The regular post-election inquest into the workings of the Local Electoral Act is taking place. The Nicolle fiasco highlights the need for an urgent tightening of the rules on candidate expenditure and the activities of campaign organisations.

The 2001 revisions to the act were heralded as bringing much-needed controls to the activities and expenses of campaigning local politicians, creating a more level playing field.

But inserted into the small print was an escape hatch as wide as Spaghetti Junction. In section 113, on campaign advertising, we read that "a candidate is not responsible for an act committed by an agent without the consent or connivance of the candidate".

It's an out clause that renders worthless any restriction on campaign spending. It also allows the campaign manager to commit a rogue act on his candidate's behalf, then say, "Sorry, sudden rush of blood to the head, candidate knew nothing. I resign".

You'll recall how last September, during the Auckland mayoral campaign, reprints of the National Business Review's hatchet job on candidate Dick Hubbard were distributed to many electors' homes. The distribution continued, although Mr Hubbard issued writs against NBR for defamation.

Herald investigations traced the reprint back to Mayor John Banks' campaign manager, Brian Nicolle. After days of denials, Mr Nicolle admitted that he had "facilitated the distribution" of the document and resigned from the campaign. Mr Banks said he knew nothing.

This paper estimated that $10,000 was spent distributing the anti-Hubbard reprints. No record of this expenditure was listed in Mr Banks' official election expenses return.

A recent letter from Detective Sergeant Andrew Saunders to Mr Hubbard explaining his reasons for dismissing Mr Hubbard's complaints says: "There is no evidence that the funds used for the printing and distribution of the NBR article came from Mr Banks' campaign. As such I would not expect to see such funds listed in the expense return."

I wonder if the detective also noted that the cost of Mr Nicolle's services as campaign manager was also omitted from the return. By my reading of the act, that must mean he provided his labour "free of charge" .

Interviews with Mr Nicolle make play of him not being a wealthy man. Yet we have to accept that he not only worked for the multimillionaire Mr Banks free, but came up with the $10,000 cost of the reprints out of his own pocket. A truly generous man.

Of course, by "facilitating the distribution" of electoral material in support of Mr Banks without Mr Banks' authorisation, Mr Nicolle did risk falling foul of section 135, which punishes those who "wilfully contravene" the section, which says you have to have permission of the candidate to circulate election material.

Detective Saunders lets him off the hook here by deciding "it does not appear he has committed a breach" of that section. He does not explain how this came to him.

Mr Nicolle's new employer, Act leader Rodney Hide, is standing up for Mr Nicolle, claiming the nasty Mr Hubbard is carrying on a personal vendetta.

Mr Hide knows a thing or two about vendettas. He's the master of them, particularly when he's hounding a political foe for just the sort of skulduggery Mr Nicolle has freely admitted to.

Agreed, the $10,000 wouldn't have taken Mr Banks over his $70,000 spending limit - though adding in Mr Nicolle's salary might have. As for the dirty tricks episode involving the reprints, that totally backfired, giving Mr Hubbard's campaign a welcome mid-fight boost. So you could say that rough justice has been served.

But the Nicolle high-jinks have revealed how weak and impotent the laws on campaign spending and behaviour are.

The precedent has been set. There appears to be nothing to stop a campaign manager running amok on his candidate's behalf and as long as the candidate says he was out of the room at the time and knew nothing, no sanctions can be invoked. Not on the candidate at any rate. As for the campaign manager, if summarily convicted for not getting the candidate's authorisation, he or she is liable to a fine not exceeding $1000. Which is no more than the cost of distributing a few leaflets.