Labour has asked the Auditor-General to consider whether a decision to allow Peter Dunne to keep his entitlements as a party leader after his United Future party was deregistered is in breach of the rules for public funding.
Yesterday, Speaker David Carter ruled Mr Dunne could keep the status and entitlements of a recognised party leader but he would revisit the issue after United Future sorted out its re-registration, which could take up to two months.
That decision sparked outrage from Labour and a walk-out by NZ First MPs in Parliament.
Last week, the Electoral Commission deregistered United Future because it could not guarantee it had the 500 members required, but yesterday, Mr Dunne said he expected to reapply next week.
If Mr Dunne was stripped of his entitlements, he would lose about $122,000 in funding as well as some speaking rights in Parliament and membership on panels such as the business committee.
Labour MP Trevor Mallard said Mr Dunne's party entitlements should be immediately removed as he was effectively an independent MP. After saying Parliament was "a farce" and accusing Mr Carter of "looking after your mates", he walked out of Parliament rather than apologise.
When Mr Carter refused to provide the advice he had received on the matter, NZ First leader Winston Peters led his party out in protest.
Outside Parliament, Mr Mallard said the Speaker was simply trying to protect Mr Dunne because he supported the National Government.
He also questioned whether re-registering United Future would mean those entitlements were automatically restored. Rules stated independents could only be recognised as MPs for a newly registered party if that party had at least six MPs.
Mr Mallard later wrote to the Auditor-General asking whether continued funding for United Future was within the rules for public funding.
Mr Carter said there were clear rules when an MP formed a new party, but there was no precedent or specific rule if a party's registration ended while it was in Parliament.
"The consequences of loss of recognition are significant and I consider I should follow fair and proper process in determining this matter."
Mr Carter said he would ask the standing orders committee to see if a rule change was needed.
Mr Dunne said Mr Mallard and Mr Peters were "just game-playing".