ACT leader John Banks has been accused in parliament of lying about the donations he received for his failed 2010 Auckland mayoralty campaign.
Labour MPs on Tuesday targeted the government over the donations scandal, asking how Prime Minister John Key could still have confidence in Mr Banks.
Police last week announced they weren't going to charge Mr Banks after investigating the donations he received, which were described in his election return as coming from anonymous donors.
Mr Banks has a support agreement with the government and holds ministerial portfolios.
Labour's Grant Robertson asked Deputy Prime Minister Bill English: "Is the standard that he is now setting for participation as a minister in his administration that lying is OK so long as he can get away with it?"
He followed that up with: "Can the minister confirm that he retains confidence in ministers who lie?"
Mr English said the test was whether the police decided to prosecute, and they had not.
"It's not the intention of this government to lower itself to the standards of the previous government where regular recklessness with the truth was almost a qualification to be a minister," he said.
Mr Banks received a $50,000 donation from piracy accused Kim Dotcom and $15,000 from Sky City for his mayoral campaign.
He sought the donations but they were described as anonymous in the election return prepared by an ACT Party worker.
Police said there was insufficient evidence to lay charges under local government election laws.
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