Work starts on poll spending law change

Treasury and Justice officials have already begun looking into ways to retrospectively validate election spending by political parties that was declared unlawful by the Auditor-General, Kevin Brady, Parliament was told yesterday.

And National is producing advice about expenditure given to Labour last year by the former Chief Electoral Officer, David Henry.

Deputy Prime Minister Michael Cullen told Parliament that while the Auditor-General's final report was not yet complete, officials were looking at ways "in which validation might occur."

But he said Parliament regularly passed validating legislation in the annual financial review bill - National had validated $50 million of unlawful tourism spending in one year.

National MP Tony Ryall kept up the pressure on Labour, though with Prime Minister Helen Clark and National leader Don Brash away, the intensity of the attack was lower than the fever pitch the day before.

The Auditor-General found that all parties broke Parliament's own spending rules, though National and the Maori Party had relatively small liabilities and have repaid the funding.

But Labour is thought to have spent $800,000 unlawfully in the three months before last September's election, including $446,000 on its pledge card.

The Government has resisted calls to pay the money back, and has proposed retrospective legislation to cover expenditure of up to $350 million going back 15 years.

Labour's pledge card is thought to be by far the biggest item of expenditure identified by the Auditor-General.

The card was also a subject of interest before the election by Mr Henry because it wasn't properly authorised, he told the party in a letter of September 2.

The Labour Party argued, saying it had been authorised by Helen Clark as legitimate parliamentary spending. Three days before the election, the party offered to include the cost of the card on its election expenses - an offer later withdrawn.

Mr Ryall yesterday mentioned the Henry letters to Labour and suggested the party made the offer to include the cost of the pledge card in its expenses to avoid a negative statement from the Chief Electoral Officer days before the election.

Mr Ryall also produced a file note from the Electoral Office of a meeting this year between Mr Henry and the Acting Deputy Police Commissioner at the time, Roger Carson, shortly after the police announced they would not be prosecuting any parties.

The notes imply that Mr Henry called the meeting because he was unhappy Mr Carson had told the media that there was a general misunderstanding of electoral rules.

"Mr Henry stated that Section 221 [the relevant provision] was clear and that the explanatory booklets for parties and candidates had been discussed in draft with party administrators and set the requirements out clearly.

"[Mr Henry] had obtained Crown Law Office advice before referring the complaints to the police, and Crown Law had confirmed that the law on the point was clear."

Meanwhile, Dr Cullen denied in Parliament that he had intended to "bully" Herald journalists when he issued a statement linking retrospective tax legislation before the House that will benefit the Herald's owners, APN, and the paper's critical stance on a retrospective law to validate election expenditure.

In answers to questions from National finance spokesman John Key, Dr Cullen said the Herald had not yet explained the moral difference between its own tax matter and the stance in an editorial last week which compared Labour's proposed solution with taxpayers who have to repay tax they previously thought they did not have to pay.