MPs knew rules on spending, says watchdog

Kevin Brady

Auditor-General Kevin Brady says he forewarned political parties last year to be careful with their election spending.

That, he said yesterday, is what could be taken from a report delivered to Parliament in June last year - three months before the September election - and he thought it cleared up any confusion about the rules.

"That was my view, but clearly that wasn't shared [universally]," he said.

A furore has broken out over leaked findings of a new report Mr Brady is preparing, which finds that much of the taxpayer-funded political advertising in the three months before last year's election was unlawful, including Labour's $446,000 pledge card.

In an exclusive interview with the Herald, Mr Brady said:

* He clearly warned MPs to watch their election spending.

* He expected their spending to be appropriate.

* He challenged the Prime Minister's argument that if a problem with unlawful expenditure existed for three months last year, it might have amounted to $350 million over 15 years.

Mr Brady said yesterday his new report on political advertising would stick to the three-month period before the last election.

"I drew a line in the sand when I reported to Parliament in June last year and drew attention to the fact that the election period was critical and they needed to be careful.

"Basically I thought I had given an indication that I would expect behaviour to be appropriate for that period. So that's where I'm drawing the line."

Prime Minister Helen Clark has said that, if a problem with unlawful expenditure existed for three months last year, it might have existed for as long as 15 years, and that retrospective legislation validating up to $350 million of expenditure might be needed.

Mr Brady's comments about his intended warnings challenge that defence.

He said he had investigated parliamentary-funded advertising in the entire financial year ending in June 2005 because he suspected some parties might have spent more earlier in anticipation of an earlier election.

"Nothing came to our attention in that period that caused us concern."

Therefore his report would focus entirely on the three-month pre-election period.

His report last June concluded that there needed to be a wide-ranging review of parliamentary, ministerial and state sector publicity and advertising. But in a chapter specifically on advertising in the pre-election period, it says the rules are clear about not using parliamentary advertising for electioneering purposes.

Mr Brady did not pass judgment yesterday on the merits of proposed retrospective legislation but said it would be inappropriate for him to recommend it in his final report.

"My job is to report what's going on, not to tell them how to fix it. Parliament can do what it likes."

National has repaid the Parliamentary Service about $10,000 of expenditure by MPs identified in the draft report as being unlawful. The Maori Party has said it will do the same with its $53.

But with liabilities estimated to be $800,000 for Labour, $60,000 for Act, and $40,000 for United Future, they and New Zealand First and the Greens have challenged the findings through the Parliamentary Service.

United Future leader Peter Dunne criticised Mr Brady and former Solicitor-General Terence Arnold for not consulting MPs before reaching their views.

Mr Brady said he was consulting MPs at present through the Parliamentary Service. His report had been leaked but that might have happened anyway if he had gone to MPs individually.

He said he was more than happy to hear from individual MPs if that was what they wanted.

But he emphasised that his initial findings about unlawful expenditure were his own and not based on the Solicitor-General's view.

He had sought his opinion because of the issue's significance and "his view was consistent with our view".

Mr Brady said he was not feeling threatened or under pressure by the political argument surrounding his report. He is four years into a seven-year term.

Mr Brady began the present inquiry after a referral from Speaker Margaret Wilson and complaints to his office. He said he had not wanted to begin investigating until a police inquiry into election spending under the Electoral Act was over - an investigation that ended in March with no charges being laid.

Mr Brady was not sure when his final report would be published.