KEY POINTS:
In a major backdown, Labour has said it will pay back thousands of dollars of taxpayers' money misspent at the last election - whatever the outcome of a legal challenge to the spending.
Labour party president Mike Williams this morning issued a statement saying the party would pay the money back.
He earlier told the Herald that his party might reconsider the matter if a New Zealand First attempt to overturn the ruling by the Auditor-General was successful.
That comment is understood to have infuriated Prime Minister Helen Clark.
Auditor-General Kevin Brady last year found $1.17 million was unlawfully spent by political parties before the 2005 election.
Six of Parliament's seven parties offended - Labour by $768,000, New Zealand First $150,400, The Greens $80,900, United Future $63,800, ACT $17,800, National $11,300 and the Maori Party $48.
The Government passed legislation retrospectively to validate the spending.
NZ First strongly rejected Mr Brady's findings and is seeking legal advice about whether or not to repay the cash.
In the NZ Herald Mr Williams said that if NZ First was successful in challenging the Brady report Labour may reassess its position.
However, that is no longer the case.
"The Labour Party has always said that it will refund this money by the end of the financial year and that remains our intention," he said this morning.
"There is no point whatsoever in speculating about the outcome of a court action which has not taken place.
"Such speculation is entirely hypothetical and has no influence over whether Labour intends to refund the money or not.
"We will be refunding it."
- NZPA
