State funding for political parties way to avoid trouble

Labour Party president Mike Williams said his party did not fund any of its last campaign with loans of the sort that have rebounded on British Prime Minister Tony Blair in the "peerages for sale" scandal.

Mr Williams said the British Labour scandal and New Zealand Labour's trouble over the funding of its pledge card pointed to a clear need for state-funding of political parties.

And he said there was no way Labour could easily repay the $446,000 spent on the pledge card if that was what the Auditor General required.

Mr Blair and his wife, Cherie, are due in New Zealand tomorrow afternoon, after a brief visit to Australia to coincide with the end of the Commonwealth Games. They will continue to Indonesia on Wednesday.

Anti-Iraq war demonstrations are being planned for Canberra today when he speaks to the Australian Parliament, and at the Auckland Town Hall tomorrow night where it is believed he will attend a function.

Mr Blair was plunged into a monumental row after admitting he knew that three millionaires he put forward for peerages had given loans to Labour to fund its campaign last year.

Mr Williams made it clear he does not believe the peerage nominations were a coincidence - "yeah right".

New Zealand Labour had not taken loans and would not.

Labour ran two years of surpluses then obtained a $200,000 bank overdraft in election year, secured against its property valued at about $2 million.

And while he thought that what Mr Blair had become involved in was "politically extremely dangerous" he did not believe he had any alternative.

"Across Europe you have state funding of political parties to avoid this thing."

Mr Williams said he and the party organisation strongly supported state-funding of political parties but could not convince their political wing.

"The New Zealand Labour Party has as policy state funding of political parties and we've never managed to get it past our caucus but I suspect that this may cause the British Labour Party to change its attitude."

He also thought the review of election funding should include a look at state-funding of political parties.

Any repayment of the money spent on the pledge card - which the Electoral Commission has said should have counted as an election expense - should come from the leader's budget and not from the party.

"We had nothing to do with that expenditure. In fact it staggered me how much it was."

The Auditor General is continuing to investigate election expenditure and Mr Williams said that if the party were ordered to repay it, it couldn't.

"Not a prayer."

"It's not our money. It comes out of the leader's budget. I think the payback would be if it was ordered deducted from next year [from the leader's Budget].

"The bottom line is the Labour Party could not, at present, pay back that amount. We would have to take loans and dispose of property."

National Party president Judy Kirk said she was not aware of National ever having taken a loan of the sort Mr Blair and British Labour had and would not consider it.