Hon Dr MICHAEL CULLEN (Minister of Finance) : I move, That the Appropriation (Parliamentary Expenditure Validation) Bill be now read a first time.

Dr Richard Worth: I raise a point of order, Madam Speaker. Would it not be appropriate for us to see this bill?

Madam SPEAKER: That is not a point of order. [Interruption] The bill is on the Table.

Hon Dr MICHAEL CULLEN: Speaking to the point of order, I say that a copy of this bill was made available to National Party members this morning before their caucus.

Gerry Brownlee: The bill was delivered to us halfway through our caucus this morning. One copy was given to me, and another copy was given to Dr Brash. There are only two copies on this side of the Table, and they were brought into the House just as Dr Cullen was about to speak. This debate should not progress until there are sufficient copies on the Table for every member to have an opportunity to read it.

Madam SPEAKER: I understand that copies of the bill are available for members on the Table.

Gerry Brownlee: I seek leave for the House to adjourn for 20 minutes while the bill is distributed.

Madam SPEAKER: Leave is sought. Is there any objection? Yes, there is. [Interruption] Members, please, we will preserve a little bit of respect and decorum.

Hon Dr MICHAEL CULLEN: Of course, when bills are moved for introduction and passing under urgency, they are tabled subsequent to the motion being approved.

This bill does two things. Firstly, it validates expenditure from 1989 to the present day, and, secondly, it provides interim funding definitions to enable the Parliamentary Service to function until the end of 2007, when clause 7 of this bill lapses. The first part of the bill, the validation, is unspecific—

Hon Brian Donnelly: I raise a point of order, Madam Speaker. Given that some sensitivity has been expressed by National Party members about being able to see the bill, some of us in this part of the House would like to actually hear what Dr Cullen has to say. It has become quite clear that the official Opposition is not going to allow that opportunity, at all. I ask that you ensure we do not have a continuation of the barracking that has just started. [Interruption]

The ASSISTANT SPEAKER (Ann Hartley): I am ruling on the point of order, Dr Smith. About five members on the National Party side of the House spoke during the member’s point of order. This is a final warning to those members. Mr Donnelly makes a perfectly valid point. We cannot hear. It is very hard for the parties on the cross benches to hear. I ask the member to show all members some respect.

Hon Dr MICHAEL CULLEN: Madam Speaker—[Interruption] I raise a point of order, Madam Speaker. I have never done this in my career before, but I have the right: I ask to be heard in silence.

The ASSISTANT SPEAKER (Ann Hartley): The member has asked to be heard in silence, and he will be heard in silence. I warn members that the member will be heard in silence. Members have had their warning.

Hon Dr MICHAEL CULLEN: The validation is for expenditure under Vote Parliamentary Service that may have been outside the scope or purpose of an appropriation or other enactment. It is framed as generally and vaguely as that because the import of the Solicitor-General’s opinion, followed by that of the Auditor-General and the Auditor-General’s subsequent report, is that it is impossible to tell what may or may not have been outside the scope of Parliamentary Service expenditure up until the present day. It certainly casts a pall upon a whole range of expenditure around travel and other matters that may have been outside the scope. The Auditor-General did not look at those; he looked only at a 3-month period, and only at the communications vote. Therefore, of course, there is nothing in his report that assists us in terms of determining what else may have been outside the scope, including communications expenditure, before 1 June 2005—expenditure that is exactly the same as expenditure that he has ruled unlawful in the period under review.

Secondly, the bill provides an interim funding definition, because that uncertainty continues to the present day and into the future. It is not clear what the Parliamentary Service can spend money on at the present time. Were, for example, Dr Brash again to seek to travel to another place in the country to sign up a second National Party member for the year, that would probably be outside the scope of the parliamentary appropriation, according to the rulings of the Auditor-General. We should not forget that the Auditor-General did not look at the issue of travel funding.

This issue began, it would now appear, with the Auditor-General’s 2005 report. That report was primarily about ministerial budgets—more precisely, about Government publicity campaigns such as that surrounding the Working for Families package. The report incidentally made some observations and comments around Parliamentary Service funding, but in no part did the Auditor-General state in any shape or form that the then currently understood interpretations of what was legitimate were in fact outside the bounds of what he considered to be legitimate. So no clear warning was given at that point.

The Auditor-General’s report last week, and the previous Solicitor-General’s legal opinion, took that matter somewhat further. As for the Auditor-General’s 2005 report, as I said, the content was limited in some respects; the non-content, in our view, remains very significant. The Solicitor-General’s opinion in April this year took a very narrow view of what was in, in terms of parliamentary purposes, and I think it is worth reminding ourselves of the Jack Hodder opinion, which states: “A fundamental feature of the context is that the potential scope of the work of the House of Representatives relating to legislation on public expenditure, and of the parties represented in the House, is almost unlimited. However, that scope is the field of contestable policy proposals and decisions, and of legitimate political dialogue between MPs and the electorate. The competition between parliamentary parties includes a continual contest for future electoral support.” I can only say “Hear, hear!” to that; that is what we call democracy. But taking a narrow view of what is in, as the Solicitor-General and the Auditor-General did, then having a brightline test, leaves a huge amount of uncertainty about what is, in fact, legitimate. That was comprehensively challenged, as I said, in the Hodder opinion, and in the Speaker’s report to the House.

Furthermore, the Auditor-General’s report last week provides no clear guidance at all to the House as to what, in the current parliamentary appropriations, is legitimate spending. Wittingly or unwittingly, the report ended up being partial in that respect, both because it covers only a very limited time period, from 1 June 2005 to the election, and because it covers only certain appropriations—that is, communications expenditure.

It is clear that legislation is the only way to remedy the issue of unlawfulness, and that is unaffected by the refunding of money. The passage of this bill does not, at this point, change at all whether a party should or should not refund money to the Parliamentary Service. The refunding of the money does not affect in any way the unlawfulness of the original expenditure. The National Party argument seems to be that it prefers to remain with its expenditure being unlawful. Indeed, it is in the peculiar position of arguing—it is the only party in the House arguing this—that it knew that the rules had changed but it broke them nevertheless, and has now chosen to refund the money. And Katherine Rich seems to be the sort of fall person, in that respect.

The real problem is that nothing is solved, in terms of the current conundrum, by the Auditor-General’s position. There is no clear guidance in the report, as I have said, and the bill therefore provides a narrow definition of what is out, and a brightline test from there. What is out, in terms of communications, is seeking support for the election of a particular person or persons, seeking support for a party vote for particular parties, encouraging any person to become a member of a particular party or parties, and soliciting subscriptions or other forms of financial support. That probably reflects a pretty fair summary of where the vast majority of parliamentarians believed the rules were, up until the Auditor-General’s report. It is a narrow definition, and then there is a brightline test; what is beyond that is, therefore, legitimate expenditure. Therefore, Dr Brash will not have to refund the expenses of his travel to Nelson to sign up Ian Ewen-Street as a member of the National Party.

Gerry Brownlee: I raise a point of order, Madam Speaker. Those references that Dr Cullen is wishing to pepper his speech with are, in fact, of themselves out of order. Dr Cullen has asked that the House give him the respect of being heard in silence. You have said that that is his right. We are not able, actually, to find anywhere in Speakers’ rulings or the Standing Orders that that is something speakers can ask for; nonetheless, we respect his desire to get his message across. But we are not prepared to sit here and hear him make personal reflections on members on this side of the House without your intervention—without your calling him to account. There have been three occasions now. I am loath to take a point of order during the Minister’s speech—it is the opening speech on a bill—but, Madam Assistant Speaker, you do have a duty, if you are preserving Dr Cullen’s right to be heard, to ensure that our right not to be impugned in any way is also treated with some respect from the Chair.

Hon Dr MICHAEL CULLEN: Speaking to the point of order, I was not impugning Dr Brash, at all. The point I was making was that, in my view, what Dr Brash did was a perfectly legitimate action. But that legitimate action is cast into doubt by the Auditor-General’s ruling. What this bill does is make clear that what Dr Brash did was legitimate. So if the member thinks there was a personal reflection, I am happy to withdraw and apologise for that. But let me assure him that there was no personal reflection in that comment.

The ASSISTANT SPEAKER (Ann Hartley): Perhaps, from the point of view of clarifying the issue, if the member would like to withdraw and apologise.

Hon Dr MICHAEL CULLEN: I withdraw and apologise, to the extent that it appeared to be a personal reflection.

The ASSISTANT SPEAKER (Ann Hartley): Yes.

Hon Trevor Mallard: Point of order—

The ASSISTANT SPEAKER (Ann Hartley): No, please, I want to make two points. First of all, to the member—[Interruption]

The ASSISTANT SPEAKER (Ann Hartley): That member will leave the Chamber now. I was in the middle of giving a ruling. That was extremely bad manners.

• Phil Heatley withdrew from the Chamber.

The ASSISTANT SPEAKER (Ann Hartley): The point I was making to Mr Brownlee was that under Speaker’s ruling 57/2, any member is entitled to be heard without interruption.

Hon Trevor Mallard: I raise a point of order, Madam Speaker. I think it is important. A member—I am sorry I do not know the member’s name, but the one next to Mr Bennett—called out twice during Dr Cullen’s speaking to the point of order. I think she should be disciplined, because you did say that people were on a final warning.

The ASSISTANT SPEAKER (Ann Hartley): I ask the member whether she called out.

Paula Bennett: I am sorry, Madam Assistant Speaker, but I am desperately trying to find, in the Standing Orders—that is what I was actually doing; I have not been calling out.

The ASSISTANT SPEAKER (Ann Hartley): Please be seated. I ask the member to stand and just answer my question: did the member call out during that point of order?

Paula Bennett: I am sorry, Madam Assistant Speaker. I am not trying to be smart; I am just trying to work out which point of—

The ASSISTANT SPEAKER (Ann Hartley): Did the member call out during—[Interruption]—just a minute; just answer the question. We have been hearing points of order, and they will be heard in silence. Did the member call out during the point of order?

Paula Bennett: Yes. Yes. I am not sure, to be honest with you.

The ASSISTANT SPEAKER (Ann Hartley): The member will leave the Chamber. [Interruption] Just wait, please. I will wait until the member leaves the Chamber.

• Paula Bennett withdrew from the Chamber.

Gerry Brownlee: I raise a point of order, Madam Speaker. None of the Speakers’ rulings or the Standing Orders work if members of Parliament are not prepared to respect them. The Chair has no authority other than the authority that comes from the respect members of Parliament are prepared to give the Chair. You have taken a pre-emptive strike—and I use those words very deliberately—on our side of the House this afternoon, when two members were provoked, quite unreasonably, by the very member who stood up to complain about them just a few minutes ago and who is well known for his loud and smart mouth in this House.

Madam Assistant Speaker, I want to explain to you that the decorum in the House from this point is extremely tenuous. We are not prepared to be treated in a manner that is any different from the Government. Our observation at the moment is that that is exactly what has just happened in the last couple of minutes, particularly in respect of the last incident where one of the loudest people through points of order—during my own point of order, for example—was the very person who appealed to you and whose appeal you accepted by throwing one of our members out of the House. That is not a good way to progress.

I want to point out to you also, Madam Assistant Speaker, that when you call on Speaker’s ruling 57/2—which states: “Strictly speaking, a member is entitled to be heard without interruption, but with the tacit consent of the House the rule has been relaxed in favour of members asking reasonable questions.”—you should remember that we are part of the House; it does not belong exclusively to the Government. Anybody who is witnessing the sort of legislation we are getting pushed through today, who has witnessed the activities of the last couple of days, and who is witnessing the very partial position taken by Parliamentary Service could well believe that the Government thinks that this is just some sort of a rubber-stamping exercise for dictatorial powers. But it is not, and it is your job, Madam Assistant Speaker, to ensure it is not seen to be that. We expect fair treatment and we expect you now to turn to Mr Mallard and deal with him as you have two of our members.

Hon Dr MICHAEL CULLEN: I just want to draw it to your attention that Dr Nick Smith has yet to leave the Chamber, having been ordered to do so—

The ASSISTANT SPEAKER (Ann Hartley): No, it was not him; it was another member.

Hon Dr MICHAEL CULLEN: Was he not ordered to go?

The ASSISTANT SPEAKER (Ann Hartley): No.

Hon Dr MICHAEL CULLEN: In that case—and I think he thought he was ordered to, for a moment—I make a point about being heard in silence. I know that that is done relatively rarely recently. In fact, it is a very longstanding principle of this House that members have the right to ask that, and it applies to any member of the House. If Dr Brash, in responding, wishes to be heard in silence, then he also can make that request.

The ASSISTANT SPEAKER (Ann Hartley): Thank you—

Gerry Brownlee: It’s not the issue.

The ASSISTANT SPEAKER (Ann Hartley): It is the issue, Mr Brownlee, and it is what I ruled on. I also tell the member that a warning was given. Several interruptions occurred prior to Ms Bennett’s interruption. There was not an interruption from the Hon Trevor Mallard. He was entitled to raise the point of order he raised. I ask Dr Michael Cullen to continue.

Hon Dr MICHAEL CULLEN: Can I make the point—

Hon Murray McCully: I raise a point of order, Madam Speaker.

The ASSISTANT SPEAKER (Ann Hartley): I just warn the member that I have dealt with the point of order to date, so I presume he is raising a new point of order.

Hon Murray McCully: I am, Madam Assistant Speaker. I heard you direct the Minister of Finance to withdraw and apologise after offence was taken on this side. That should have taken place without any qualification. Dr Cullen sought to make that withdrawal and apology with qualification. I now ask that you require him to withdraw and apologise in the terms required by the Standing Orders.

The ASSISTANT SPEAKER (Ann Hartley): He did withdraw and apologise the second time without any qualification. He did that the second time.

Hon Dr Nick Smith: I raise a point of order, Madam Speaker. Are we to take from your ruling in respect of the request by the Minister of Finance for silence on this very contentious bill that any interjection will result in a member being ejected from the House? The reason that that is important is that Dr Cullen has repeatedly claimed that the Leader of the Opposition, Dr Brash, specially travelled to Nelson to—

The ASSISTANT SPEAKER (Ann Hartley): The member will be seated. I have dealt with that point of order. The member has withdrawn and apologised for that. The point of order has been dealt with.

Hon Maurice Williamson: I raise a point of order, Madam Speaker.

The ASSISTANT SPEAKER (Ann Hartley): I presume it is a new point of order.

Hon Maurice Williamson: It is a very new one, as of this minute. I have been in this Parliament a long time, and one of the traditions I have been very keen to follow and observe is that whenever Speakers were making a ruling or discussing a point of order, they would always be on their feet. In fact, it was important that any member of this House had to resume his or her seat whilst the Speaker did that. I want to make a plea on behalf of my colleague Phil Heatley, because, Madam Assistant Speaker, you did not rise to your feet on a number of occasions. Rather, you sat while you made a ruling. I did not realise you were even involved in making a ruling when I looked up. On a couple of occasions since then you have stood up to so do, but you were not on your feet when you were dealing with Phil Heatley’s interjection.

Going back a number of Speakers, I see Sir Robin Gray here in the House. He will know that he used to get to his feet all the time and deal to people like me when we were being badly behaved. I suggest, on behalf of Phil Heatley, that because the sign was not there that you at least allow him to come back into the House and make sure that he then behaves himself according to the principle that when you are on your feet we remain silent.

The ASSISTANT SPEAKER (Ann Hartley): I take the member’s point and also note that although Speakers often stand when they are giving a ruling, they often remain seated too. I also make the point on the ruling I gave in respect of Mr Heatley. I had very clearly said I will address the ruling.

Hon Dr MICHAEL CULLEN: I make the point now more theoretically and assisted by the intervention from Dr Smith. Let us suppose a member of Parliament travels somewhere and has a range of business at that place. Amongst that business he or she may sign up a member for his or her political party. The import of the Auditor-General’s opinion, and the brightline test that is imposed there, is that the entire expenditure is out of being legal. [Interruption] I am afraid that that is not rubbish. The member should read the Solicitor-General’s opinion again. Mr McCully is nodding his head. He actually agrees with me. He understands the point being made.

The Solicitor-General’s opinion quite clearly is that if something is outside then that renders the entire vote activity—the expenditure that that involves—outside the appropriation. The member really has to read those reports very carefully, because if he does not he will not understand how important it is to actually carry forward the second part of this bill, which is to clarify the current spending rules. And might I say to the House that the Government, if it were self-interested, would not bother to do that part, because half the Government is covered by Vote Ministerial Services in that respect, not Vote Parliamentary Service, and that would give us an undue weighting and advantage in that respect.

However, in carrying forward that interpretation—in setting out that narrow interpretation—there is a sunset clause: it will expire at the end of next year. That is done because we have to respond to the need for a broader review of the rules. Another independent report is being done by John Goulter and Adrienne von Tunzlemann, which may have implications for the structure of Parliamentary Service votes. There are issues that will almost certainly lead us into the legislation around the Parliamentary Service in terms of the apparent responsibility of the Speaker for expenditure incurred by a political party with which the Speaker is not in the least connected. I think that in itself places the Speaker in an impossible position.

This House, and the parties in this House, must move on from these issues to actually address those issues over the coming few months so they can be clarified before we enter upon another election cycle in 2008. That is why the sunset clause is both long enough to enable the review to be done but short enough to make it clear that it does not go into the 2008 election year.

This is not a difficult bill; it is a bill that requires some degree of detailed application in order for it to be understood clearly and to make sure that people understand the actual surrounding issues. I am sure that most of the debate will have absolutely nothing to do with the actual contents of the bill, but then that is not unusual, unfortunately, for debates in this House these days.

Hon MAURICE WILLIAMSON (National—Pakuranga) : I raise a point of order, Madam Speaker. I am sorry to carry on with the point of order I raised before, but I ask you to look at Standing Order 80(2). Under the heading “Maintenance of Order”, that Standing Order states: “Whenever the Speaker rises during a sitting, members must sit down and be silent so that the Speaker can be heard without interruption.” Now I think that is a very clear Standing Order in our book—that is, when the Speaker rises to his or her feet, members must sit and remain silent. When my colleague Phil Heatley interjected you were not on your feet, Madam Speaker, and therefore I make the plea again—because Mr Heatley could easily not have realised you were in the process of standing—that he be allowed back in the Chamber.

The ASSISTANT SPEAKER (Ann Hartley): The point that I made stands exactly as I said. The ruling certainly does not state that the Speaker has to stand at every point. But I take the points that Mr Brownlee made, and I say both those members can come back at 4 o’clock.

Dr DON BRASH (Leader of the Opposition) : This House has rarely seen more cynical and self-serving legislation. If this bill passes in its present form, there will be no legal obligation on any political party to pay back the money that was stolen from taxpayers—none at all. Let me say that again: if this bill passes in its present form—

Hon Trevor Mallard: I raise a point of order, Madam Speaker. On behalf of Katherine Rich and other National Party members, as well as other members of the House who have stayed within the old rulings of the commission and accidentally stepped outside authorised expenditure, I object to being called a thief.

The ASSISTANT SPEAKER (Ann Hartley): Again, members were calling out during that point of order. Members know there should be silence during a point of order. I thought that comment was part of the debate. The member has taken a personal reflection at being called a thief—is that correct?

Hon Trevor Mallard: I have taken a personal reflection at the member saying that the money was stolen. I am one of the members who made an error by taking the rules as they had always been and as they were confirmed to me by the Auditor-General. He subsequently changed his mind. The money was not stolen, and I say that on my behalf and on behalf of Katherine Rich, who did exactly the same thing as I did.

The ASSISTANT SPEAKER (Ann Hartley): The member is not making a direct accusation to the member or to a party, which the member cannot do—he cannot use those words. But that is not really what he did.

Katherine Rich: I raise a point of order, Madam Speaker. Mr Mallard’s interest in my well-being is rather touching, but I am a bit unaware as to why he keeps including me in the debate. That member knows he is not able to seek leave on behalf of other members. He is a member who has been in this House for a long time, so I would have thought that he would be aware of that. I take offence at being continually included in the debate when there is no reason for that.

The ASSISTANT SPEAKER (Ann Hartley): Again, that is not a point of order, because of the non-direct reference. I have ruled that no direct reference was made to a member. Is Katherine Rich taking direct offence?

Katherine Rich: Yes, I am taking direct offence at inclusion.

The ASSISTANT SPEAKER (Ann Hartley): The member has taken direct offence. Would the member please withdraw and apologise.

Hon Trevor Mallard: I withdraw and apologise.

Hon Murray McCully: I raise a point of order, Madam Speaker. I apologise to my colleague Dr Brash for interrupting his speech. You have just given a couple of rulings, Madam Assistant Speaker, and I just draw your attention to the fact that again you have given those rulings while being seated. If you do that it will make things quite difficult for us this afternoon, during what is going to be quite a robust debate. If you want to retain order in the House, I urge you to obey the Standing Order and stand when you want to make a ruling.

Hon Trevor Mallard: If one reads the Standing Order carefully, one sees there is no requirement on the Speaker to stand. What it does make clear is that when the Speaker stands, everyone else is to be quiet. There is no requirement for you to stand. Over the years some Speakers have stood all the time, some have stood some of the time, and, frankly, in the case of some people one cannot tell the difference.

The ASSISTANT SPEAKER (Ann Hartley): The member is quite right. I tell the Hon Maurice Williamson that I gave exactly that ruling quite a while ago.

Dr DON BRASH: If this bill passes in its present form, there will be no legal obligation at all on any political party to pay back the money that it has, in deference to the sensitivities of Mr Mallard, misappropriated. For that reason, primarily, the National Party will be voting against this legislation.

The ASSISTANT SPEAKER (Ann Hartley): The member cannot make a direct allegation against a member about misappropriation. I said before that the member had not made such an allegation, but this time he clearly has.

Gerry Brownlee: I raise a point of order, Madam Speaker. What Dr Brash said was, effectively, “in deference to the sensitivities of Mr Mallard”, and he referred to the money having been misappropriated. If it helps you, Madam Assistant Speaker, I will table the Auditor-General’s report, which talks about the money having been misappropriated. That is not an aspersion against the Minister; it is a fact. It is the only reason that we are here to discuss this bill today. To say that we cannot mention that has to be absurd.

The ASSISTANT SPEAKER (Ann Hartley): That is not what I said at all. I said: “when it is made against an individual member.” The member cannot say that about an individual member. He can certainly say that in the context of the debate.

Gerry Brownlee: I raise a point of order, Madam Speaker. He did not say it about an individual member. He said, “in deference to the sensitivities of Mr Mallard”; he did not accuse Mr Mallard of misappropriating funds. The fact is that the Auditor-General’s report talks about the Labour Party having misappropriated funds. If Mr Mallard wants to say that by virtue of his membership of the Labour Party he is affected, well, that is only a matter of fact, surely. If he is also offended by the fact that the Auditor-General did put that in the report then, I guess, that is the reason why the Government has brought in the legislation—to tell the Auditor-General he is just a plonker, and to go away because the Government does not want to know about him.

The ASSISTANT SPEAKER (Ann Hartley): I take the point, Mr Brownlee. I would just remind members that they cannot make accusations against individual members.

Dr DON BRASH: I repeat: we will be opposing this legislation because in its present form it imposes no legal obligation on any political party to pay back the money that has been misappropriated. We will be moving amendments to make the passage of the bill conditional upon every political party repaying the money that has been misappropriated.

The Labour Party has been trying to avoid this issue for over a year. I came across a press statement issued by my colleague Simon Power on 5 September 2005—

Hon Member: Before the election?

Dr DON BRASH: —before the election last year, in which he drew attention to the fact that the pledge card issued by the Labour Party bore the parliamentary crest. And he asked whether that could mean it was funded from taxpayers’ money. Of course, we now know that it was. When Simon Power raised that question at that time, he was quietly ignored by the Labour Party. But we know that 3 or 4 days before that, the Chief Electoral Officer had warned Mike Smith of the Labour Party by phone that the pledge card was an election expense. On 2 September last year—3 days before my colleague discovered it—the Labour Party received that advice in writing. Initially, Labour Party members accepted that the pledge card was an election expense and then, of course, they changed their minds—just after the election.

At the beginning of this parliamentary year, I drew attention to the fact that $446,000 spent by the Labour Party on its pledge card was almost certainly an improper use of taxpayers’ money. Then, a few months back, we had the draft of the Auditor-General’s report. At that point, neither I nor anyone on the Opposition side of the House knew precisely what the Labour Party’s obligation was in that draft report—we did not have it. But we knew, from the criteria listed in the document that we had, that the pledge card, at least, would have been caught by the Auditor-General’s ruling.

So what happened? Well, the Labour Party started to make excuses. It said the rules had changed. The Auditor-General said no, they had not changed. The Labour Party said the rules were unclear. The Auditor-General said no, they were not unclear. The Labour Party said everybody had been doing it since 1989, and $350 million was at stake here. Helen Clark told people to move on, because it was a beltway issue and nobody cared about it outside Wellington. Then Mike Williams, the president of the Labour Party, said the party had made such expenditure in 2002 and 1999, so it was OK. The situation is worse than that. Not only was that an admission that because Labour had sinned before, it thought it could sin again without penalty, but we now know that in 1999 the pledge card did not carry the parliamentary crest and was published with material saying it was proudly supported by members of the Labour Party. That raises some very serious questions about whether the public and Parliament were misled about where the money came from.

Now we have a bill that validates what has been done, so there is no legal obligation at all on political parties to pay back the money that has been misappropriated. Helen Clark says that Labour will pay it back, but we know that sometimes Helen Clark makes “commitments” that she has no intention of actually honouring. I think back to when she first became the Prime Minister. She said her objective was to get New Zealand into the top half of the OECD within 10 years. Well, 6 or 7 years on, she is hoping we have all forgotten about that, because, of course, she has not a dog’s chance of actually achieving that objective. When she talks about getting this money paid as a target for this financial year, is that a target or a commitment? Why will she pay anything back after the law has been changed in order to make what is currently illegal, legal?

Not only is that the case but this bill, at clause 7, proposes a new definition of “funding entitlements for parliamentary purposes” that would clearly allow the Labour Party pledge cards to be OK. In order to be counted as electioneering, material has to explicitly ask for a vote, explicitly ask for membership of a party, or explicitly ask for money. Under that definition of electioneering, the pledge card would be legal.

We should also, however, note that even if this cynical and self-serving bill passes in its present form, it does not get Labour off the hook for having breached section 214B of the Electoral Act. That section makes it a corrupt practice to knowingly spend above the legal limit. We know that is exactly what the Labour Party did. It had a limit of $2.38 million; we know it spent at least $2.8 million. It was warned by the Chief Electoral Officer that it was at risk of doing that. Even the Labour Party’s own auditors said that if the pledge card was electioneering expenditure, then the Labour Party had breached the cap. I think of what happened to my poor friend Bob Clarkson. He was taken to court by a Minister in this Government who thought he might have overspent slightly the $20,000 electoral limit. Bob would have forfeited his election to the seat of Tauranga had he been found to be guilty. He was not guilty—the court found he was not guilty. The Chief Electoral Officer, the Electoral Commission, the Auditor-General, and the Solicitor-General all accept that Labour spent more than its legal entitlement in the 2005 election, and nothing in this bill will change that fact.

Passing this bill into law will remove any legal obligation that political parties may have to pay back the money that they owe. The National Party has paid back the small amount of money that was inadvertently used by a small number of my colleagues. ACT has paid back the money that it inadvertently used too, and I congratulate the party on that. The Māori Party has paid back the money that it inadvertently spent. The Progressive party did not spend outside the terms of the rules at all. Why? Because Matt Robson said the rules were entirely clear. Let me congratulate the Progressive party, the ACT party, and the Māori Party. We had very careful people running our money, and I call on the Labour Party and the other parties that have not yet paid back the money they owe to pay it back, and to pay it back now.

The Labour Party stole the last election by the slimmest of margins, by breaking not one law but two laws. The very least it can do is to pay back the money that was misappropriated, and to pay it back now.

Hon STEVE MAHAREY (Minister of Education) : The Leader of the Opposition made, I think, four points. Before I move on to rehearse a bit of the history of the Appropriation (Parliamentary Expenditure Validation) Bill that is before us today, in the spirit of sound debate I thought I would answer each of those four points, if I am able to.

In the first point the member argued that there was no obligation to pay back this money. Of course, he is right. There is no legal obligation for reimbursement of this money. But the Labour Party has made it absolutely and unequivocally clear that now we are in the position of having in front of us the reports of both the Auditor-General and the Minister responsible for this, we will be refunding the money. So I say to the member that that is the first point.

In the second point the member asked why Labour has been not responding in this way for some months. The reason was we have not had the Auditor-General’s report until now. We have not had the response from the Minister responsible for this funding until now. The member himself is debating this point now because we have those reports now. Even the member himself, and the other parties that he has quoted as paying that money, paid that money prior to receiving those reports. They now, in a post hoc way, have to be sure that they are paying back what they now regard as the appropriate amount of money on the basis of those reports. In other words, most of this debate has taken place because of a leaked report. The real debate takes place now because we have the actual reports—the final report and the response from the Minister responsible.

The third point he made was that perhaps we need to look at commitments being carried out. I do not want to get into a silly argy-bargy back and forth across the House, I simply say to the member that the reason he is sitting in an MMP Parliament of this construction is that politics had become so bankrupt, following Governments that preceded both himself and myself, it led to people saying that people do not carry out commitments—compared with the last 7 years, when this Government has restored the notion of politics being about carrying out commitments.

Fourthly, the member said that the Labour Party’s knowingly spending money had led to a situation where it has now been required to pay it back. I do not think anybody in the House, including the few members on his side who spent money during this time—I will vouch for them as well as everybody else—spent the money knowingly. The only people who appear to have done that, I am sorry to say, are those who did so in relation to the GST issue that applies to broadcasting. It beggars belief to think that someone who sat on the GST committee, and who understood exactly what GST was, did not understand that GST applied to broadcasting spending. That is knowingly spending the money, and that is why the member’s party should pay the $115,000 back. That is the one bit of knowingly spending money that really does need to be put to bed. The $115,000 that was knowingly overspent on broadcasting is obviously something the member should have, would have, and could have known should be paid back. So the $115,000 that we are constantly told is sitting in a bank vault somewhere should be paid back. The money should be paid back so that the member can move on.

Hon Dr Nick Smith: The member who is speaking has raised the issue of the GST refund. My colleague and National leader, Dr Don Brash, has often sought leave to introduce the bill in his name. To see whether Mr Maharey’s just-stated comments are in fact true to his word, I again seek the leave of the House for Dr Brash’s bill in the ballot to be introduced, to lie upon the table, and to receive its first reading forthwith.

The ASSISTANT SPEAKER (Ann Hartley): The member has sought leave for that bill. Is there any objection? There is.

Hon STEVE MAHAREY: I say to Dr Smith that there is absolutely no impediment in the way of the National Party paying that money back today. National members should put the cheque on the table today. There is no impediment at all to their paying it back. If they are so eager, if the money is there, they should write the cheque and pay it today.

Let me go back to the bill itself and rehearse the story so far. This is how it goes. The Auditor-General reviewed advertising expenditure for the 3 months before the last election. What he did during that time was to broaden what we understood to be money being spent for parliamentary purposes. The Auditor-General I think, from all of our points of view, has applied a definition of parliamentary purposes that is different from what has been used by people for a large number of years. What that means is that although he focused only on the 3 months prior to the last election, the implications of the ruling by the Auditor-General go back to 1 July 1989 when the rules were changed. Also, just because the Auditor-General focused on advertising, it should not lead us away from the fact that the way in which he has interpreted advertising’s purpose has raised implications for all of the spending by members of this House under that parliamentary rubric.

So two points have been raised by the Auditor-General that we need to look at. One is the broadening of the “parliamentary purposes” definition—the range of spending that people in the House are involved in. As a result, it is important for us to have a look at how we operate in the House. From the point of view of the Auditor-General, we have not been operating properly. Therefore, the rules need to be changed.

An important point is what we do with all of this. How do we deal with the fact that he is effectively saying there are unappropriated expenses here? Effectively, what he is saying means that expenses incurred outside the appropriation are in breach of section 4 of the Public Finance Act. According to the Auditor-General, such a breach, when it occurs, is illegal, notwithstanding any repayment of the money—that does not sweep away that fact. So we are put in the position that no matter what members might do to put it right—a National Party member, a Māori Party member, or whoever, who is putting it right by deciding to refund the money—we will still be outside the Act. So the only legal remedy for such a breach of section 4 of the Public Finance Act is for those expenses to be validated by an Act of Parliament. Without that validating legislation, no matter what people do, it will remain an unlawful situation. Is this unusual? No, it is not. Unappropriated expenditure is something that has been validated before. For instance, last year the financial review bill included validation of $310 million relating to forecast liability under the Kyoto Protocol.

Now what happens after that in respect of the situation with the Auditor-General and the situation in terms of the law; what happens next? This is what happens next. The report goes to the Minister responsible for that expenditure. That Minister makes a response because, in this case, the Auditor-General asked for a response. The response from the Minister responsible stated, among other things, that “in accordance with section 26C of the Public Finance Act 1989, the unlawful breaches of the seven party appropriations should be validated by legislation, and that legislation should be introduced as soon as is practicable.” The Minister said that the validations should not await the normal annual validation process.

The report of the Controller and Auditor-General and the report of the Minister responsible for the vote said, of course, that what we might want to do—and the Minister has confirmed that she will—is go for an external review of our institutions to have a look at what we do in the future. So we have validating legislation and we will have an external review to see where we go from here. One of the things we need to do, of course, is to look in particular at what “parliamentary purposes” will actually mean in the future. All of us are in a situation right now where we may well be spending money in a way that is outside this new understanding from the Auditor-General. So in the interim we need to make sure we are OK, and that is why this legislation finishes in 2007—it is an interim measure. I reiterate the point I made before that there was no requirement to reimburse, from what the Auditor-General and the Minister said, but we have made it very clear that we will do it.

This bill does three things. First, it validates past expenses that may have been outside the scope of appropriations in Vote Parliamentary Service from 1 July 1989 until the bill comes into force. Secondly, it validates any associated breach of a range of validated Acts, such as the Civil List Act 1979. Thirdly, it provides an interim solution for the period through to 31 December 2007, following which the work that we will do between now and then will set the scene for the future.

That is the nature of the game here today. We are in a situation where nobody here has intentionally spent money, except in relation to the GST. We have had the Auditor-General’s report, which has changed the rules of the game. We have had the Minister’s response for Parliament to consider, and the result of that has been for us to have validating legislation and a working party to look at what we will do post - December 2007. That is the situation we are in.

Hon Dr Nick Smith: You are corrupt cheats.

Hon STEVE MAHAREY: I say to Dr Smith that we are in the same situation as members in his party. This legislation is absolutely necessary, but if the member is extremely excited about what he is doing today, I ask whether we can have a cheque for the GST before the end of the day.

GERRY BROWNLEE (Deputy Leader—National) : The explanation from Mr Maharey was an utter disgrace. I ask simply these questions: what definition do we give to the word “thief”; what definition do we give to the word “cheat”; and what do we call a group of people who deliberately take something that is not theirs, use it for their own ends, then try to hide the fact that they took it in the first place? They are thieves and they are cheats.

We are here today only because they were caught. Let me make it very clear to anyone who wants to know, with regard to all this talk from Mr Maharey about the need to validate this spending, if the Labour Party had not been caught we would not be here today. It is as simple as that. What we have is a bill to cover up the theft by Labour from the taxpayer—a theft that it has now been caught for—and Labour members are all holding up their hands and saying that they are holier than thou and will pay it back.

Chris Auchinvole: When?

GERRY BROWNLEE: Well, the question is when. I notice that when Labour was caught by the Auditor-General for appropriating some $21 million to advertise its Government programmes and it was later pinged back to only $15 million, those members said that it was not much. But I tell you what, this morning the Labour caucus found out that $750,000 split 50 ways is a huge amount of money. So we do want to know when it will be paid back, and we want to know why this legislation does not include that information.

What I was most fascinated by was the Prime Minister’s reaction on last Monday’s Breakfast television programme, when she was asked about the intention to pass validating legislation. She said: “Oh well, that is just a technical thing. We are paying it back. There it ends. Let us move on.” It was classic Helen Clark—13 months of saying that Labour will not pay, and of saying that everyone else is wrong except Labour, and then it is: “Oh well, we will pay. We are moving on. That is the end of that.”

The rules are extremely clear around this particular issue, and they have been for a very long time. For Labour to suggest that they are not is completely disingenuous. I refer Mr Maharey to the Hunn-Lang report of 1990, which was the basis for the establishment of the Parliamentary Service and the rules that go with the expenditure of taxpayer money around parliamentary support in the first place. Apparently, we are being told today that these rules have been wrong for the last 16 years and that we have to go right back to that time to sort it all out. Well, I say to Mr Maharey that that was a Labour Government report, which was put on the Table by no less a person than Sir Geoffrey Palmer, and that there is nothing in it that would suggest that any of the behaviour that has gone on before this time was particularly illegal.

For Dr Cullen to suggest that somehow, if this legislation is not passed, simple things like MPs’ travel, their communication with their constituents, and their use of a research facility to find out whether some idea is worthwhile would be completely wrong is, of itself, wrong. That is what democracy is built on: the idea that we elect some people to think a little bit about the future—some people who can move freely and speak freely. But when it comes to the election period, there is no provision, and there never has been, for some party to confuse its campaign expenditure with its parliamentary expenditure. What we saw from Labour members was a cynical decision to very deliberately pay for the pledge card—and, it would appear, for a great deal of other advertising—from its Parliamentary Service funding.

What they knew also, because, let us remember, they had letters from the Auditor-General, the Chief Electoral Officer, and their own auditors stating that if this pledge card is considered election spending—and they have admitted right from the word go that it was—they would breach their electoral spending cap. It was a breach of section 214B of the Electoral Act, as Dr Brash pointed out, and, in that sense of knowing, it makes those members party to a corrupt practice. What we are doing here today is, apparently, alleviating that situation. Well, this Appropriation (Parliamentary Expenditure Validation) Bill will not do that. The question still remains out there for New Zealanders to ask themselves: “Is this a Government that respects the conventions of governance in our country?”. The answer overwhelmingly is “No”.

We have asked over and over, when the Government will pay this money back. What we have had in return is a deafening silence. The reality is that when this bill passes today, there will be no legal requirement for the money to be paid back. In fact, we might ask ourselves this question. If the pledge card was not illegal because 14 months or so after it was posted out the law changed to make it legal, why would one pay the money back?

The other point that Mr Maharey made was that even if one paid the money back, one still has to validate it. Well, I want to know why we do not do that every time someone commits benefit fraud or every time the Government pays a prison construction bill that it should not be paying. We could go on and on about where Government appropriations are going in the wrong direction, but there is no need to refer back to Parliament.

Mr Maharey said that it is not unusual to come back for appropriations to be realigned. Those appropriations are usually within the policy confines of a Government. They are not about some Government choosing to stick its hand deep into the pocket of the taxpayer and reach money out for its own political purposes, and that is the strong and serious difference we have here.

I am in possession of some information that tells me the land grab undertaken by Robert Mugabe’s Government in Zimbabwe is perfectly legal, because after that Government got in the bulldozers and all those thugs who whipped those people off those farms, it passed a law to make that action legal. Although I do not want to exaggerate, become carried away, and suggest that this Government is operating as if it were a Mugabe-style Government, the reality is that the comparison is chillingly close. Mr Hughes shakes his head and says “No, no, no”. I would ask Mr Hughes why we are here today and why we have this legislation in front of us. If Mr Hughes and his colleagues had not robbed the taxpayer of nearly $1 million, we would not be here today. The reality is that this legislation makes perfectly legal the terrible and disgraceful act that the Labour Party committed. Members opposite are saying that it happens all the time. It does not happen all the time. There are appropriation realignments, but there are none like the sort of situation we have today where illegal activities are being made legal.

I reserve my final comments for New Zealand First members, who, I think, have been a very big disappointment on this particular issue. They have a $160,000 overspend and a statement from their leader that they will not pay it back, but will go to court. Well, everyone knows that when this legislation passes—assuming that the House will be compliant enough to pass it—then there is no basis on which to go to court, because Mr Peters will be stumping up to court, saying: “I am not paying this money back, because I did not break the law.”, and the judge will say to him: “You are dead right, sonny. Fourteen months after you spent the money, your mates in the Labour Government made it perfectly legal for you to do so.” So I hope that the New Zealand First members get up today and tell us whether they will accept their moral obligation to repay the money, and whether they will accept the fact that New Zealanders expect politicians to repay the money.

I would also ask the Labour Government members whether we can expect during their speeches today to have put in front of us a time line for when they will repay the money. Finally, I want to know why Labour members keep swinging arrows across to this side of the House asking whether National will pay the GST. The answer is “Yes”.

Hon Judith Tizard: When?

GERRY BROWNLEE: Well, unlike the Labour Party, we want the law changed so that we can pay. Labour members are changing the law so that they do not have to pay. This is utterly disgraceful legislation and we will be fighting it very hard.

PETER BROWN (Deputy Leader—NZ First) : New Zealand First will be supporting the Appropriation (Parliamentary Expenses Validation) Bill. [Interruption] Yes, we will. We will do that for three reasons. The first reason is that the Controller and Auditor-General has recommended that we do so. [] Members should take the time to read the Auditor-General’s report. On page 53 of the report he makes the recommendation that this legislation should be passed. As the Auditor-General notes, the relevant sections of the Public Finance Act 1989 require this type of legislation to validate the appropriation. The Controller and Auditor-General is the man who is telling virtually every party in Parliament that it owes some money.

The second reason New Zealand First is supporting this bill is that the Speaker herself has recommended that this step be taken. Finally, we are supporting this legislation because Treasury suggests that it should be supported. Treasury, in its report, explained why this sort of legislation is required in terms of the Public Finance Act 1989.

In fact, New Zealand First is somewhat disturbed about the politicking that surrounds this type of legislation.

The ASSISTANT SPEAKER (Ann Hartley): Nobody can hear, at all. Will members please show some respect to the speaker.

PETER BROWN: To put it simply, if the Controller and Auditor-General, the Speaker of the House, and Treasury all independently say we must pass this legislation, then New Zealand First agrees that it should be passed. I invite members of the National Party to read the documents—maybe I should table them.

I want to make this point perfectly clear: New Zealand First will pay any moneys that it rightfully and lawfully owes.

Hon Members: What does that mean?

PETER BROWN: The members do not understand what that means.

The ASSISTANT SPEAKER (Ann Hartley): I say to the members at the back of the Chamber that one or two interjections are acceptable, but that constant barracking is not acceptable.

Rodney Hide: I raise a point of order, Madam Speaker. I have been sitting here quietly, actually.

The ASSISTANT SPEAKER (Ann Hartley): Yes, you have.

Rodney Hide: But it is very, very hard to keep quiet when the deputy leader of New Zealand First speaks in favour of a law to validate his party’s unlawful spending, and has the temerity and audacity to say that New Zealand First, as a matter of policy, will pay back any money it lawfully owes, when it is busy here, under urgency, changing the law so—

The ASSISTANT SPEAKER (Ann Hartley): The members knows that that is not a point of order. [Interruption] No, the member will please be seated. The member cannot go on with a point of order that is not a point of order. It is a debating point.

Gerry Brownlee: I raise a point of order, Madam Speaker. Mr Hide’s offering to the House leads us to an interesting point. I refer you to Standing Order 165 and Speakers’ rulings 70/5-6 and 71/1-5, which deal with financial interests, pecuniary interests, and declarations thereof. Given that Labour MPs have today received the bad news that they each have to write a personal cheque, given that many other parties have found themselves in a similar position, and given that New Zealand First is the only party out there saying that it will not pay it back, then—

The ASSISTANT SPEAKER (Ann Hartley): I am sorry, but this is not a point of order.

Gerry Brownlee: With all due respect, it is.

The ASSISTANT SPEAKER (Ann Hartley): It is not a point of order. The member will be seated. That is a debating point, and the member knows it.

Hon Dr Nick Smith: I raise a point of order, Madam Speaker.

The ASSISTANT SPEAKER (Ann Hartley): I am sorry, but I have ruled on the point of order. Please be seated. What the member has been raising for the last 2 or 3 minutes are matters within this bill that are for debate.

Gerry Brownlee: Madam Assistant Speaker, you cannot debate the Standing Orders. The Standing Orders are clear. This member has a financial interest in this bill, and he has an absolute obligation to declare it.

The ASSISTANT SPEAKER (Ann Hartley): The member is just completely misinterpreting the Standing Orders, and—

Gerry Brownlee: Would you interpret them for us.

The ASSISTANT SPEAKER (Ann Hartley): Mr Brownlee—[Interruption] Please be seated, Mr Brown. Before we go any further, Mr Brownlee will withdraw and apologise for his interruption of the Speaker.

Gerry Brownlee: I withdraw and apologise. I raise a point of order, Madam Speaker.

The ASSISTANT SPEAKER (Ann Hartley): No, please be seated—I was ruling on that. It was not a point of order. The member was bringing into the debate Standing Orders that do not apply to this matter. Please continue, Mr Brown.

Hon Dr Nick Smith: I raise a point of order, Madam Speaker.

The ASSISTANT SPEAKER (Ann Hartley): I say to the member that if he is contesting my ruling, that in itself is disorderly.

Hon Dr Nick Smith: Madam Assistant Speaker, I want to read to you—

The ASSISTANT SPEAKER (Ann Hartley): No, just a minute. Can I be assured that the member is not contesting—

Hon Dr Nick Smith: I am not contesting your ruling, Madam Assistant Speaker; I am raising a new point of order.

The ASSISTANT SPEAKER (Ann Hartley): I call Dr Nick Smith, who is raising a new point of order.

Hon Dr Nick Smith: Madam, Speaker, I draw to your attention Standing Order 166, which states: “A member must, before participating in the consideration of any item of business, declare any financial interest that the member has in that business.” We are all aware in this House that there is a court action involving members of this House. A court case in the High Court of New Zealand names every Labour member—in fact, I think the interest applies also to yourself, Madam Assistant Speaker—as having a financial interest in this bill.

This is a very serious point of order. It goes to the heart of the integrity of this Parliament. I ask you, Madam Assistant Speaker, to give a considered ruling on the following point. Given the fact that there is a legal action involving the financial accountability of all 50 Labour MPs, then a clear interpretation of that Standing Order, particularly when one adds to it the Speakers’ rulings, would say that members opposite who are affected by the legal action must declare a financial interest in this bill. I ask you, Madam Assistant Speaker, to give a considered ruling so that the Standing Orders of this House are upheld.

It is a perfectly proper Standing Order, because when we debate issues in this House, it is the public interest, not our own personal interests, that must take precedence in the business of this Parliament. I believe that the 50 Labour Party MPs have a very distinct private interest in this bill. Madam Assistant Speaker, we need your ruling on Standing Order 166 for those members to be required to declare that financial interest. If you do not do so, these Standing Orders are not worth the paper they are written on. We are talking about a sizable amount of money—over $10,000 per member. Those members have a financial interest, it must be declared, and they should not be able to participate in a debate in which they have that financial interest.

The ASSISTANT SPEAKER (Ann Hartley): The financial interest is not different from that of any other members generally. That is the point. Court proceedings, or anything else, do not—

Hon Dr Nick Smith: Can you explain why?

The ASSISTANT SPEAKER (Ann Hartley): The member will now leave the Chamber.

Hon Dr Nick Smith: I simply asked you to explain why.

The ASSISTANT SPEAKER (Ann Hartley): The member will now leave the Chamber, with no backchat. [Interruption]

• Hon Dr Nick Smith withdrew from the Chamber.
• Debate interrupted.