The Electoral Commission, the independent body charged with supervising compliance with campaign rules, referred the Labour Party to the police after finding that they had overspent by over $400,000.
[5] Labour criticised the use by the National Party of trust funds to facilitate large anonymous donations, alleging American multi-millionaire Julian Robertson as a contributor.
However, National Party campaign manager Steven Joyce stated, "It is possible that [Mr Robertson] made an anonymous donation.
[9] The Auditor-General investigated publicly funded party advertising for the 2005 election, with a preliminary finding that much of the spending was unlawful being leaked.
Labour strategist Pete Hodgson said on 13 September 2006 that his party would not be repaying any money, and the Government might introduce legislation to legalise the spending.
[11] While she did not agree with the legal analysis of the Auditor General, the Speaker, Margaret Wilson, recommended that legislation be passed to retrospectively validate expenditure, that parties should pay back their overspending, not as a legal obligation, but in order to maintain the confidence of the public, that the administrative processes of Parliamentary Services should be reviewed, and that legislation be developed to clarify the law on expenditure.
The issue of Exclusive Brethren involvement led to Labour calls for compulsory disclosure of large donations to political parties within altered campaign finance legislation.
[21] Activist Nicky Hager felt there were clear distinctions on the legal advertisings of the Unions and what he alleged as obvious violations of the election act section 221 by not only the Exclusive Brethren with full knowledge of members of the National party (The Hollow Men: A Study in the Politics of Deception p238), but also third party spending by several other groups including the Horse Racing Lobby.
(The Hollow Men: A Study in the Politics of Deception p240) On 29 June 2006, Bernard Darnton, leader of the Libertarianz, sued Helen Clark for allegedly misappropriating public funds to pay for her "pledge cards" during the 2005 election.
Some commentators labelled the lawsuit a stunt, although it received media coverage as concern about the "pledge card" funding grew.
[28] Soon after, and within a day of saying that personal abuse had no place in NZ politics, Clark described Don Brash, leader of the opposition, as a "cancerous" and "corrosive" presence in national affairs,[29] a statement for which she was later criticised.
In an interview the following day she gave the example of a cartoon on the Young Nationals' website which had been there since before the election campaign, and indeed before Brash's leadership of the Party, depicting her as Star Wars villain Darth Vader telling Luke Skywalker she is his "lesbian father".
[30] Told that the National Party had expressed sympathy for her, Ms Clark replied: "I have very, very prominent friends in New Zealand life who have rung me… saying they were simply amazed at the sort of people, seemingly reputable citizens, who were prepared to pass on baseless lies as if they were factual.
Within a week, private detective Wayne Idour admitted being hired by the sect "to dig dirt" on Labour MPs and described some of the things he had found out as "alarming".
[34] Hager claims that the National Party spent millions of dollars in its election campaign without breaching the legal spending cap.
[35] He points to several possible breaches of the election law by National, and asserts that the scope of the Auditor General's inquiry was "very limited" and did not include illegal third party advertising.
[33]: 240–241 In addition, Hager disclosed a letter from the Exclusive brethren to Don Brash and John Key (later head of the National Party) stating that "We are working on 'our/your' campaign full-time" written in May 2005, four months before the election.
[36][verification needed] The sources and alleged breaches by National in Hager's book remain controversial and have sparked a debate regarding the invasion of privacy versus the public interest.
Dominion Post commentator Chris Trotter wrote in the 20-Oct-06 Dominion Post[verification needed] that "Solicitor General Terence Arnold QC's "expansive" interpretation of the Parliamentary Services Act betrayed a woeful lack of knowledge about the way our political system operates", and continued: His opinion characterised parliamentarians as glorified civil servants subject to executive oversight and prohibited from spending public funds on any form of political advocacy (which he appeared to regard as a private activity).
Mr Brady went on to compound the anti democratic, effect of the solicitor general's opinion by confining his investigation into "unlawful" parliamentary expenditure to election advertising.
However, Jim Evans, Emeritus Professor of Law at Auckland University, responded to the critics of the Auditor-General's report on a blog saying that "various attempts [have] been made in recent weeks to obfuscate the issues surrounding the Auditor-General's report on advertising expenditure by political parties in the three months before the last general election".
[48] Following the release of the Auditor-General's report, the Appropriation (Parliamentary Expenditure Validation) Bill was moved through Parliament in two days under urgency, being passed on 18 October 2006.