John Armstrong: Labour's dodgy card tricks

Those disgusted with Labour for refusing to pay back the $446,000 the party rorted from the public purse to fund its pocket-sized election pledge card may soon have reason to be angrier still.

The upshot of Labour being put through the wringer by various state agencies, ranging from the Electoral Commission and the police to Auditor-General Kevin Brady, may be Labour getting what Labour has long hankered for - partial state funding of political parties' election campaigns.

Michael Cullen is more than hinting that has to be the logical outcome of the necessary rewrite of the rules which supposedly have governed political advertising paid for out of the parliamentary leaders' funds - the stash of taxpayer-provided cash which every parliamentary party gets on a pro rata basis as part of its budget to run its operations.

The Auditor-General may recommend the rules be tightened to ensure compliance. Yet Labour, having been caught flouting them, is now shamelessly flagging they be liberalised.

Such a perverse outcome could happen only at Parliament because the politicians write the rules under which the politicians operate. Thus did the gamekeeper double as poacher in Labour's paying the production and distribution bills for its pledge card out of its leader's fund.

The funds - Labour gets nearly $1.5 million a year - have always been state funding in drag. However, Parliament's rules, though fuzzy, explicitly rule out using the money for electioneering.

Labour was caught out when the Electoral Commission queried whether the spending on the pledge card noted on the party's return of election expenses took the party over its allowable limit under the Electoral Act.

The commission referred the matter to the police, who decided not to prosecute because there was no evidence the overspending had been intentional.

However, the Auditor-General, who is responsible for checking public money is spent in the manner which Parliament stipulates it be spent, was also on the case.

His preliminary report - which was leaked to the media this week - included an opinion from the Solicitor-General that the spending not only breached Parliament's rules but was unlawful.

The big question now is what Brady recommends in his final report. He is in a tricky position. Labour is not going to pay the $446,000 back to Parliamentary Services, the administrative arm of Parliament. It does not have the money. And the Auditor-General does not have the power to force it to do so.

National is demanding Labour "pay it back". It made a symbolic point of writing a cheque for $10,588 and 17 cents - the amount that Brady's preliminary report deems National spent unlawfully.

Brady is thus in a damned-if-he does and damned-if-he-doesn't scenario.

However, he has another option for expressing his displeasure while preserving his independence.

Under the Public Finance Act, the Auditor-General can direct the "responsible minister"' - the Speaker in this case - to report to Parliament if he has reason to believe that spending has not been lawful.

The report must detail the events that gave rise to the alleged breach, plus any remedial action that has been taken or been proposed to prevent a recurrence.

If the Speaker thinks there has not been a breach, he or she must explain why.

Margaret Wilson's response will be interesting, given that her Labour colleagues are adamant the party has not breached the rules.

The Prime Minister is instead arguing that it is the Auditor-General who has changed the rules of the game after the referee had blown the final whistle.

This is bunkum. While the rules confusingly allow parties to inform the public of its views, the definition rules out anything that promotes the election of a person or party.

Moreover, Brady warned three months before the 2005 election about not using parliamentary advertising for electioneering or related purposes.

Not content with arguing black is white, Helen Clark, Cullen, and Winston Peters - whose self-ascribed role as Labour's apologist seems unaffected by his spider bite - also claim the Auditor-General's preliminary report means spending by most parties over many past elections has been deemed inappropriate. This is a further attempt to fudge the issue and spread the guilt.

However, the Parliamentary Service Commission, which comprises representatives of all parties in Parliament, rewrote the guidelines after the 2002 election.

What happened in prior elections is irrelevant to Brady's investigation. The same applies to Labour's two-wrongs-make-a-right defence that it paid for its 2002 pledge card out of its leader's fund, so it thought doing the same in 2005 would be okay.

Labour's other excuse is that the payment was signed off by officials from Parliamentary Services. This doesn't wash either.

Those officials are in an invidious position, given they are faced with making decisions which affect the political livelihood of their masters on the commission.

However, they have some protection. Following the rewriting of the rules on advertising in 2003, the commission promulgated several principles which stipulated MPs were "personally responsible" for the way their parties used public money.

That the Prime Minister is now ducking that responsibility is all part of the damage-limitation strategy, of course.

Labour has taken a fresh hit over the pledge card rort. But it took one when the rort was exposed and again when the police opted not to prosecute - all to little effect on its poll rating.

Moreover, at this stage of the three-year electoral cycle, it can dig in its heels and ignore the "pay it back" chant coming from the other side of the House.

Labour's confidence in its immunity is typified by Cullen's willingness to canvass state funding.

He says it may be time to be upfront and stop trying to draw an artificial line between what parties do for "parliamentary purposes" and what they do for election purposes.

He has a point. While the rules forbid electioneering, almost everything a party does at Parliament is done with the next election in mind. That can make the rules difficult to interpret as to what is acceptable - except in glaringly obvious cases like Labour's pledge card.

While NZ First and the Greens will nod in agreement with Cullen - and also back any retrospective legislation validating the unlawful payments made last year - National will not.

It is declaring Brady's findings to be an affirmation of the existing rules. It holds the moral high ground. It will not budge while there is still political mileage to be made at Labour's expense.

After that? Well, there is also an onus on National to help sort out the current mess and come up with workable rules.

One thing is clear. Labour will quietly dispense with its pledge card. As a device designed to build voters' trust in the party, its resurrection would likely do the very opposite.