By AUDREY YOUNG political reporter

Two founding political parties of the Alliance, the Democrats and Mana Motuhake, split from their respective umbrella parties at the weekend.

It means that the four parties that formed the Alliance in 1991 have gone full circle and are effectively separate entities again.

Mana Motuhake confirmed its decision to leave the Alliance and will attempt to form a broad-based Maori party before the next election, with advice from Alliance president Matt McCarten.

And the Democrats (formerly Social Credit) voted to leave the Progressive Coalition, formed in April while leader Jim Anderton remained titular parliamentary leader of the Alliance.

Mana Motuhake and the Democrats were among the four founding parties of the Alliance, along with the Greens, which left in 1997, and NewLabour, which merged into the Alliance in 2000. The Democrats elected Stephnie de Ruyter of Invercargill as their leader at the weekend to replace Grant Gillon, who did not seek re-election.

The Democrats also split from the Alliance in April to support Mr Anderton's Progressive Coalition.

The Democrats' two list MPs at the time, Mr Gillon and John Wright, stood under the Progressive Coalition ticket at the July election.

But the party polled 1.7 per cent, enough to return only two MPs: Mr Anderton and former Alliance minister Matt Robson.

The Democrats' conference in Christchurch on Saturday rejected a motion from Mr Gillon to remain part of the Progressive Coalition, despite pleas from the two former MPs and Mr Anderton.

Mr Anderton credited the Democrats, who as part of the Alliance had a role in the last Government, for being involved in many policy achievements such as regional development and Kiwibank.

He said the party now had greater freedom to advocate for itself, and he committed himself to working closer with it, including working for a financial transactions tax.

But the conference voted down the motion 58 per cent to 42 per cent.

Yesterday, Mr Anderton wished the party well but sought to dispel the perception that the Democrats had been the backbone of the Progressive Coalition.

"In the recent election, 93 per cent of the funding raised by the Progressives - over $300,000 in six weeks - came from non-Democrat sources."

And 75 per cent of the 2200 membership had no association with the Democrats.

After the vote, Mr Gillon did not seek re-election as leader.

Party president Peter Kane has resigned as co-chairman of the Progressive Coalition.

He said the party had 1600 members, 500 of whom had dual membership of the Progressive Coalition.

The party planned to stand under its own banner next election.

Mr Kane said there was "a real market internationally for monetary reform and you'd be ludicrous to be subjugating that to a very orthodox [party]".

"Jim [Anderton], for all his values, is actually very traditional in his economic approach."

Mr Kane said the Democrats stood for "reform of what we see as a corrupt economic system, one that fails to serve most people".

"We would like to see a debt-based system replaced with a credit-based system."

But that was just a means to an end - the end being "human fulfilment: systems for people, not people for systems".

Mana Motuhake finalised its separation from the Alliance in Auckland on Saturday, with the blessing of the Alliance's ruling council.

The council has also allowed Mr McCarten to offer advice to a steering committee set up by Mana Motuhake to try to get several other Maori parties under one banner.

Top of the list will be the Mana Maori party to which Tame Iti belongs, and the half-developed Maori party of broadcaster Derek Fox, which stalled when he was given the job of setting up the Maori Television Service.

Mana Motuhake leader and former Alliance MP Willie Jackson said the party also resolved to call itself "Mana Maori Motuhake".

The change signified that "we're back on our own again and not reliant on Pakeha for success".

He did not mind if the name changed again after talks with other parties on a pan-Maori party.