Speaker Lockwood Smith says he will urgently fix a difference between MPs' spending rules and practice which has seen MPs wrongly take young children on trips at taxpayer expense.
Auditor-General Lyn Provost's report into Cabinet Minister Phil Heatley's spending, released on Tuesday, highlighted a problem where the Parliamentary Service had been telling MPs they could use taxpayer funding to pay for their preschool children's travel since 2007.
There are 16 current MPs who may have been led astray by the wrong advice.
One area where Heatley misspent taxpayer funded entitlements was by using them to take one of his children, aged under five, on travel that was not directly between their home in Whangarei and Wellington.
The report says the service has been providing incorrect advice since 2007 to MPs that their children aged under five had unlimited travel between any locations in New Zealand.
"Mr Heatley is not the only member affected by this incorrect advice from the Parliamentary Service," the report says.
The Auditor-General pointed out Speaker's directions did not match the rule and they were the legal basis for the spending.
"That had never been the practice and was not consistent with the members' handbook," Smith says.
"It's everyone's understanding that that was actually a mistake in the Speaker's directions."
Smith says Cabinet adopted in 1973 a royal commission on parliamentary salaries and allowances recommendation that dependent children of ministers should be allowed free travel from home to parliament.
In 1990 another change saw preschool children allowed to retain unlimited travel with their parents but the limit for trips for older children was set at four and was only for travel between home and Wellington.
"That, in the 1990s, went into the members' handbook... the latest version of the members' handbook is 2005 and that says there is no limit to the number of trips for children under five," Smith says.
"...Obviously I need to fix it because the legality of the spending... is based on the Speaker's directions and I need to address it as a matter of urgency."
Smith says for older children he was looking at how the four trips were made up.
"What happens if a trip is broken? Is it still a trip?"
He was not looking at making the allowance more generous but possibly more flexible.
Smith says 45% of the cost of spouse's travel is deducted from MPs' salaries.