John Key says there's "zero chance" National's relationship with the Māori Party will break down over the proposed Kermadec sanctuary despite the coalition partner considering walking away.
A political fight has broken out over the proposed 620,000 square kilometre ocean sanctuary in New Zealand's exclusive economic zone after negotiations with the Māori Fisheries Trust stalled.
The Trust, also known as Te Ohu Kaimoana, is continuing with its court action against the Government, saying it wasn't consulted and still wants the right to fish in the area.
It says the 1992 Treaty of Waitangi settlement over fishing, known as the Sealord deal, gives iwi rights to fish in the area.
Trust chair Jamie Tuuta says the debacle will be a stain on this Government and will be its equivalent to the foreshore and seabed debate which dogged former Prime Minister Helen Clark.
The break-down in talks also had the Māori Party considering its confidence and supply agreement with National.
"They've compared it to the foreshore and seabed and we have said it is serious enough to give us grave concern," co-leader Marama Fox said on Wednesday.
"We want to make sure that we have explored all the options available to us before we walk away."
But the Prime Minister doesn't think the impasse will be enough to end the relationship between the parties.
"There's zero chance in my opinion of it escalating to a more serious issue with the Māori Party. We have a great relationship with them, we can understand the issues and we'll work at it until we find a solution that's acceptable.
"It's possible to have disagreements on an issue and have a really good relationship - frankly we have that all the time," he said on Thursday.
Plans for the sanctuary were announced at the United Nations General Assembly in New York last year, which was a surprise to many.
"I thought it would be pretty much universally supported by everyone, but I was proved to be slightly wrong," Mr Key said.
Mr Key says the Government thought they were "on pretty safe ground, and with a lot of Māori we are".
"We believed we were right and believed given Māori's long-term position of advocating to the Government on conservation they'd be highly supportive of it and actually funnily enough, the local iwi are."
He says while the 1992 deal did cover fishing in all economic zones including the Kermadecs, previous legislation reserved the right of the Government to create marine ocean sanctuaries "wherever it wanted".
Mr Key was still confident a solution will be found, saying the parties aren't "a million miles away" in their positions.
While allowing indigenous fishing was a possibility, the "gold standard" of an ocean sanctuary was to have a no take zone for mining or fishing.
But Environment Minister Nick Smith says while Te Ohu Kaimoana had been clear about keeping fishing rights, he said that wasn't "compatible with a genuine sanctuary".
Regardless, the legislation has the numbers to pass in Parliament with the backing of the Green Party, but co-leader Metiria Turei says the Government first needs to fix its mistake.
"We know this can be a great outcome for everyone, except the Government has royally screwed this up, Nick Smith has made a terrible mess and they now have to clean it up."