www.mccully.co.nz - 20 October 2006

The Mugabe Solution

Robert Mugabe would be proud. Over a year after the 2005 Labour campaign pledge card was launched and a week after the Auditor-General’s damning finding that this was an unlawful use of taxpayers’ cash, everything has been put right. Perfect. Provided you are an adherent of the Robert Mugabe school of constitutional rectitude, that is.

This week, under urgency, the Parliament passed special validating legislation. It is now lawful to spend taxpayers’ cash on the Labour pledge card, where previously it was not. Over $800,000 of unlawful Labour spending in the last election campaign (yes, just the campaign; who knows how much more has occurred outside that period) has been retrospectively validated. And the use of taxpayers’ money to fund the Labour pledge cards in 1999 and 2002 has been validated too.

Any legal requirement for parties to pay the money back has now been extinguished. And the Speaker will only tell the House whether parties have advised her of a commitment to make repayment - not how much actual cash has been received. The Parliamentary Service Commission is not subject to the Official Information Act. So no one will ever know.

Equally important, the Darnton case in the High Court, challenging Helen Clark and her colleagues to repay the pledge card cash has now been overridden by retrospective legislation. And the damaging flow of documents from the case, showing the extent of Clark and Heather Simpson’s complicity has been stemmed. An absolute classic, right from the Robert Mugabe textbook.

Lie of the Century

The key defence run by the Labour Party to the pledge card rort has been the fact that they did the same thing in 1999 and 2002. Commentators, journalists and members of the public have struggled to understand how such a monumental rort could have gone undetected.

So just how did everyone leap to the massively incorrect conclusion that the Labour Party is run by decent, law-abiding individuals who pay their own campaign expenses? Well, the answer is simple. Look at the line at the bottom of Helen Clark’s pledge card brochure in 1999: "This card was paid for and delivered by Labour supporters."

And compare that with this quote from Clark on Close Up last Thursday: "There was never any attempt to hide that this was parliamentary funding." So who do you imagine would have to have the longest nose in New Zealand right now????

The Other Very Long Nose

The other very long nose belongs to Clark’s deputy Michael Cullen. Pretending that there was some time pressure to validate the unlawful expenditure, he moved the urgency motion on Tuesday afternoon. But a brief glance at the officials’ advice makes it clear that nothing of the sort was necessary.

"In this case," the Treasury advice told Cullen, "the only legal remedy for such a breach of S4 of the Public Finance Act 1989 is for these expenses to be validated by an Act of Parliament."

So far, so good. But then: "As a matter of course, unappropriated expenditure occurs every year in a number of votes. The validation of such expenditure is a usual part of the overall budget legislative cycle."

Hang on. So the unlawful pledge card expenditure and other breaches should be dealt with as "a usual part of the overall budget legislative cycle."

"For instance" the Treasury memo continued, " last year’s Financial Review Bill included validation of $309.843 million in relation to the recognition of the forecast liability under the Kyoto Protocol."

So Treasury had not recommended validating legislation under urgency. To the contrary, they had recommended the "validation of such expenditure" as "a usual part of the overall budget cycle," as had been the case with last year’s Financial Review Bill. So who, you may well ask, had actually suggested that the matter should be outside the budget legislative cycle referred to by the Treasury? The answer, you will be surprised to hear, is the other key player in this appalling saga - none other than Madam Speaker.

The Responsible Minister

A key player in the strategy enacted this week has been Margaret Wilson. Not as Speaker. Technically she has been wearing a different hat: as Minister Responsible for the Parliamentary Service.

Under Parliament’s Standing Orders, criticism of the Speaker, Margaret Wilson, is forbidden. All Members are required to respect her position and authority. But there have been many highly colourful and extremely negative statements inside and outside the Chamber about the Minister responsible for the Parliamentary Service this week.

The Minister Responsible for Vote Parliamentary Service was required under the Public Finance Act to respond to the Auditor-General’s report with one of her own. In order to do so she took the extra-ordinary decision to fire Crown Law as advisors to the Parliamentary Service. Crown Law, you see, had already advised the Auditor-General on the issue. But why would that pose a conflict? Surely the Parliamentary Service had an identical interest to that of the A-G: of correctly understanding the law and ensuring that its procedures correctly applied it. Apparently not.

Instead Wilson brought in Jack Hodder from law firm Chapman Tripp. To describe the Hodder opinion as providing an alternative analysis of the law to that of Crown Law would be more than generous. Rather it simply ran interference on the Crown Law opinion. All of which seems to have suited Wilson rather well.

The report to Parliament of the Minister Responsible is a model of sophistry. It ran the Clark/Cullen/Wilson line that Parliament had been ambushed by the Auditor-General: the A-G’s 2005 report "gives no hint of an immediate change to the rules." It merely "expressed concern and counselled caution but did not provide the new interpretation contained in the 2006 report."

All of which is complete garbage. As the Crown Law opinion makes clear, the law has been settled in this area for many years. The A-G has not changed it. The use of public money to pay for the Labour pledge card was always (until this week) unlawful - which is precisely why Labour has worked so hard to hide the fact. What has changed is that the Labour Party has been caught with its grubby mitts in a very large but unlawful taxpayer-funded cookie jar.

But in one other respect, Crown Law had already tendered advice that the Clark/Cullen/Wilson troika would have found most unpalatable. In relation to the Darnton case (in which Clark and her colleagues were being sued for the repayment of the pledge card monies) Crown Law had already advised that "In relation to the payments at issue, the Parliamentary Service had no statutory power of decision." …"the Parliamentary Service only administers the payment of funding entitlements for parliamentary purposes in accordance with the Speakers’ direction; S7(b) of the Parliamentary Service Act. The process for payment of invoices by the Parliamentary Service is that members and parties present invoices for payment once the expense has been incurred. Prior approval from the Parliamentary Service is not sought, and there is no opportunity for the Parliamentary Service to vet spending at any stage prior to payment."

Crown Law further refer to page 1066 of the 2006 Budget Estimates which refer to communications budgets as part of a group of "expenditures incurred on the direct authority of members themselves under rules promulgated by the Speaker."

All of this would have been deeply inconvenient to certain senior members of the Labour Party for two quite important reasons. First, once caught, it was pivotal to Labour’s strategy to be able to argue (as Clark has in Parliament) that the Parliamentary Service officials had "authorised" the use of taxpayers’ money to fund the pledge card. Yet Crown Law had quite clearly stated that no such authorisation could be given, because the Parliamentary Service never had any such function. If Helen Clark and co had spent her Leader’s budget unlawfully then, according to the Crown Law view, they would have to face the consequences themselves rather than hiding behind the skirts of the Parliamentary Service officials. With views like that, these clearly, were not the sort of chaps that Helen Clark and Michael Cullen would have wanted advising Parliamentary Service.

Utu

Second, the Labour Party’s response to the pledge card disaster was summed up neatly and truthfully by a Dover Samuels interjection in this week’s Parliamentary debate "utu" Revenge.

As Michael Cullen sneeringly reminded Parliament this week, Labour MPs, most of who are Ministers, are not dependent upon the Parliamentary Service. They are staffed and funded through Ministerial Services - a part of the Department of Internal Affairs. So, enjoying the protection of Ministerial resourcing themselves, Cullen and co are intent upon putting the blowtorch on Parliamentary Service funding of their opponents at every possible level. This is payback time.

The coming weeks will see an ugly battle played out within the Parliamentary Service Commission as Cullen and co pursue the utu strategy - also a characteristic of the Mugabe regime. That Cullen, Clark and co could be so petty and vindictive comes as absolutely no surprise. Having already assisted the Labour Party’s case by off-loading Crown Law, Wilson will need to be careful. She is responsible to all MPs - not just her Labour colleagues. It won’t take too much provocation to have National MPs saying about the Speaker some of the less charitable things they have said about the Responsible Minister this week.

ENDS

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