A Royal Commission into the government's conduct will be a bottom line for New Zealand First if it is in a position to negotiate forming a government after the election.
Yesterday Prime Minister John Key officially announced an inquiry that will focus on allegations that former Justice Minister Judith Collins may been involved in efforts to undermine the then head of the Serious Fraud Office, Adam Feeley, in 2011. Ms Collins strongly denies the allegations.
Despite demands from opposition parties, Mr Key has rejected the idea of holding a full scale commission into all the allegations made against the National government and its staff.
"It'll be an independent inquiry, it'll be involving the powers of the Inquiries Act, it'll be chaired by an independent person, it'll most likely be a retired judge or a QC," Mr Key said yesterday. "The terms will be about the actions or conduct of a person who was a minister."
New Zealand First leader Winston Peters said he had informed Labour and National his party would not form a government with any party that did not agree to a full inquiry.
"It doesn't matter what parties we are talking to after the election on this matter we want a proper respectable Commission of Inquiry, with the appropriate commissioner and the appropriate terms of reference - and that is a bottom line."
Mr Peters said a proper inquiry should also look into the emails behind the book Dirty Politics. "An inquiry should get at the truth and the personnel and the terms of reference are critical for that to happen," he told Radio New Zealand's Morning Report programme. "Anything short of that will be deeply condemned by the public because the truth will have been denied them.
However, Mr Key questioned the New Zealand First leader's commitment to the Royal Commission.
Mr Key said any such negotiations can wait until after the election, adding Mr Peters has shifted ground before.
Labour suggests terms of reference
Labour would reserve the right to broaden an inquiry into whether Judith Collins tried to undermine the director of the Serious Fraud Office, if elected to government.
Labour Party leader David Cunliffe said he had written to the prime minister suggesting terms of reference for an inquiry, and Mr Key terms do not go far enough, Labour would look at extending the inquiry.
"Subject to how far through the process is, we would certainly reserve the right to broaden the terms of reference of the inquiry post-election."
Mr Cunliffe said New Zealanders' confidence in Government had been called into question.
Greens also want Commission
Green Party co-leader Metiria Turei agrees that given the seriousness of the allegations a Royal Commission would be the only way to get to the bottom of what has been happening.
"John Key needs to put in place a wholly independent inquiry, a Royal Commission, so that we can have some trust in the process, because at the moment the public can rightly say the process is managed by the government, looking into government mismanagement and potential criminal behaviour and it's not good enough."
Constitutional law specialist Matthew Palmer QC said politics will determine the level of inquiry the prime minister chooses to use.
"The prime minister is going to be concerned to establish a credible process and the opposition is going to be concerned to attack that process as not credible.
"So I think we really need to wait to see what the terms of reference are. That's going to be key to how effective the inquiry will be - how wide are the terms of reference and, most crucially, who is appointed to undertake it."
Mr Key has said he will will release the terms of reference stating the scope and purpose of the inquiry today. They will then be formalised by way of an Order in Council signed by the Governor-General.