Prime Minister John Key has announced that, following the receipt of the Auditor-General's report into expenditure by Phil Heatley, he has decided to reinstate Mr Heatley as a Minister in the National-led government.

"I have spoken to the Governor-General and advised him of my wish to have Mr Heatley reappointed.

"Mr Heatley has acknowledged that he has made mistakes, but the report by the Auditor-General makes it clear that although some expenditure was outside the rules, it was not deliberate.

"The report also acknowledges that some of the rules were confusing.

"However, this case has demonstrated an important lesson for all Ministers and MPs: they must be very careful in the handling of public money."

Mr Heatley's portfolios will be Housing and ‘Fisheries & Aquaculture'. 

"The change of title for the Fisheries portfolio reflects the importance of aquaculture in driving economic performance.  We will be making further announcements on aquaculture in the near future," says Mr Key.

Mr Heatley's reinstatement to Cabinet will take effect from Thursday.