Fran O'Sullivan: National yet to face the music on election spend

It's far too early for National to start the drum roll on the longevity of the Labour-led Government. National may be well ahead in some polls but the coup rumours over Don Brash's leadership just will not go away.

John Key's popularity is rising and concerns linger over whether an accident-prone Brash will be able to remain bullet-proof through to the 2008 election.

The "dead cat on the table" as far as National is concerned is not the fact that most New Zealanders still have little understanding of what a Brash-led party stands for, but the fact that it has yet to be brought to account for its own election spending misappropriation.

In effect, it has yet to be hoist by the petard it has fashioned for itself over the $112,500 GST it has (so far) failed to pay several broadcasters on the $900,000 of allocated public funds it was allowed to spend on radio and television advertising during the 2005 election.

National continues to argue that a "misunderstanding" between the party and its advertising booking agency resulted in the agency buying advertising totalling $900,000 excluding GST, instead of $900,000 including GST, as had been allocated by the Electoral Commission.

But that seems difficult to credit, given the commission's clear warnings that the $900,000 allocated to National was GST inclusive and further advice that while the commission's allocations to parties were GST inclusive, broadcasters' ratecards and quotations may not include GST.

These were factors that then National Party general manager Steven Joyce - a former Radioworks executive - should have drawn to the notice of Rainmakers executive Marianne McKenzie, who placed the party's advertising for it. Joyce says he did but couldn't produce any written instructions.

McKenzie says she did not recall receiving any such instruction but that all business she conducts is GST exclusive.

In any event McKenzie submitted regular invoices - with GST attached - which should have made it obvious to any but the most numerically challenged that National's spend was trending ahead of its $900,000 allocation well before October 5, 2005 when it officially discovered the error.

The Electoral Commission threw the matter to the police, which - true to form with their fearless probing of electoral misdeeds - could not attribute any responsibility to either the National Party or Rainmakers and were "not therefore in a position to charge either party". But that does not let National off the hook.

The broadcasters - who must remit any GST on paid advertising schedules to the IRD's coffers - have been waiting for more than a year for their share of the $112,500 owing to them.

National continues to argue that it can't pay them the GST, even from within its own party funds, as political parties are themselves precluded from paying for campaign broadcasting under the Broadcasting Act. It cannot be forced to commit an illegal act simply to satisfy the broadcasters.

Stumping up with the GST would also put the party well over the $900,000 limit, again putting it in breach of the Broadcasting Act and resulting in a possible fine.

Not surprisingly, National has failed to get support from the governing parties for its attempt to get validating legislation passed so that it might pay the GST without facing any further legal consequences.

The governing parties could see no irony in passing validating legislation so that they could pay back the $1 million-plus they raided from the public purse for electoral purposes without being in breach of the Public Finance Act. But put that to one side.

Labour President Mike Williams is smarting badly over the $825,000 of additional fund-raising he must mount to pay back the parliamentary funds the Auditor-General has ruled his party wrongly used for electoral purposes. Williams is flailing about as Labour seeks revenge.

But the argument is quite simple. Misunderstanding or not - and the police report on the issue certainly accepted the party's line at face value - it would seem National really has no option now but to "pay it back" and face the consequences of having to stump up with a fine.

National argues Labour fought an unfair campaign by raiding the public purse to such an extent it was able to boost itself back to power in a close run race.

But the reality is that if National had discovered the GST error before the election it would have been forced to "course correct" and cancel bookings in the final weeks of the campaign to stay within its allocated $900,000 total budget.

Instead it pushed on and effectively received $100,000 worth of radio and television advertising coverage that it wasn't entitled to - the amount that would have been paid as GST if the party had played by the rules. That's the real crux of the matter.

The magnitude is light years away from the $825,000 of additional campaign funds that Labour achieved through its misuse of parliamentary funds.

But if Labour stole the election - as National alleges - National is not without sin.