she could provide communications help.

Ms Setchell lost her senior communications role at the ministry because of her relationship with National leader John Key's chief press secretary Kevin Taylor.

National MP Nick Smith said neither Ms Setchell nor Mr Taylor were members of the National Party.

Ms Curran is the Otago/Southland representative on the Labour Party's ruling council, and last year wrote and presented a strategy paper to the party's Otago/Southland regional conference.

Dr Smith said Ms Curran - who is contesting former environment minister David Benson-Pope's nomination to be Labour's candidate in Dunedin South - got the ministry communications contract "uncontested". He questioned how it was possible for the ministry to employ a Labour Party activist and find no conflict of interest but dismiss a person over a perceived conflict of interest when the partner of a staff member of the National opposition was employed.

Dr Smith said Ms Curran got the contract on the "insistence" of Mr Parker and that Labour was increasingly "politicising" the environment ministry.

Mr Parker told reporters he had suggested Ms Curran's name to the ministry during a discussion on what communications help it needed.

He had suggested her because "I knew her to be very able in these areas". He had known Ms Curran long before she joined the Labour Party through her work with her company Insight Communications.

"I didn't recommend who they should hire and I wouldn't do that," he said.

The ministry has 11 communications staff. Ms Curran got the contract in mid-2006 as part of climate change work, the environment ministry said.

Environment Minister Trevor Mallard told Parliament that Ms Curran was not a member of the national council of the Labour Party at the time the contract was awarded. It was also not correct that Mr Parker had insisted she be appointed, he said.

For contracts of between $10,000 and $50,000, the ministry's operating policy was to get at least three quotes.

"I am advised that that was done in this case," Mr Mallard said.

When Environment Ministry boss Hugh Logan appeared before a parliamentary committee yesterday he appeared unable to recollect conversations and events without referring to the two reports already out on the Madeleine Setchell affair.

The reports, released on Wednesday, said Mr Logan made "significant errors" in his handling of the situation, and he is losing his performance bonus as a result.

Dr Smith questioned Mr Logan yesterday on whether Ms Setchell would have her job today if not for the "objections" to her appointment made by Mr Benson-Pope's office. Dr Smith said there were media reports that adviser Steve Hurring's conversation with Mr Logan had been robust and direct "that Madeleine Setchell had to go".

Mr Logan repeatedly referred the MP to the reports.

Mr Hurring had been trying to find out some information in his telephone calls, Mr Logan said.

"I came to my own decision" regarding Ms Setchell, he said.

Mr Logan said he had not been aware when Ms Setchell was appointed as communications manager of her partner's role.

He should have been told and if he had been, he would have known he had a potential conflict of interest to manage. "Would she have got the job or not if you had known of that potential conflict of interest," National MP Katherine Rich asked.

Mr Logan said there were principles laid down for dealing with potential conflicts of interest, which included changing people's duties.

Mr Logan offered Ms Setchell a lesser role but she turned it down. She received a confidential settlement for losing the senior role.

In

Clare Curran, Labour Party Council member and contracted communications adviser to the Environment Ministry

Out

Madeleine Setchell, sacked senior ministry communications adviser and partner of National Party press secretary Kevin Taylor