Audrey Young: Only one exit for Labour

It may work overnight, but it won't work forever. Labour's attempts to extort a retreat from National on its campaign to paint the Government as corrupt successfully created a short-term diversion. But the problem remains, with no clear way out for Labour. It finds itself in a seemingly windowless, doorless room, unable to see the exit sign.

Labour's impressive fightback over election spending has seen the news pages filled with stories about plans to curb National's reliance on anonymous donations, and what the Brethren were up to, and bad behaviour in the House.

But even if Trevor Mallard carries out his threat to reveal MPs' dirty secrets, the Auditor General will still deliver his report on taxpayer-funded election advertising by parties within three months of the last election, and Labour still has an $800,000 problem.

Unless the Auditor General wants to appear pliable, the report will almost certainly confirm his and the Solicitor General's original view that Labour's pledge card, and other electioneering material, was funded unlawfully through parliamentary budgets.

Contrition will be out of the question if it implies in any way that Labour knowingly bent, stretched or flouted funding rules before the close election, because that meets the legal definition of a corrupt practice.

The issue has produced some remarkable shifts in Parliament, including National leader Don Brash improving his House performance and looking in command for the first time.

The altered dynamic was caused as much by Labour being dulled by having the disturbing report into Phillip Field dished back to them day after day after day.

Mallard insists his threat was driven by a deep sense of personal offence at having his integrity impugned by being called "corrupt". The offence appears to have deepened after four consecutive polls showed Labour's support sliding and National's rising.

But what must have stung Labour into its counter-campaign this week was that so many of its own supporters (75.8 per cent) believe Labour should pay any unlawful expenditure back to Parliament.

Its defence that almost every other party has been breaking the rules too won't work. As former National leader Bill English put it this week, the public cannot abide a Government that believes it is above the law.

Labour was initially able to take moral comfort in the "honour among thieves" approach common among political parties in matters to do with their own funding, but that is weakening.

The call this week by Act leader and hibernating perk-buster Rodney Hide to respect the Auditor General's findings was a shift that hints of a willingness to pay back any liability (what are rich friends for?) and to join the moral high ground against retrospectivity.

United Future leader Peter Dunne has already suggested Labour's pledge card pushed the boundaries of the rules. And the Greens are decidedly uncomfortable with the retrospective legislation - its former co-leader, the late Rod Donald, was the conscience of parliamentary spending matters.

Labour's miscalculation about the voter interest in the issue is now a matter of record, and one that has not been seen since last year's "chewing gum" budget was trumpeted as a triumph - the same budget that bled Labour's support and forced it to spend more than it wanted to retain power.

But Labour may have been justified in thinking there would be little interest in the pledge card. After all, when it was revealed 10 days before the election last year that the pledge card had been funded by the taxpayer, the story quickly sank.

The revelation came from National MP Simon Power, who complained then that it was an abuse of taxpayer money. He also claimed, wrongly we now know, that the card had previously been paid for by the Labour Party.

Uncharacteristically, Labour did not seek a correction at the time when the Herald ran Power's claim. Presumably it felt it was in its interests for the misconception to continue.

One is put in mind of the British caution often cited to suspects: "You do not have to say anything, but it may harm your defence if you fail to mention when questioned something which you later rely on in court."

Labour later relied on something it failed to disclose at the time - arguing that the taxpayer funding of the pledge card was justified last year because it had also been in previous years.

But within a day of Power's press release, the pledge card issue had been overwhelmed by what became the dominating story of the campaign - the admission by National leader Don Brash that he had known about the Exclusive Brethren's campaign plans to support his party, contrary to an earlier impression he had given.

At gut level, the National-Brethren relationship remains a disquieting and a murky one. The Brethren's approach to the Electoral Commission during the campaign to ensure that its campaign would not put National's position at risk has the hallmarks of political professionalism, most logically National's.

When Labour decided last week to mount its own counter-campaign, National's links with the wealthy, secretive, religious sect was the logical choice for its prime target.

It certainly has more potency than Labour's action in laying a counter-complaint with the Auditor General over literature that National produced in 2002 under English's leadership.

It was National's behaviour at that election and following it that forced the cross-party review of the rules.

National's wealthy corporate backers abandoned the party under English and it raided parliamentary funds not just for the 2002 election but for the blatantly political foreshore billboards following it that set a new benchmark for other parties.

Brash took over the helm just as the review of the rules was completed and stopped the raids. He followed the rules which banned spending on "party political, promotional or electioneering material for the purpose of supporting the election of any person".

The fact that Labour has no material produced by Brash last year to wave around rather allows National to rest its case.

Other parties undoubtedly spent in good faith - faith that they could have one last free-for-all before the rules were properly applied.

Labour's deputy Michael Cullen this week issued a paper detailing rule changes after the election in an attempt to show that there had been minimal changes and that what had been allowable in 2002 should be allowable in 2005.

In some respects it does the opposite. What he has not highlighted was a substantial addition to the rules under the heading "Responsibility for Information", which puts the onus on the political parties to keep to the rules, rather than Parliamentary Service - the administrators whom parties have blamed for authorising their unlawful expenditure.

Labour's original escape route - to legislate retrospectively to validate unlawful expenditure - is no longer politically tenable to the electorate, at least not as the sole answer. To make amends with the voter it will have to make amends to the ledger - that is the exit door.