Prime Minister John Key says he would welcome a snap election if the Labour Party wants to go to the polls over South Canterbury Finance.
Labour says the whole Government should resign over the finance company's collapse and the general state of the economy.
Labour is calling for Finance Minister Bill English to resign, saying his mismanagement has cost the taxpayer millions of dollars.
The Government is defending its handling of the bailout of finance companies, after revealing on Monday that expected losses could reach $1.2 billion, up $300 million on the last estimate.
Of the total, all but $100 million stems from the collapse of South Canterbury Finance, which was put into receivership last year, triggering the Government's deposit guarantee scheme.
The Government says no offer presented for the South Canterbury would have reduced its liability under the scheme.
Labour leader Phil Goff says politicians from all sides agreed that the guarantee scheme was needed in 2008, but National has to take responsibility for what has happened since.
Mr Goff says the whole Government should step down after it has allowed the New Zealand economy to stall.
The Prime Minister says he would be happy to go the polls today, but the election date has been set for 26 November.
