Labour 'won't pay back pledge card money'

Labour will not pay back money the Auditor-General decided had been illegally spent because it did not believe it had done anything wrong, Cabinet Minister Pete Hodgson said today.

Mr Hodgson was asked today on National Radio whether Labour would pay back money on election campaign advertising the Auditor-General found to be unlawful.

"No, we won't pay the money back," Mr Hodgson said.

There were two reasons for this, he said. In 2005 its expenditure on the pledge card and been "almost identical" to what it spent in 2002 and 1999. The second reason was that the Auditor-General's judgement had come out after the expenditure was made.

"We had no way of knowing that the rules were going to change after the event," Mr Hodgson said.

National deputy leader Gerry Brownlee said it was astounding the prime minister had left it to Mr Hodgson to tell taxpayers Labour would not be paying back the money it "misspent" on its election pledge card.

National claims a final report by Auditor-General Kevin Brady will find Labour spent more than $800,000 illegally in the run up to last year's election including $446,000 on its pledge card.

National has paid back $10,588 Mr Brady considered was wrongly spent by seven of its MPs, and has accepted his interpretation of the rules.

But Labour has maintained it has obeyed the rules as they were widely understood by all political parties.

Deputy Prime Minister Michael Cullen today told reporters Labour was waiting on the Auditor-General's final report but believed it unlikely Labour would have to pay anything back.

"... we're quite clear that in terms of things like the pledge card our view is absolutely that was within the rules as understood at the time," Dr Cullen said.

"I don't think it's very likely that we're going to end up paying back that money given our view that we're acting within the rules at the time.

The Auditor-General's "re-interpretation" of the rules did not lead Labour to accept the money should be paid back.

"I think the Auditor-General is wrong... What the Auditor-General is saying is he believes the appropriations were not properly made. That may or may not be true, what we're saying is that's not the understanding at the time. That's the key point, it's the issue of good faith at the time which is at issue here," Dr Cullen said.

Questioned by reporters on the issue Mr Hodgson later avoided giving a direct answer to whether Labour would refuse to pay back any money.

"You need to go and talk to the prime minister or the leader of the house about that, but both parties have been talking about validating legislation. That isn't my decision."

Dr Cullen said Treasury would be "very unhappy" if there was not any retrospective legislation validating the expenditure.

Dr Cullen said recent polls showing voters wanted Labour to pay back any money illegally spent were not surprising given the way the issue had been reported.

The public was not so interested that it was looking into the finer details of the issue - for instance, what the rules were around Parliamentary Service funding.

- NZPA