Prime Minister John Key says scrapping TVNZ's charter is not a step towards selling the network but the Green Party thinks stripping it of its public service responsibilities is part of a "hidden agenda" to do just that.
Key said on Monday the charter was being canned because it was not working.
"There's been a number of inquiries into it, there's been no discernable difference in the amount of local content that's been played because of the charter."
TVNZ operates under a charter which encourages it to show programmes that reflect New Zealand's identity.
In return it gets $15 million to produce shows that would not be commercially viable.
The $15m would be "fully contestable" through NZ on Air, Key said. TVNZ will probably get "the vast bulk of it back".
The Greens' broadcasting spokeswoman, Sue Kedgley, said scrapping the charter and giving the funding to NZ on Air made no sense.
"Axing it means TVNZ will have no public service responsibilities and will therefore be purely profit driven," she said.
"With no public service mandate, TVNZ will become indistinguishable from its competitors and easier to sell."
Kedgley said the charter is flawed but the answer is to improve it, not throw it out.
"I think this is a hidden agenda - to strip TVNZ of its public service responsibilities, squeeze it like a lemon financially at a time when advertising revenues are in free fall, and then flick it off in a few years time."
National indicated the change during its election campaign. At the time Labour said it was a Trojan horse for privatisation.
TVNZ announced last week that it was axing about 90 jobs and cutting its programme and operating budgets in an attempt to save $25 million, following lower than expected advertising revenue.
