Christopher Luxon's defending the Government's handling of its new stand-off with Kiribati.

New Zealand's relationship with the central Pacific Island nation appears to have reached an all-time low.

Aid to the country has been put on hold pending a review after the Kiribati President pulled out of a pre-arranged meeting with Foreign Minister Winston Peters last week.

The nation continues to form closer ties with China, and the New Zealand government is responding to the "radio silence" by suspending aid to the central Pacific island nation - aid that amounts to more than $100 million over three years.

Luxon told Mike Hosking we can't keep sending aid money into Kiribati if we don't have a relationship or dialogue with them.

He says the Government has been putting tens of millions of dollars a year into Kiribati, and it needs to be spent effectively.

When it comes to tourism, the Prime Minister is hoping the new digital nomad visa reform will boost the industry back to pre-Covid levels.

He told Hosking it’s something they talked about in opposition, but had other things on their plate to deal with first.

Luxon says the sector hasn’t bounced back, and is actually turning off growth, which is absolutely unacceptable.

The next step, he says, is to ensure New Zealand is at the top of tourists’ bucket lists and to strengthen the relations that “went cold” through Covid.

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