Nick Smith should have offered to resign yesterday. The Prime Minister would not have been obliged to accept it and judging from his statements, he almost certainly would not have done so.

Offering to leave the Cabinet, however, would have been proper acknowledgement by Smith that he was in major breach of ministerial guidelines in writing an ACC claim-related reference for his friend and National insider Bronwyn Pullar while also holding the ACC portfolio.

Sure, Smith has confessed to "an error of judgment". He also apologised to John Key.

However, avoidance of not just conflicts of interest by ministers, but even perceptions of conflicts of interest is absolutely fundamental to the Cabinet system of government.


The rules in the Cabinet Manual make it very clear that it is not appropriate for ministers to intercede on the behalf of close associates on an official matter, not least because it implicitly puts pressure on public servants to respond favourably to that intervention. There is a word for that: corruption.

Rather than reinforcing those rules, apologies and admissions of errors of judgment are cop-outs which risk weakening and diluting the rules.

Smith's contrition - however genuine - simply does not go far enough in atoning for what he did. Yet, sacking him from the Cabinet would arguably have been going too far.

Such was the quandary facing Key yesterday as the existence of Smith's reference for Pullar - written on paper with the ACC minister's letterhead - became public knowledge.

Had Smith still been ACC minister, things would have been a lot simpler. Key could have simply removed the portfolio from him.

Punishment would have been seen to have been exacted. But Smith would have remained in the Cabinet.

However, Smith lost the ACC portfolio in last year's post-election Cabinet reshuffle. Unfortunately, the Cabinet Manual does not offer any advice as to what prime ministers do when the minister has moved on but the events in question happened during his or her tenure.

Key could have announced an independent inquiry and stood Smith down until that reported.

He instead seems to have taken supposed mitigating factors into account.

Smith insists he resisted Pullar's repeated requests to intervene in her case.

He says he has a long trail of letters and emails as proof of that. Smith should release them.

He made it clear in the note to Pullar's medical assessor that it would be inappropriate for him to comment on Pullar's actual ACC claim. And he confined his comments to her condition before her cycle accident in 2002 which triggered her long-running dispute with ACC.

None of that absolves Smith, however. The perception of conflict of interest remains.

Opposition calls for his resignation have only intensified.

The combination of a minister going unpunished and National's refusal to countenance a full inquiry into the farrago surrounding the mistaken release of highly-sensitive ACC claimant files has left National wide open to attack. It all now reeks of cover-up even though there may well be nothing to cover up.