Disgraced Act MP John Banks will give up his seat in Parliament on Friday but is unlikely to be stripped of the royal honour he received three years ago if he is convicted of an electoral rort, Prime Minister John Key says.

Banks was made a Companion of the New Zealand Order of Merit in the 2011 Queen's Birthday Honours, for services to local body affairs.

In August, he may be convicted after being found guilty last week of knowingly filing a false electoral return during his bid for the Auckland mayoralty in 2010.

That has raised questions about whether he should keep the honour.


Yesterday, Mr Key said he would give some consideration to that - probably after the September election - but offered clues as to what his decision might be.

"I take a very considered and cautious view of that because when we bestow an honour on somebody it's a very significant event and I always want to get a bit of perspective around that. History tells you there are very few honours that have been taken off people. You'll remember the debate we had around Doug Graham."

Mr Key decided late last year that Sir Douglas should keep his knighthood despite the Supreme Court's upholding his conviction for signing off on false statements in the prospectus of failed finance company Lombard while he was on its board.

Mr Key also downplayed the need for a stronger investigative approach to cases of electoral malfeasance.

The John Banks case prompted Labour justice spokesman Andrew Little to call for a high-level independent inquiry into recent police investigations into politically charged cases, and for consideration to be given to establishing a dedicated independent anti-corruption unit.

But the PM said that when a complaint is made against a politician, "in my experience the police are quite thorough in investigating those because they don't want to be criticised that they somehow apply a different standard to members of Parliament than they would to anyone else in the general public ... I don't have evidence to support that they're not following things through."

He downplayed the extent of corruption in New Zealand. "We rank either No 1 or 2 or 3 in the world in terms of being the least corrupt and having the greatest transparency.

"I personally think there's a lot of people that throw around the word corruption in New Zealand and they might do it for political effect for [the media] to report but actually New Zealand in my experience of being here is not corrupt. Our judicial system, our police force our public service and actually our politicians are good, law-abiding, honest people."


Mr Key confirmed Banks' resignation would be effective from Friday. The Act MP sent his letter of resignation to Speaker of the House David Carter yesterday. The Government is likely to put a motion to Parliament next week to avoid an otherwise automatic byelection in Epsom so close to a general election.

The vote will require a 75 per cent majority but Labour has yet to confirm it will support the motion. A spokeswoman said it would decide at its caucus meeting next Tuesday.