Political donations appear to have been hidden inside a secret slush fund controlled by a coterie of Winston Peters' trusted advisers.

National MP Nick Smith claims Labour MPs have blocked two former officeholders from NZ First from appearing before MPs to give evidence on the NZ First Foundation saga.

Smith told Parliament and then media that Labour MPs on the justice select committee had blocked the appearance of former NZ First president Lester Gray and former NZ First treasurer Colin Forster from appearing before the committee's inquiry into the last election.

The pair had written to the committee saying they wanted to give evidence about the ongoing NZ First Foundation donations saga.

BRADEN FASTIER/STUFF Nick Smith claims Labour MPs wouldn’t let two former NZ First officeholders give evidence to MPs.

Labour are refusing to comment on the matter and are taking a privileges complaint out against Smith for discussing the matter, a serious charge that could lead to Smith being censured by Parliament.

The stoush comes as the Electoral Commission tells MPs it needs more power to investigate political parties.

BRADEN FASTIER/STUFF Meka Whaitiri believes Nick Smith is breaching privilege.

Gray and Forster both wrote to the committee in late November offering to submit in a closed session to "shed some light on the inappropriate internal workings of the party that seemingly aren't monitored or controlled by electoral law."

The letter was written after Stuff revealed in late November that funds from the NZ First Foundation had been used to pay for campaign headquarters and donations infrastructure, while donations to the fund did not appear to be disclosed to the Electoral Commission.

The pair said they want to submit over "serious revelations over the failure to disclose major donations, the significant expenditure on unauthorised campaign activities and in the appropriate running of a separate foundation without the proper oversite [sic] of elected party officials."

ROBERT KITCHIN/STUFF Winston Peters says his party has always followed the law.

Smith claimed the Labour members blocked an attempt to invite the pair to speak to the committee but would not say why.

"Labour is part of a cover up in denying the Committee and New Zealand the opportunity to hear their concerns."

Labour chair of the committee Meka Whaitiri refused to comment, saying the matter was covered by Parliamentary privilege.

Whaitiri said she believed Nick Smith had breached privilege and he was making a privileges complaint to the Speaker about Smith's actions.

"I won't be commenting on deliberations of the committee until such time as they are public and reported to the House, and I would expect all members of the committee, including Nick Smith, to do the same," Whaitiri said.

Smith disagreed, saying he believed the matter had been resolved in a part of a committee outside of privilege.

"It's just an excuse for not providing any explanation. The committee resolved in general business that the committee would write to the previous treasurer and president. It's being used as an excuse to not have to answer for Labour's decision to block the committee hearing from them."

NZ First leader Winston Peters said the former officeholders could not be expert witnesses on something they didn't know anything about.

Peters has maintained over recent weeks that his party has always followed the law.

He said his party was cooperating with the Electoral Commission.

Gray resigned as President of the party earlier this year, saying he was unable to sign a party return for "moral reasons".

Gray has been asked for comment.

ELECTORAL COMMISSION: WE NEED MORE POWER

Chief Electoral Officer Alicia Wright, fronting a Justice Select Committee on Thursday, told MPs the Electoral Commission lacked power to compel political parties to provide answers and documents when investigating possible breaches of electoral law.

Electoral Commission chairwoman, Marie Shroff, said she hoped Parliament would "look favourably" at reforming those powers.

Shroff said in her former role as privacy commissioner, "I had more powers to require material and require attendance, and I was surprised to find that the electoral commissions doesn't".

Smith asked the commission if this lack of power was compromising their ability to investigate NZ First over allegations on the NZ First Foundation.

But select committee chair Whaitiri blocked the question and others related to the electoral law passed under urgency on Wednesday, saying they were "out of scope".