The Auditor-General is being asked to investigate Shane Jones' role in funding a Northland cultural centre.
The facility in Opononi was given $4.6 million, and the Regional Development Minister had a say on its funding - despite declaring a conflict of interest relating to work on the centre plans he did while a Labour MP.
ACT leader David Seymour says the minister must go.
"I don't see how Jacinda Ardern can keep him in Government on that basis. If it was Helen Clark or John Key, Shane Jones would be moving to the backbenches and no longer a minister."
Mr Jones sat in on a funding meeting with other ministers just 11 days before the funding was announced, and was once touted as a possible chair for the project.
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He told NZME he didn't advocate for the centre to get funding - and just provided "factual, publically-available information ... when an issue was raised during a discussion in which I otherwise took no part".
He insists he played no part in the decision-making process.
Mr Seymour says this situation is a real test for the Prime Minister.
"We now have a smoking gun email that says he was decisive in the decision being made to give his old entity taxpayer money," he told Newshub.
"If [Ms Ardern is] going to accept this standard, I don't see how we can have confidence in the word of any minister. She's got to be decisive."
Mr Jones runs the Government's Provincial Growth Fund, a $3 billion effort to boost the economy in the regions.