Smith reportedly missed a curfew after last week's win against Argentina and Hansen has declared that the punishment was not up for discussion.
"There's nothing to elaborate on. He just broke a protocol that's non-negotiable and the consequence is you don't start in the XV if you break it," Hansen stated.
The emergence of the Smith, 24, has been a key factor in the All Blacks' unbeaten run this year, but the Hansen claims he views Saturday's Rugby Championship clash with South Africa as the "ultimate" test.
"They are a big side, they are physical and we have to match that physicality and passion and desperation they have got." Hansen said of South Africa.
"They haven't had a great start to the championship so if we come in half-cocked, we could find ourselves on the back foot."
Smith's replacement will be Piri Weepu, a veteran of 62 Tests, who produced an impressive performance when coming from the bench for the final quarter of the 21-5 win against Argentina last weekend.
New Zealand lead the Championship with three wins out of three, while South Africa have had a win, draw and a loss.
Australia lie third and Argentina, who are in their first southern hemisphere Test competition, are currently last.
Smith's omission is one of four All Blacks changes with lock Sam Whitelock and flanker Liam Messam returning to give added muscle to a pack which also sees Andrew Hore start at hooker.
Springbok coach Heyneke Meyer has also stressed the importance of on-field discipline as he made only two changes to the side that lost 26-19 to Australia last weekend.
Lock Flip van der Merwe replaces the suspended Eben Etzebeth, while Francois Louw comes in for Marcell Coetzee to bring more experience, marking All Backs captain Richie McCaw on the open-side flank.
Meyer claimed that the Springboks were guilty of "two soft moments" against Australia which cost them the game and has made it clear that he wants no repeat against the All Blacks.
"There's a huge difference in playing the All Blacks in South Africa than playing them here," he said.
"We don't have a good record against them in New Zealand. If you want to win then you have to be tactically astute, your defence has to be impeccable and there needs to be no soft moments in your discipline."
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The entire All Blacks apparel line has been updated for 2013/14. Check out the New Zealand All Blacks polo.
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