Setchell found other public jobs closed to her
The Environment Ministry communications manager sacked because her partner works for National Party leader John Key found the door closed as she sought other public service jobs.
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Ms Setchell's partner is Mr Key's senior press secretary, Kevin Taylor.
She declared the relationship in her Environment Ministry interview. It did not become an issue till minister David Benson-Pope's office phoned chief executive Hugh Logan the day she started work, to ask if Beehive talk was true.
Mr Logan had not known of the relationship, but was told by Mr Benson-Pope the next day that the minister did not think he could be "free and frank" with her because of it.
Two days later, Mr Logan told her she would have to move to a less sensitive position or leave. She left with an undisclosed payout.
A report by former state services commissioner Don Hunn finds Mr Logan did not manage the conflict of interest, despite advice from present commissioner Mark Prebble that it was possible to do so.
Mr Logan's failings mean he will not receive a bonus of up to 15 per cent of his $330,000 to $340,000 salary package.
Dr Prebble also took the rare step of punishing himself for failing to ensure that commission staff who dealt with the issue while he was overseas were made aware of Mr Benson-Pope's comments. He has docked 2.5 per cent of his $420,000 salary - about $10,000.
He insisted Mr Hunn's report found no evidence that Mr Logan acted against the principle of public service neutrality, but rather failed as a fair employer. "It's still not clear to me that she needed to move jobs."
But National Party state services spokesman Gerry Brownlee said Ms Setchell's difficulty in finding other public service jobs, despite being invited to apply, showed she had been blacklisted because of her relationship.
"You're headhunted for a job, issues around conflict of interest are dealt with, you're appointed to a job, a minister packs a sad and you're sacked.
"That's a bad, bad sign for our public service. It means we're not politically neutral and Dr Prebble needs to be doing something about that."
The report reveals that MAF director-general Murray Sherwin decided Ms Setchell's job application would go no further after he consulted minister Jim Anderton - though Mr Anderton told Mr Sherwin it was his decision to make.
Ms Setchell's application for the education job also faltered.
State Services Minister David Parker and Prime Minister Helen Clark said yesterday that they had confidence in Dr Prebble. Mr Benson-Pope resigned from Cabinet in July for misleading the public by denying knowledge of the calls from his office to Mr Logan.
The Dominion Post