A comment by Prime Minister John Key last week that the Government was not an "Indian giver" has prompted a complaint to Race Relations Commissioner Joris de Bres.
Olive McRae, of Waitati, yesterday described the comment as "racist".
Mr Key responded through a spokesman the allegation was "absurd".
Ms McRae said she was "absolutely shocked" to read Mr Key's comments, and suggested the Prime Minister check the background of the phrase.
She said Mr Key should apologise for being "racially offensive".
As prime minister, he needed to "think carefully about everything that comes out of his mouth", and should not use phrases that could offend ethnic groups.
Ms McRae stood for the Democrats for the Social Credit Party in last year's general election, plans to stand in next year's Dunedin City Council elections, and is the Dunedin representative of anti-fluoride group Fluoride Action Network New Zealand.
Despite her political ambitions, she denied her complaint was a political stunt.
A spokesman for Mr Key said yesterday: "Claims that the Prime Minister was being racist, or making racist slurs, are absurd."
• Brewer's Dictionary of Phrase and Fable says "Indian giver" is a colloquial United States term for someone who first gives, then takes back a gift, and "alludes to the supposedly duplicitous dealings of Native Americans".
It says the term is "now decidedly non-politically correct".
