No more secret admirers as Labour strikes back

Political parties could be forced to rip up anonymous cheques as Labour tries to shut down the growing funding of the National Party by trusts.

Proposals to change donation rules are at an early stage of development. Moves to stop money being channelled through trusts could also prevent anonymous donations of the type that Labour itself accepted to the tune of more than $300,000 of last year.

The transparency of donations has been thrust into the political spotlight as Labour fights back over criticism of its use of taxpayer money to fund its 2005 pledge card.

In response to National's calls for Labour to repay $446,000 spent on the card, Labour has attacked the funding of National's election campaign.

National's receipt of $1.74 million worth of donations through trusts was lawful, but Labour is adamant that it will not continue.

Labour also wants to look at wiping out expensive "negative" campaigns by third parties like the one mounted by the Exclusive Brethren last year.

Little is known about trusts which donate large sums of money to the National, apart from the post office box numbers from which they operate.

One, the Waitemata Trust, has been a donor for several years. Last year it gave the party $1.25 million.

Another one, the Ruahine Trust - which operates from the same box number as Waitemata - gave $250,000.

National Party president Judy Kirk told the Weekend Herald that the Waitemata Trust "supports centre-right politics and campaigns" and encourages democracy.

She said she did not know where the money came from that went into the trust or who was behind it.

"We write to them, we ask or request funding for a project and it's up to them whether we get it or not," she said. "I'm not familiar with the trustees. You'd have to contact the trust - I can give you an address but that's all I've got."

National's MPs view Labour's attacks on their party's funding as a diversionary tactic to shift the media's focus away from the pledge card battle.

But it seems that electoral reform has been on Labour's agenda for several months.

Justice Minister Mark Burton wrote in May to the Justice and Electoral Select Committee to discuss a review of electoral laws to cover:

* Advertising expenditure.

* Whether there is a case for more controls on donations.

* Alternative approaches to the funding of parties and candidates.

The letter, released yesterday in the select committee's report about the 2005 election, said the Government aims to introduce an amendment bill early next year if required. Any necessary changes would be in place for the 2008 general election.

The Maori Party and New Zealand First said they had not yet discussed the issue of getting rid of trusts as vehicles for donations, while United Future said it would evaluate any proposals.

Act is known to believe that people should be able to make anonymous donations, while the Greens are strongly in favour of transparency.

National's president said that her party worked within the rules and would continue to do so.

"If they [Labour] want to have a discussion, that's fine - but it remains that you work within the rules," Mrs Kirk said.

Labour president Mike Williams argued it was important to get "full transparency" of political donations.

He said he sometimes received cheques from a lawyer's trust fund accompanied by a letter saying that a client wanted to make a donation.

Currently, that could be accepted as an anonymous donation, but it should not be legal, he said.

Several Labour figures believe added transparency will reduce the amount of cash from the corporate sector - and therefore mean that state funding should be adopted.