Freedom New Zealand

National's problem in being associated with "secret agendas" intensified last night with the revelation of a secretly taped conversation in which senior MP Lockwood Smith suggested he would like to do things in government "that may not be policy right now".

It follows the broadcast by TV3 of a private conversation between deputy leader Bill English and delegates at a cocktail party at the party conference last Friday in which Mr English said he would like to "eventually" sell Kiwibank.

That led to an embarrassing backdown yesterday by Mr English, who as finance spokesman effectively heads the party's policy development, and is a stickler for demanding discipline from others.

Leader John Key said National had no plans to sell Kiwibank. He agreed with Mr English's assessment that he had not chosen his words well.

Dr Smith's comments are not likely to be as damaging as Mr English's because he carries less weight in the party.

But they will be powerful ammunition for Labour in its bid to convince voters that National has a secret agenda.

Deputy Prime Minister Michael Cullen said last night that it was "starting to look like we cannot trust anything the National Party has told New Zealanders".

He said Mr Key had to explain what was happening inside his caucus.

He could admit he had no intention of sticking to the centrist agenda he was promising New Zealanders.

"Or he can admit that the senior MPs around him are very happy to use him to gain power but have no intention of letting him him run the show if they are elected.

"It's time for answers," Dr Cullen said.

Mr English's retraction on Kiwibank said: "With respect to Kiwibank, I shouldn't have made the comment I made.

"National has had no discussions about Kiwibank and has no plans to sell it."

He also said that comment he had made about the complexity of Working For Families had been construed as criticism of John Key.

"That is wrong."

In reference to the TVNZ interview in which he refused to say that Mr Key had understood Working for Families, Mr English said he had been determined not to widen the debate - "not to criticise John Key".

Asked about the use of secret tapes, Prime Minister Helen Clark said there was always the possibility that something someone said could be picked up and run on the front page of a newspaper.

"So the key thing is to say in private what you do in public. I think that is where Mr English has been caught out."

Referring to the latest taped comments, Mr Key said last night that Dr Smith's comments did not amount to evidence of a secret agenda.

"It is the latest in a long line of dirty tricks and personal attacks by our opponents, and we fully expect more of these in the coming months."

He said National was being upfront about the policies it intended to implement if it became the Government.

WHAT LOCKWOOD SMITH SAID:

"There's some bloody dead fish you have to swallow ... to get into Government to do the kinds of things you want to do ... and you have to balance up what really matters.

"If you try to do everything differently you'll scare the horses and under MMP it's very hard to win.

"Once we have gained the confidence of the people, we've got more chance of doing more things.