KEY POINTS:
Prime Minister Helen Clark puts the Air New Zealand fiasco down to a "bad-hair" day for Foreign Affairs secretary Simon Murdoch.
But National leader John Key believes it could point to a breakdown between the present Government and the bureaucracy.
Mr Murdoch failed to alert the Government to Air New Zealand's interest in a tender to transport Iraq-bound Australian military personnel to Kuwait, which the Government would have opposed.
Mr Murdoch flagged no issues of sensitivity when the airline sought advice from him in January.
Asked if it had reduced her confidence in the Ministry of Foreign Affairs, Helen Clark said: "I do work very closely with them and it is highly unusual for something like this to happen so I have to put it down to one bad-hair moment for the chief executive."
She rejected any comparisons between New Zealand flying military engineers to Iraq in 2004 with the two flights of Australian troops in June - which ministers discovered only this week.
New Zealand had sent military engineers to do work which could have been done by civilians had it not been in a war zone. They stuck very strictly to those humanitarian tasks and defended only themselves. "They did not engage in any way."
"The sensitivity about transporting the Australian Defence Force is that Australia was one of a handful of countries which was part of the so-called Coalition of the Willing which supported the entry into Iraq and what followed."
Asked if the New Zealand Government would have had the same concerns about transporting troops to Iraq from a country that was not part of the Coalition of the Willing she said "I think we would have to look at it case by case and what the position of the country concerned was at the time."
Helen Clark would not say whether Labour would moderate its on-going attack on National leader John Key over his party's position on Iraq.
But she believed National would have committed troops to Iraq "and we would probably have had Air New Zealand helping out flying them up and back, and flying the body bags back."
Mr Key said last night said Air New Zealand had acted totally professionally in seeking advice from MFAT "and I think the right advice from MFAT should have been to tell them not to do it, simply because by association it involves them in something with which the declared position of the Government was not to be involved."
He did not accept that National had ambiguity around its Iraq policy. It supported the right of the Coalition of the Willing to send troops to Iraq - based on the view that there were weapons of mass destruction there and on the principles put up by the United States and Britain to support it.
But Bill English as National leader had made it clear that National would not have sent troops and had been criticised for saying so.
"I don't think our position has changed. We would not have engaged troops."
Mr Key said he might accept the "bad-hair" day analysis if only Mr Murdoch had known about the Air New Zealand flights but many other senior public servants knew. On top of the information delays in the Madeleine Setchell case "you'd have to say we are having a breakdown between this Government and the bureaucracy."
Mr Key criticised Labour's focus on highlighting differences over Iraq.
"Rather than trawl through used fish and chip paper, surely at some point they need to work out what is in the national interest. I would have thought that what was in the national interest was the main Opposition and the Government having a unified position on foreign policy.
He said in the time that he has been leader, National had tried "to sing from the same song-sheet with the Government."
"If they are going to continue to flog a dead horse with Iraq, what it shows is that they are not focusing on what has happened since I have been leader and they are so desperate, they have nothing else to debate."
