United Future says it is insulting that the Government decided to continue allowing a commercial radio operator to broadcast on a public frequency while at the same time allowing TVNZ 7, a public television channel, to go off air.
A contract allowing Media Works to run Kiwi FM for another six months was renewed on Sunday. TVNZ 7 was turned off by Television New Zealand at midnight on Saturday.
United Future leader Peter Dunne says it is embarrassing and inconsistent that the contract was renewed at the same time TVNZ 7 shut down.
Mr Dunne says the Government's decision is short-sighted.
Broadcasting Minister Craig Foss says the Government is exploring what else can be done with the frequency.
MediaWorks' licence to broadcast Kiwi FM on a public frequency puts limits on its advertising revenue.
Mr Foss says MediaWorks pays for Kiwi FM's operations.
Auckland University of Technology head of radio Matt Mollgaard says there needs to be a major re-think about the future of broadcasting in New Zealand.
He describes the broadcasting environment in New Zealand as stagnant with no thought being given to what will happen to publicly owned radio frequencies.
Labour has accused Mr Dunne of shedding crocodile tears over the demise of TVNZ 7.
Broadcasting spokesperson Clare Curran says he has done nothing to support public broadcasting.