Judith Collins says Shane Jones' recent comments about Indian students were "way off", and part of a strategy to ensure NZ First meet the 5 percent threshold to stay in Parliament at this year's election.
Jones last weekend appeared on Newshub Nation, where he called for greater limits on immigration.
"What sort of country do you want?" he asked host Simon Shepherd. "We were originally settled through the Treaty of Waitangi. The indigenous people coming with their Pacific roots, the Māori people, then the Anglos came, and in my case the Croatians came.
"If you want another million, 2 million, 3 million people, we should debate it and there should be a mandate, rather than opening up the options, unfettered, and everyone comes here from New Delhi. I don't like that idea at all. I think the number of students that have come from India have ruined many of those institutions."
The comments caused outrage and drew criticism from migrant groups and other MPs, and drew a rebuke from Prime Minister Jacinda Ardern, but Jones was unrepentant.
"The younger generation in New Zealand, especially those who belong to 'Ngāti Woke,' have inherited the value of free speech. But when they hear speech that is not in the vein of a carefully nuanced and perfectly couched terminology, then they are offended and they reach for the mallet of xenophobia."
Collins, appearing on The AM Show on Friday, stopped short of calling Jones a racist, but said he was playing a "racist card".
"I'm a good mate of Shane's, and I know Willie [Jackson, Labour MP] is too, and I just think honestly Shane, that was way off."
Jackson, appearing with Collins, said Jones was a "mixture of brilliance and crackpot".
"There's a fine line between free speech and racism," he explained. "We can be guilty of these sorts of things at times, but Jonesy is giving an opinion. I thought it was wrong. It was loose."
Jones said people who think his comments were racist have a different "generational style".
"I don't belong to the tribe of woke snobbery. I'm a 60-year-old Croatian-Māori from Kaitaia, beer drinking, plain speaking, red-meat-eating politician."
It's a similar excuse he used a decade ago after being caught using his ministerial credit card to watch porn, saying in 2010 he was a "red-blooded adult".
NZ First often polls below the 5 percent threshold between elections, but usually manages to claw its way back on election day. Collins said that's the real reason he made the comments about Indian students.
"What he was trying to is he was trying to get the 5 percent that NZ First needs, and it's all about playing the race card, and he shouldn't have done that."
Jackson - whose Labour Party is in coalition with NZ First - said there was no need, as the Jones' party was "already on track" to make it back into Parliament.
National has ruled out working with Winston Peters' party - a stance they're hoping will draw enough voters away from NZ First to get them back into Parliament either alone or regular partner ACT.