Parties may have to repay money spent on election

Labour's pledge card, paid for by Parliament.

Political parties and individual MPs may be forced to repay hundreds of thousands of dollars they spent last election after a legal opinion by the Solicitor-General on election spending that suggests it was unlawful.

For Labour, that could mean finding $446,000, the cost of its pledge card that was billed to Parliament.

It could also mean some National MPs writing out a personal cheque for thousands of dollars for letters sent to constituents during last year's election campaign - for example Katherine Rich's to superannuitants promoting tax cuts.

The opinion also points to a radical shake-up before the next election of the rules around what MPs may and may not spend taxpayers' money on.

If it is incorporated into the final Auditor-General's report on parliamentary spending on advertising and publicity at the election and if it is accepted by the Government, it will establish an easy test for when MPs and parties are breaking the law.

The basic rule at present is that material intended to persuade a voter to vote for a candidate or party in an election should not be funded by Parliament.

Prime Minister Helen Clark has defended taxpayer spending on the pledge card - Labour's key promises - by saying it had been done in previous years without complaint and that most other parties were at it, too.

The Auditor-General is nearing completion of an inquiry into Parliament's funding of election advertising after Speaker Margaret Wilson referred the matter to him last year.

The legal opinion was supplied in April to the Auditor-General's office by former Solicitor-General Terence Arnold, who is now a Court of Appeal judge.

In it, he says Parliament authorises expenditure for "expenses incurred by members of Parliament in their capacity as members".

"The appropriations do not cover activities by members in their capacity as candidates for election."

It said election material was something that was intended to persuade a voter to favour a candidate or party in an election "and it is not necessary for advertising or publicity to expressly solicit a vote for it to fall into this category".

"I consider that the Auditor-General is entitled to take the view that expenses incurred for an electioneering purpose and reimbursed from appropriations [money voted by Parliament] are outside the scope of the appropriations and are accordingly unlawful."

It goes on to say that if the material concerned could be seen as having both a parliamentary purpose and an election purpose, it should be considered election material.

It said a simple "in-out" test would limit opportunities for abuse and provide a clear framework.

The opinion has been sent to every party leader with a letter from Auditor-General Kevin Brady to the general manager of Parliamentary Service, Joel George, complaining strongly about some of the spending he approved last election.

As part of its inquiry, the Auditor-General's office sought from MPs and parties copies of advertising material funded by Parliament in the three months before the election - material which is not supposed to solicit votes.

Mr Brady was concerned that "a number of advertisements and newsletters expressly solicited votes".

"Even where no express soliciting of votes occurred, a large number of communications contained material that can only be described as election platforms and promises."

It would be possible for Parliament to pass legislation giving retrospective authority to expenditure deemed unlawful but National is unlikely to support it, given that it has little to pay back.

National has an unrelated problem, being unable to pay $112,000 in outstanding debt to five media outlets without breaching the spending limits in the Broadcasting Act.

The party was entitled to spend $900,000 on election advertising but spent an additional $112,000, claiming after the election its media agent had not realised the initial figure was GST inclusive.

It is possible, but unlikely, that National would do a deal with Labour to legitimise otherwise unlawful expenditure.

National leader Don Brash said if the inquiry supported the opinion that the pledge card funding was unlawful, Helen Clark must immediately order repayment by the Labour Party.

He said "a small number" of National MPs were in breach of the rules.