Public Service Commissioner Peter Hughes will investigate contracts with government minister Nanaia Mahuta's husband's business.
Mahuta is married to Gannin Ormsby, who owns consultancy company Ka Awatea Services.
National's public service spokesperson Simeon Brown wrote to Hughes on 29 August and again two weeks later - on 13 September - requesting the company's contracts with Kāinga Ora, the Ministry for the Environment, the Department of Conservation and Te Pūni Kōkiri be looked into after it was raised in the media.
Mahuta also wrote to Public Service Minister Chris Hipkins on Monday, saying she had been "assiduous regarding declarations of potential conflicts and management of those potential conflicts in line with Cabinet Office guidance and oversight".
She has consistently said she has declared any conflicts of interest and conducted herself consistently with the Cabinet Manual, and said in the letter she would "support this mater being raised with the public service commissioner".
Hipkins then sent a letter to Hughes requesting the matter be looked into, including with a broader focus on the public service to see if other agencies had contracts with the company or related entities.
"Satisfy yourself that agencies relationships with Ka Awatea and any of its associated business enterprises are in order, and if not, take whatever action you deem appropriate to rectify the situation," Hipkins wrote.
"I would also like you consider what broader lessons can be learned and guidance given as a result of your findings."
Hipkins requested Hughes' findings be reported to him, and publicly at the same time.
Hughes responded to the requests today, writing in a letter to Brown that "I do not think this matter reaches the threshold for an inquiry using my powers under the Public Service Act 2020".
"However, I agree with you that how the four agencies managed conflicts of interests issues here needs to be looked into and I intend to do that."
He said he intended to specifically look into how the agencies managed perceived or actual conflicts of interest relating to Ka Awatea and associated business enterprises, "and form a view on the adequacy of what has occurred".
"I want to be sure all relevant matters have been identified to ensure prompt, complete resolution so this matter can be put to rest."
Brown said he was pleased Hughes was looking into the matter even if at a lower level than he would have preferred.
"I did ask for an inquiry, this is more of an investigation - to be honest I think an inquiry would have more powers attached to be able to actually get that information and be sure it was as full and as fulsome as possible."
the party had been raising questions over the appointments for months, he said.
"This is too little, too late from the government."
"National expects this investigation to be full and thorough so New Zealanders can have confidence in the public service and how public contracts are awarded."
Mahuta also said it was important to ensure government departments were following procurement policy.
"This is about government departments adhering to the procurement guidelines and it's really important that they do. It's really clear on my part that I have declared conflicts of interest, they've been managed in accordance with the Cabinet Manual and that's very important.
"I think a number of members of Parliament have talented members of their family who shouldn't be pigeonholed because they have a member of their family representing at a political level, and that is the reality for a number of politicians."
She said she had also been concerned about the matter - and ongoing reporting of it - for some time.
"Even though I have declared conflicts of interest and noted that they've been managed in accordance with the Cabinet Manual, these stories are still persisting. I raised my concerns with Minister Hipkins verbally on the 12th of this month and then wrote a letter to ask that he look at that."
"All the issues that have been raised I had no say in approving at contract level any of the matters that have been raised," she said.
Hipkins - and several MPs of all political stripes - spoke about how small New Zealand was said conflicts of interest could often arise, but they must be managed appropriately.
"I've not seen any evidence at all that any ministers have been involved in any of the decisions regarding Minister Mahuta's family," he said.
"Wider issues have been raised about it and so I think it is appropriate for the commissioner to assure himself that the relevant systems and processes are robust and they're being followed.
"I would go back to the tenure of the last National government when there were ministers' families involved in the public service either as employees or contractors as well. Wellington is a small place, New Zealand is a small country, conflicts of interest are inevitable. The really important question is are they being appropriately managed."
Hipkins said there had never been a prohibition on MPs' family members working for the government, and that would be very unfair.
Acting Prime Minister Grant Robertson was asked why the investigation was being launched now.
"Probably because we ended up with a third government agency who was involved in contracting services," he said.
"Each individual agency had done their own investigation but I think both Minister Mahuta and Minister Hipkins felt that when we reached that point it would be better to get an overview."
He stood by Mahuta.
"There is absolutely no suggestion that Minister Mahuta has done anything wrong - or indeed any other minister," he said.
"I think that Minister Mahuta has done the right thing here. There is no reason for her to be receiving the type of vitriol that I have heard from some people, what we now need to do is sort out government departments to make sure they do their job properly."
ACT leader David Seymour said such an investigation was long overdue.
"When you have a government working group where three out of five members are the relatives of a minister you've either got an incredibly talented whānau or a real problem with the appointments process. You've got three separate internal inquiries - that justifies a serious government-wide inquiry."