John Banks' votes would've been rejected

The Government would have rejected votes from former ACT MP John Banks' had he not resigned from Parliament, Prime Minister John Key says.

ACT MP John Banks has announced his resignation from Parliament, sparing him the potential ignominy of being forced out by a conviction, though his resignation is unlikely to force a by-election in Epsom.

The fallout from Banks being found guilty of filing a false electoral return continues, however, with Labour saying the verdict raised questions over whether his Queen's Birthday honour should be revoked, and calling for an inquiry into how politically-charged cases are handled.

ACT has also been challenged over its handling of Banks following the guilty verdict, with critics saying it has not fitted the party's tough stance on crime.

Banks handed in his resignation yesterday saying it would take effect on Friday, meaning he will not be forced to act if he is convicted in August.

He joins former National MPs Pansy Wong, Richard Worth and Aaron Gilmore as recent MPs forced to leave Parliament in disgrace.

"I have given my heart and soul over four decades to making a worthwhile contribution to this country," Banks said.

"I have always endeavoured to do the right thing. Consequently I am deeply saddened at this turn of events."

Key said Banks' resignation was "the right thing to do under the circumstances".

He said that because the general election was on September 20, the Government would seek leave not to hold a by-election in Epsom.

The motion would be put forward in a fortnight when MPs returned from a two-week recess, and would require the support of 75 per cent of the House.

Banks' resignation will not affect National's ability to govern, with 59 of its own MPs in a House that will be reduced to 120, as well as the support of the Maori Party's three MPs and UnitedFuture leader Peter Dunne.

Key said today that if Banks had decided not to resign, the Government would not have accepted any proxy votes cast by him.

"We've got five weeks to run - it's largely valedictories and a bit of not-super-contentious legislation to go," Key told Breakfast.

"Our view is we probably wouldn't have accepted his vote anyway.

"We hold his proxy. So if he'd physically gone to Parliament and cast his vote himself, of course he could always vote because he's another party. But in terms of exercising his proxy, we wouldn't have done that."

Labour leader David Cunliffe said the resignation should have come sooner, with the guilty verdict also raising questions over whether Banks' Companion of the New Zealand Order of Merit (CNZM) honour should be revoked.

The former police minister and Auckland mayor was made a CNZM in the Queen's Birthday honours in 2011 for services to local body affairs, months before he returned to Parliament as an MP.

Cunliffe said if he was prime minister, he would be seeking advice on whether Banks should have the honour revoked.

"The basis of the honour was to the offence that's been committed," Cunliffe said.

"It is a very serious offence, punishable by up to two years in prison, and that would certainly create the possibility of having the honour revoked, but I would want to check the precedent and get more advice on it."

On the issue of a by-election in Epsom, Cunliffe said Labour would consult other parties about supporting the motion not to hold one, though the public was unlikely to want to hold two expensive elections within months of each other.

ACT leader Jamie Whyte, who met with Banks during the weekend and made it clear the party would move against him if he did not resign, said Banks' move was the right one.

"I think he's done the right thing for himself, actually," Whyte said.

"I think it would have been very hard for him to have hung on in there - for ACT and for Parliament."

The decision would allow them to move the focus from Banks to ACT's policies.

"It's been a terrible distraction and I hope we can put it behind us and focus on the issues."

Meanwhile, Labour's justice spokesman Andrew Little has called for an independent inquiry into the way politically-charged cases were handled, saying the police decision not to prosecute Banks needed to be investigated.