Labour MPs tight-lipped on payback discussions

Labour MPs have spent a day discussing their response to the election spending controversy, just a week ahead of the Auditor-General's much anticipated final report about the issue.

The MPs remained tight-lipped about the outcome of their talks, which took place during an all-day caucus meeting at Premier House.

Prime Minister Helen Clark confirmed that MPs were briefed on the issue, but her office said she would not comment on what, if any, decisions were made.

Labour has come under immense political pressure in recent weeks to pay back any taxpayer money that Auditor-General Kevin Brady finds was misspent.

As much as $800,000 of Labour spending is thought to be in dispute, and the Auditor-General's final report is likely to be tabled in Parliament next Tuesday.

Senior minister Phil Goff yesterday hinted that he expects Labour's final amount to be reduced, partly because he successfully argued his own spending was within the rules.

"I guess that leads to a broader concern if a mistake was made in a specific case then mistakes were probably made in a number of cases," Mr Goff said.

While Labour strategist Pete Hodgson has said his party will not repay any money, Helen Clark has notably refrained from making the same statement.

Should the party decide to pay money back, there is some concern within Labour that its ability to fight the next election in 2008 might be harmed.

Among the options thought to have been considered are underspending future parliamentary budgets, or using its property portfolio to help raise money.

Labour has a number of property assets throughout the country which are owned by a society, and documents show that late last year its rules were changed to provide more financial flexibility.

But the leverage available from its property portfolio appears unlikely to be anywhere near enough to meet its potential disputed amount. According to documents, the portfolio is already leveraged, and the party is unlikely to want to raise the amount by much.