John Armstrong: Labour hasn't got off the hook yet

The Labour Party may have escaped prosecution for alleged overspending of its election expenses, but the political damage has already been done.

National has blasted the police decision as a "cop-out". But it is difficult to see how much more damage Labour would have sustained had the matter gone to court.

Sure, Labour has avoided the further embarrassment of having to front in court. But it has been deprived of an opportunity to defend itself and argue its behaviour has been no worse than other parties who also used parliamentary funds for blatant electioneering. It has also been denied a platform from which it had hoped to shed more light on the links between National and the Exclusive Brethren sect.

However, the removal of an irritant off the immediate political agenda is also something of a minor victory for Labour. National can no longer wallow quite so deeply and so enjoyably in the mess Labour had created for itself. There will be sighs of relief in the Beehive about that.

But Labour needed a moral victory, rather than a let-off.

The public has already delivered its own verdict on Labour's raiding of its parliamentary leader's fund and using taxpayers' money to produce and distribute its pledge card: guilty, whether prosecuted or not.

Labour is not helped either by yet another police decision that will have people pondering why Labour politicians and party officials seem to avoid prosecution, while others - the police and the Prime Minister's driver in the speeding motorcade case - do not.

Given other political parties breached Parliament's rules, the police believed it unfair to single out Labour for punishment. Instead, they have fired a warning shot that there will be no more breaches of the rules. But there will be people who will want to see a conspiracy in all this.

However, Labour will be judged more seriously on its willingness to clean up its act and end a rort on the taxpayer.

Labour should stop muttering about how unfair all this has been. It should stop making veiled threats about bringing in official state funding of political parties if it is denied access to parliamentary funds to sell its policies. It needs to display leadership and corral other parties in Parliament into rewriting the rules so that none of them can willy-nilly use those funds as a handy treasure chest to boost their spend up on election advertising.

The good news is that if Labour does not show leadership, the Auditor-General will.