OPINION: There is something missing from the Opposition's Murray McCully/Scenic Hotel Group political donations "scandal". A link.

The "smoking gun" so far looks something like this - 87-year-old businessman, Earl Hagaman, made a sizeable donation to the National Party and the hotel group he founded subsequently won a Government contract in Niue to run the Island's biggest hotel.

Labour is calling for an Auditor General's inquiry and leader Andrew Little claims something "stinks to high heaven" about the way money "earmarked as aid" for Niue "has instead been given to upgrade a resort run by a National Party donor".

Little then goes on to finger McCully by suggesting the group which decided the contract were the foreign minister's hand picked appointees.

READ MORE:

* Hotel group founders call for inquiry to clear their name in donations row

* 'Numerous donations' by hotel founder to National Party, but no conflict

* Foreign Affairs minister Murray McCully denies link between party donation and Niue contract

* Hagamans building an empire

* Honoured for services to tourism

Little deliberately plants a few seeds with this statement; firstly, that money intended for traditional aid (presumably he means crops, humanitarian relief or medical supplies etc) was instead diverted to a luxury resort. And second, that there may be something dodgy about Government appointees deciding the contract.

So let's unpick that a little.

The first assumption deals with the nature of New Zealand aid to Niue. The Ministry of Foreign Affairs and Trade says New Zealand aid to Niue is focused on "economic sustainability, mainly through developing the tourism industry".

Increasing economic benefits from tourism is listed as the number one priority, including "supporting the expansion of Niue's largest hotel, the Matavai Resort, to accommodate growing tourism numbers". Over the years that has added up to some $18 million in aid money, most of which predates Scenic Hotel Group's involvement.

The spending has included extra rooms to accommodate 2000 more visitors each year and the development of conference facilities at the resort.

To further boost the island economy, MFAT also provided $1 million last financial year to promote Niue as a tourism destination.

There may be questions about whether New Zealand taxpayers or the people of Niue for that matter, have got value for money out of that investment over the years, given the amount of aid ploughed into it.

But the suggestion that aid intended for more worthy projects was suddenly diverted to the resort after Hagaman's donation is tenuous.

As for McCully's handpicked appointees, these are the members of the Niue Tourism Property Trust whose members are indeed appointed by McCully on behalf of the Niue Government.

It has already been widely reported that they include the likes of the island's High Commissioner and former police officer Ross Ardern. (Ardern also happens to be the father of Labour MP Jacinda Ardern so one would assume he's not embedded with the National Party).

But this is where it gets complicated.

The Niue Tourism Property Trust appointed a board to oversee the running of the hotel and according to one of the four board members the agreement was negotiated and signed between Scenic Hotels and the board rather than the trust itself.

The tender process itself, meanwhile, was run by consultancy group Horwarth (which did the early feasibility studies for Auckland's international conventional centre). So again, a step removed from the government appointees on Niue property trust.

Little is right when he says that it is his role as Opposition leader to ask questions when a big political donor is awarded Government contracts.

But suggesting it "stinks to high heaven" takes things to a different level.

Even if there hadn't been a number of steps between the minister and the decision to award the contract, Little's claim appears to rest on the assumption that everyone involved in the process - from senior diplomats, to government agencies and senior politicians - was either swayed by the donation, or leaned on by the minister.

In the absence of a whistle blower, or any documentation, leaked emails or other evidence so far to support that view, that's a pretty serious accusation. Seemingly, it relies solely on the fact that Hagaman donated money to the National Party.

This is dangerous territory for Little and not because the Hagamans have threatened legal action.

Political donations are a murky area and it is easy to score quick political hits off those who make them. The number of donors appearing in the yearly list of knights and dames makes most of us cynical about both regimes. So too the number of corporates who regularly show up as political donors. People would more likely believe in the tooth fairy than think you can get something for nothing, particularly from politicians. So suspicion, particularly about policies benefiting party donors, is healthy.

The former Governor of California, Jerry Brown, summed up the perception problem with this statement: "You take money from the richest and best connected 1 per cent to get elected and then pretend that this does not affect your judgment."

But our donations regime is at least more transparent than it once was. If anything, the Hagaman donation proves the disclosure regime is working as intended.

Millions of dollars in donations used to be laundered through the likes of like National's secretive Waitemata Trust. If the consequence of open disclosure is to become a political football then donors, and political parties, will only look for inventive ways to get around those disclosure rules and go underground again.

So Little was right to ask the question but wrong to leap to judgement before the Auditor General decides even whether to take a look.

If every big donation is going to be decried as dodgy there seem to be only two alternatives - either barring donors from tendering for Government contracts, which is probably unworkable, or a fully state funded regime, which is where the first option ultimately leads anyway, given the inevitable drying up of campaign funds.

But State funding opens a whole other can of worms, one that comes at a cost of tens of millions of dollars to taxpayers.

It's also just as likely to become a football and just as open to abuse.

Anyone who doubts that should cast their mind back to the Labour pledge card scandal of a few years back.

Which is the other problem with where Little may be going.

The public's suspicion about wealthy donors is probably only rivalled by their scepticism over politicians putting their hands out for more money.