Fran O'Sullivan: Election funding scandal a line in the sand issue

Auditor-General Kevin Brady is trying to lock the stable door on the election funding scandal after the horse has well and truly bolted.

Brady launched his inquiry into the flagrant plundering by political parties (my words not his) of the Parliamentary Service's budget to fund their advertising campaigns for last year's election on April 4, fully six months after Chief Electoral Officer David Henry asked the police to investigate what he considered to be clear breaches of the Electoral Act in relation to Prime Minister Helen Clark's pledge card.

It's the first time that a New Zealand Auditor-General has taken the serious step of mounting an inquiry into the use of public funds for election purposes.

The stakes are particularly high as the biggest user of the Parliamentary Service's budget for electioneering purposes at the 2005 election is obviously Clark herself, although other parties, particularly the Greens, NZ First and Act, are also in the frame. National has already paid back $10,000 it now says it should not have tapped.

But the lengthy time that has elapsed between the alleged misuse of parliamentary funds by the political parties and Brady's inquiry would appear to have circumscribed the Auditor-General's options to achieve financial redress on behalf of taxpayers.

Its important to note that under the Public Audit Act the Auditor-General has to act independently.

Under the Public Finance Act, if the Auditor-General believes that expenses have been incurred for a purpose that is not lawful or outside the scope of the relevant appropriation, he may direct the responsible minister to report to the House. He can also stop payments from a Crown or departmental bank account in such circumstances.

Trouble is, Brady's inquiry is focused on the three months prior to the election, the same timescale that Henry probed.

He is basically inquiring into a period which took place before the current financial year began on July 1.

Even if Brady comes down with a hardline final report - which in my view he must if he is to retain public confidence in his independence - his ability to require the political parties to pay back any misappropriated funds is minimal.

There is no point issuing a stop-loss against the various political leaders' budgets within the Parliamentary Service when they have already been reimbursed for their spending in a previous financial year.

What he has to do is use moral suasion to persuade the relevant minister that repayment by issuing a stop-loss on the relevant leaders' budgets until the filched funds are retrieved is the only option for a House of honourable members.

Thus Brady's remaining weapon - which he has signalled he might use in a letter to Parliamentary Services boss Joel George - is to direct the relevant minister, who just happens to be Speaker Margaret Wilson, to report to Parliament any expenses that she is responsible for that have been incurred for any purpose that is not lawful or not within the scope of the appropriation, along with a remedial action taken or proposed to correct the breach and prevent its recurrence.

Wilson was a formidable professor of law before she entered Parliament so would appreciate the constitutional dilemma if she fails to take other than a robust approach if Brady presents a strong report.

She is also a longtime Labour loyalist, having served as party president before entering Parliament on Labour's list.

Wilson has already faced fire from the National Party, which questioned her independence in the wake of her refusal to grant their request for a Privileges Inquiry into the Phillip Field affair.

This election funding scandal will be another line in the sand issue.

But for Wilson to act, it requires Brady to issue a final report which gives a clear determination that the parties have misused the funds that Parliament appropriated.

Clark, with her back to the wall, has been trying to obfuscate the issue by maintaining that some $350 million of spending going back many years could be at risk.

That is nonsense. Brady's inquiry is clearly confined to the 2005 election.

His preliminary finding that there have been clear breaches rest not only on an opinion by former Solicitor-General Terence Arnold but also on the clear directions issued by Wilson's predecessor, Jonathan Hunt, in November 2003, which are crystal-clear over where the boundary lies between spending for parliamentary versus election purposes.

Let's be clear about this.

It was Clark's chief of staff Heather Simpson who authorised the use of parliamentary funds to the tune of more than $400,000 out of the leaders' budget to pay for the PM's pledge card and pamphleteering.

Simpson denied to police that the exercise had anything to do with skewing voter support Labour's way. Police found a prima facie case against her but chose to give her the benefit of the doubt and did not press charges.

Labour Party General Secretary Mike Smith, who said he did not authorise the advertising spend, also escaped censure despite admitting to the Chief Electoral Officer that the pledge card should have been counted among Labours official advertising spend before changing his mind.

Acting Deputy Commissioner of police operations Roger Carson, who also knew that Crown Law considered the spending illegal, argued that a proven breach of the Electoral Act in respect of Henry's complaint could ultimately impact on the integrity of last year's election and did nothing.

Clark is now implying that journalists are running the risk of defamation suits for fearlessly probing the issue.

The Auditor-General does not run that risk - he should act.