John Armstrong: Labour can breathe sigh of relief at investigation

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Very bad news for Winston Peters. But very good news for Labour. The Serious Fraud Office's decision to investigate NZ First's handling of large cash donations made to the party by well-known business figures is a more than timely blessing in disguise for the Prime Minister.

Facing mounting pressure to deal with Peters to stop his multiplying crises tainting Labour by association, Helen Clark now has the perfect excuse to stand him down from his ministerial portfolios without his having any valid reason to complain.

When she talks to Peters today, she can cite the precedent of David Parker, who was temporarily suspended as a minister while being investigated by the registrar of companies in 2006.

The SFO investigation into NZ First makes Parker's case look like small beer. Furthermore, it is now untenable for Peters to remain in such a senior portfolio as Foreign Affairs. He can hardly be New Zealand's face to the world while his party is undergoing a fraud probe.

There will be relief in Labour ranks. Given the increasing political stench coming from the direction of NZ First, Labour could only hold its nose for so long. Thanks to the SFO, it has been given a breather.

Peters should go without prompting, of course. For dignity's sake, Clark will offer him the chance to stand down on his own accord. But Peters' flippant response yesterday to the news of the investigation suggests he may not go willingly.

In that case, Clark will without question have to sack him outright. Any refusal by him to go would be an unacceptable challenge to the Prime Minister's authority.

If sacked, the worst Peters could do to Labour would be pull his party's backing for Government legislation, the most important outstanding measure waiting for passage being the Emissions Trading Bill. But such a spiteful reaction would see NZ First effectively pushing the self-destruct button as far as voters are concerned.

The party has enough on its plate already, especially if the SFO is still carrying out its investigation by the time the election campaign begins.

The Government's stability is not at any real risk. Labour is not facing any formal confidence votes before Parliament rises for the election. It could simply veto any attempt to put such a motion before Parliament.

But to head off such motions being used by opponents to suggest her Government is on its last legs, Clark could cut to the chase by bringing forward her announcement of the election date, though not necessarily the election itself.

Being able to resolve things now means Clark no longer has to worry about the upcoming privileges committee report on the contempt charge against Peters.

Were that to be heavily critical of him, she would have been under even more pressure to dump him. That would have been far messier.

Standing Peters down now effectively puts Labour's relationship with NZ First on hold until after the election. It means Labour can now start putting some much-needed distance between itself and NZ First.

- NZ Herald

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