Tertiary Education Minister Paul Goldsmith has been accused of making a "disgusting" racial remark when speaking to a young voter.
The exchange happened after a multi-party political debate for young people in Auckland on Saturday night.
Paul Goldsmith was approached by 25-year-old Thomas Maharaj, who asked him whether a capital gains tax would ease the housing crisis.
Mr Maharaj pointed out that some National MPs own multiple properties, including Dr Parmjeet Parmar, who has a stake in seven properties.
He says Mr Goldsmith interrupted and said: "Yeah, well, you are – and she is – Indian. You just need to accept it. That's the way it is."
Mr Maharaj says he was shocked by the comment.
"[The Minister] was saying that Indians buy lots of houses," says Mr Maharaj. "Does that have anything to do with the housing crisis?"
Race was 'absolutely irrelevant'
Mr Maharaj is half New Zealand European and half Fijian-Indian. He had not discussed his ethnicity with Mr Goldsmith.
"I said to him, 'Excuse me? Why did you just call me Indian?' I was really pissed off."
"He probably didn't expect that I'd take it any further, but it has stuck with me for the past few days. I'm really disappointed."
Matt Billington, 18, witnessed the exchange, and was also shocked by the Minister's comments.
"We were like, 'What? Did he really just say that?'"
"You can't categorise an entire race of people, and say, 'Oh, that's just the way it is; they own multiple houses,'"Mr Billington says.
"It's a categorisation which, as a Member of Parliament, is disgusting. That's no way for a human to behave, let alone someone holding a position in the Government."
As Tertiary Education Minister, Mr Goldsmith is responsible for New Zealand’s $4 billion export education market. India is one of our main sources of foreign students.
In June, he launched a new strategy to make those students feel more "welcome" and "valued" in New Zealand.
Mr Maharaj approached Mr Goldsmith a few minutes after the initial exchange, and asked him to explain his comments.
1 NEWS has viewed footage, filmed by an observer, which shows Mr Goldsmith saying: "I didn't mean it like that".
Mr Maharaj says he did not receive an apology from the Minister.
"He didn't deny the fact that he said what he said."
In a statement to 1 NEWS this morning, Mr Goldsmith said: "It is possible that Mr Maharaj and I misheard each other as I remember the conversation differently."
"Regardless, I am deeply distressed at the thought I may have offended Mr Maharaj. It was not my intention."
Mr Maharaj is certain that he and Mr Goldsmith "definitely did not" mishear each other.
"This is not about party politics," he says. "If you say something racially offensive, you should own up."