KEY POINTS:
National leader John Key will refuse to do a deal with Winston Peters or New Zealand First after the election, even if the Serious Fraud Office clears the suspended Foreign Minister.
Mr Peters is confident the SFO investigation into political donations by the wealthy Vela family and property magnate Sir Robert Jones will vindicate him, but Mr Key said last night that that was only part of a much wider problem for the NZ First leader.
"From National's point of view, we're ruling out working with New Zealand First and Winston Peters."
Asked if that meant he was ruling it out entirely, Mr Key said, "Yes."
If the SFO cleared Mr Peters, it "doesn't matter", Mr Key said.
It also did not matter if Parliament's privileges committee cleared him as well.
"The reality is that Winston Peters faces investigation not only by the SFO, but he also has to pass the test from the parliamentary privileges committee, and then go on and answer all the other many and varied allegations, which I would have thought if any of them are true would also be ruling him out as suitable to hold a [ministerial] warrant," Mr Key said.
"From our point of view," he said, "the appointment of a minister to Cabinet has to be done on the basis that as Prime Minister I can look that person in the eye and have confidence that I can rely on their word.
"In the case of Winston Peters, I'm just not confident I can do that."
Prime Minister Helen Clark last night said Mr Peters would be reinstated to his ministerial portfolios if the SFO cleared him.
Mr Key said that position ignored all the other issues, including the fact that expatriate billionaire Owen Glenn had contradicted Mr Peters' story about a $100,000 donation to a legal fund.
He argued that it was clear Mr Peters had opted to stand down late yesterday because he had failed to present clear answers to the Prime Minister, and he knew he would be sacked if he did not.
The Government's partners in Parliament are confident Mr Peters' standing down will not affect its stability before the election.
Both United Future leader Peter Dunne and Progressives leader Jim Anderton said last night that standing down was the appropriate action for Mr Peters to take.
Mr Anderton said it was a "wise outcome", given other ministers had done the same when they faced inquiries.
