In the course of explaining New Zealand's quota system, Mr. Kelly said that once the Maori arrived here, "they started fighting and eating each other, so there have been Maori wars ever since."
He also said new Asian immigrants stripped beaches of shellfish and "are one of our biggest problems, with their lack of understanding of conservation and the environment."
It wasn't clear why Mr. Kelly made the comments, but in a statement later, he said he apologized "unreservedly" for comments he acknowledged were "inappropriate."
A full transcript of his remarks is available here. New Zealanders are outraged:
Maori Party co-leader Tariana Turia said Mr Kelly's remarks were "extremely offensive" and it was not acceptable to pass them off as a joke.
"It's not as if he was sitting around a kitchen table making a casual comment to a few friends.
"He has clearly shown to us that he doesn't have what it takes to be a diplomat and he should come home."
National MP Pansy Wong described Mr Kelly's comments as racist and said he should step down.
She was astounded that he had put down a large section of the population in front of a foreign Government, and predicted a backlash in Asian communities.
"He can't represent New Zealand if he wishes to voice racist opinions and alienate Asian New Zealanders."
Kelly appears to be coming under additional criticism as a former MP for New Zealand's Labour party, with suggestions that his was an ill-thought political appointment indeed. So far, Labour is continuing to back Kelly.