The information in this section from the Electoral Commission is for general guidance and is not a final statement of the relevant law in the Electoral Finance Act 2007, particularly political parties' election expenses in Part 2, Sub-part 8.  The Commission will try to help with any issues that may arise in respect of party election expenses and the Chief Electoral Office will try to help with any issues that may arise concerning candidate election expenses.  Parties should consider seeking their own legal advice.   Section references on this page are to the Electoral Finance Act 2007, unless specified otherwise.
 

What is the limit on party election expenses?

• If a party contests the party vote then its total party election expenses (including GST) cannot exceed $1 million, plus $20,000 for each electorate candidate nominated by the party.
• If a registered party does not contest the party vote then its total election expenses cannot exceed $20,000 (including GST) for each electorate candidate of the party.
• In the above cases these party limits are separate from the expense limits applying to any electorate candidates’ campaigns.
• A registered party that is not contesting the party vote and which will not nominate candidates in electorate contests may seek to list as a third party, which will allow it a spending limit of $120,000.

What is the obligation to provide a return of party election expenses?

• After a general election the financial agent of every registered party must provide a return to the Electoral Commission of party election expenses incurred during the regulated period (1 January 2008 until polling day in the case of an election falling after 1 April in the year three years after the previous election).  Expenses incurred outside this period may also need to be included.
• The return must be on a form provided by the commission, and be accompanied by an auditor's report.
• The deadline to provide the return and auditor's report is 50 working days after the day the Chief Electoral Officer declares the election of list MPs.  The Commission will write to registered parties to confirm the date of this deadline after the declaration of election of list MPs.
• The obligation applies whether or not the party contested the party vote or any electorate seat. 
• A registered party that is also a listed third party must file both a return of party expenses and a return of third party expenses.
• If the party had no election expenses then the financial agent must make a nil return and get an auditor's report.
• No deposit paid with the nomination of a party list can be refunded by the Chief Electoral Office until the return and audit report have been accepted by the commission.

How does the party election expense return relate to returns for electorate candidates?

• Every election expense incurred by a party or its electorate candidates must be accounted for in a return.  Expenses may relate to a party (including its list candidates), an electorate candidate, or split between both as discussed below.
• Returns of expenses and donations by electorate candidates (Form M30-Cand Exp) must be filed with the Chief Electoral Office no later than 70 working days after polling day.  Many party secretaries or financial agents assist the financial agents of electorate candidates to file their returns.  Guidance is provided in Return of election expenses & donations in the Candidate guide.  The Chief Electoral Office is happy to discuss any problems that arise in respect of candidate returns.  No deposits paid for candidates on a bulk nomination schedule can be refunded by the Chief Electoral Office until all the returns from candidates on the schedule are filed.

What is a party election expense?

• Party financial agents and auditors should become familiar with the definitions of party advertisement and publish (s 4), party activity (section 93), election expense (s 94), and party’s election expenses (s 95). For an activity to be an election activity these four questions must all be answered "yes":

1. Is the activity undertaken by the party secretary or the party financial agent or with their authority?
2. Does the activity constitute publishing a party advertisement?
3. Does the activity encourage or persuade, or appear to encourage or persuade, voters to vote for the party, or against another party, or both?
4. Is the activity undertaken (or deemed to be undertaken) during the regulated period (from 1 January 2008 to polling day)?

• An election expense that must be included in the return is any spending on any election activity, along with spending before or after the regulated period that relates to any election activity within that period.  A fair apportionment must be made when the activity happens before and continues during the three month period.  For example, if one third of a pamphlet print run had been distributed before the election year began then two thirds of the cost would be included in the return.  However, if the party produced billboards six months before election year and erected them in the month before polling day then the total production costs must be included in the return.  A party cannot avoid declaring an election expense simply by ensuring the work is done or invoiced before or after the regulated period.
• Election advertisements and election expenses that relate to list only candidates constitute party advertisements, and will be included in the party’s election expense return.
• Note: the cost of the following things (some of which may nevertheless be election advertisements and require promoter statements, etc) do not count as election expenses: travel, surveys or opinion polling, donated labour, replacement of election materials damaged in circumstances out of the party's control, electorate candidate expenses, allocations from the commission of time and money for election broadcasting, or publications that relate to a member of Parliament in his or her capacity as a member of Parliament.

What does capacity as a member of Parliament mean in this context?

• Costs associated with a party election advertisement that relate to a member of Parliament in his or her capacity as a member of Parliament are not party election expenses.
• This exemption relates to members of Parliament only, and does not extend to a parliamentary party performing its role and functions as a parliamentary party.
• “Electioneering” as defined in directions of the Speaker made under the Parliamentary Service Act 2000 has a narrower definition than “election advertisement” as defined in the Electoral Finance Act 2007.  An expense which is lawfully funded through Vote: Parliamentary Service may nevertheless be an “election advertisement” under the Electoral Finance Act, and may also constitute an election expense.
• The question of whether a party advertisement is an activity that relates to a member of Parliament in his or her capacity as a member of Parliament must be determined on a case by case basis by looking at the advertisement as a whole. The question will look at whether the activity occurs within a member’s capacity as a member of Parliament, or within some other capacity, like the member’s capacity as a candidate or list candidate for election.  At one end of the spectrum, the simple advertising of constituency services and comment on proceedings of Parliament are included within the exemption.  At the other, advertising expressly seeking financial support or a vote for the party are outside the exemption.
• When considering a particular publication, the following factors (amongst others) may be indications that it is not within a member of Parliament’s capacity as a member of Parliament:
  • whether the communication is of a type that a candidate outside Parliament, or a party outside Parliament, might be expected to publish 
  • references to the election 
  • formatting or branding similar to the party’s election campaign material
  • references to a candidate or list candidate who is not an existing MP.
     
• Because this exemption and the similar exemption in relation to candidate expenses are worded differently in the law the two exemptions cannot be treated as identical.

What about free or discounted materials and services?

• Materials or services provided free or at a special discount must be returned at reasonable market value. (Labour given by an individual does not count, but labour donated or discounted as professional services by a firm does unless its employees provided their individual labour for free). Consider whether the discount value also needs to be accounted for as a party donation.)

What about telecommunications, printing or postage paid for by someone else but relating to an election activity?

• If something is an election activity, then it does not matter who pays the bill, it must be counted and returned as an election expense of the party.
• As noted earlier, parties should also be aware that some facilities and services claimed against MPs' budgets within Vote: Parliamentary Service may have to be included in a party's return of election expenses if they are used for an election activity on behalf of the party.

How are election expenses apportioned between party and electorate candidate?

• Advertising promoting an electorate candidate is an election expense of the candidate.  Advertising promoting the party vote is an election expense of the party.  These rules apply regardless of who pays the expenses.  Sometimes the dividing line is not clear and an apportionment may be necessary.   A common example is an advertisement which calls for both the party vote and the election of a constituency candidate.  The following example illustrates the principles to be applied, but the electoral agencies are happy to discuss particular circumstances with parties or candidates:
• Facts:
  • Party X is contesting the party vote. Mrs Y is standing in an electorate as a candidate for Party X.
  • Party X and Mrs Y agree to arrange advertising to be displayed by commercial billboard site in the regulated period prior to the election.
  • The content of the advertising comprises two parts. The first part asks voters to give their party vote to Party X. The second part asks voters to give their electorate vote to Mrs Y. From a coverage perspective, the advertisement can be factually judged as relating 40% to the party vote and 60% to the electorate vote.
• The total cost of the advertising is $13,000. An analysis of the total cost based on invoices and other evidence reveals the following:
  • A. Costs relating to the candidate vote
    Artwork and photography of the candidate $1,000
  • B. Costs relating to the party vote
    Artwork and photography of the party leader $2,000
  • C. Joint costs
    General design, production, printing, material, assembly, transport $8,000
    Site rentals paid for 3 months before election $2,000
  • Total election expenses $13,000
• Allocation of costs
  • Some costs clearly relate to the candidate (A. in the example). Other costs clearly relate to the party (B. in the example). The joint costs (C. in the example) require apportionment on a factual basis which in this example means 60% of those joint costs will be allocated to the candidate and 40% allocated to the party.  The expenses should therefore be returned as follows: 

• This result is not affected by the payment arrangements (if any) made between the candidate and the party.  If each pays the share allocated to them no other issues arise.  But if, for example, the party pays the whole $13,000, the candidate would need to disclose in her return a donation of $7,000 from the party.
• An apportionment must be made between the party and an electorate candidate's expenses if an advertisement which gives more than 10% of its coverage to the candidate in any capacity as a list candidate or promoter of the party vote is published or broadcast in the electorate concerned, unless the same advertisement is also published or broadcast to a similar extent in 10 other electorates (s 80).
• Remember, the party financial agent must give prior written authorisation before an election advertisement promoting the party is published, and the candidate financial agent must give prior written authorisation before an election advertisement promoting the candidate is published.  Parties and electorate candidates are also reminded that there are important differences in the advertising rules between broadcast and other media and how they apply to parties and electorate candidates.  See Election advertising rules - summary and the Broadcasting guide.
• Whenever the cost of an election advertisement is apportioned between parties or candidates, the total apportionment must add up to 100%.
• Joint advertising between a third party and a party or candidate cannot be apportioned.  The full cost of any third party advertising must count toward both the third party and the party or candidate. 

Can costs be spread over more than one election?

• No.

Are there deadlines for billing the party and the party paying its expenses?

• Yes:
  • No claim against a party is recoverable unless sent to the financial agent within 20 working days after the day the chief electoral officer makes the declaration of election of list MPs by notice in the New Zealand Gazette. Parties should ensure that suppliers are aware of this.
  • All election expenses incurred by a party must be paid no later than 40 working days after the date on which the above declaration is made unless payment is ordered after that time by an appropriate jurisdiction in the case of an unpaid or disputed claim, or by leave of the district court in the case of a disputed claim later agreed for settlement or an undisputed claim that was late being made.
     

What documentation is needed?

• Invoices and receipts are required to be produced and kept for claims and payments of election expenses of $100 or more (including GST).
• For the purposes of audit and possible investigation, every financial agent is required to take all reasonable steps to ensure that all records, documents, and accounts that are reasonably necessary to enable the return to be verified are retained.

What is the return form for use for the 2008 general election and how should it be completed?

• The form, including instructions for its use, will be provided to financial agents of registered political parties (and made available on this page). It will be provided in a variety of formats so that financial agents may fill in either a soft or hard copy of the document before signing and returning the form as instructed.

What is the role of the party auditor?

• The requirements are set out in s 107, with which the financial agent, party secretary and party auditor are strongly advised to familiarise themselves. 
• While engaged by the party, the auditor is assessing and reporting as appropriate on whether the party's election expenses and associated record keeping have been within the law, and whether the auditor has received all necessary information to form an opinion. 
• The law gives auditors powers of access to party records and to require information and explanations from the party secretary.
• Party secretaries are reminded that a party auditor cannot be a body corporate or someone closely connected to the running of a party, must be a chartered accountant, and properly appointed and notified to the Commission. (s 12, also Companies Act 1993 s 199(1)).

What information should the financial agent provide for the auditor?

• Details of all party election expenses. 
• The completed return form.
• The web address of this guidance.

Can the auditor take a sample of expenses rather than look at them all?

• The audit must be of the party's entire party election expenses so that the auditor can form an opinion on the matters which are required to be covered in the audit report, such as whether the return is accurate and proper records are being kept. Any sampling, drawn in accordance with normal professional auditing practice, must be from across the entire party organisation without excluding any area of the party's election expenditure. The Commission does not accept any of the following as 'reasonable excuse' for not providing an audit report on a party's entire party election expenses:
  • cost or time involved in the audit or the servicing of it
  • alleged difficulties arising from the location of relevant documentation
  • alleged autonomy of organisations within the party
     

What should the auditor do if they are unable to give an unqualified opinion?

• If a party secretary does not provide all the information required or fails, in the auditor's opinion, to keep proper records of party election expenses sufficient to earn an unqualified opinion then the auditor may give a qualified opinion, an adverse opinion, a disclaimer of opinion, or an ‘except-for opinion’ in accordance with the Institute of Chartered Accountants Auditing Standard No.702 "The Audit Report on an Attest Audit".

What happens if an auditor's report does not comply with requirements?

• If the audit report does not comply with the requirements of section 107 of the Electoral Finance Act it may be rejected by the Commission and the financial agent would be required to get a new one.

What if an error in, or omission from, a return is discovered later?

• The financial agent should immediately prepare an amended return, obtain an auditor's report on the amended return, and forward both to the Commission with a letter explaining the circumstances.

What if a disputed or unpaid claim is later settled in full or part?

• If a disputed or unpaid claim included in the return is paid in full then a new return and auditor's report is not required.  If a party pays a disputed or unpaid claim for an amount different from that shown in the party's return, then the financial agent should immediately provide an amended return with a letter explaining the circumstances.  A fresh auditor's report is required only if the amount paid is more than that shown in the original return.
• Similarly, if a court decision results in payment of a claim for election expenses which was not included in the party's return of election expenses, the financial agent should immediately prepare an amended return of election expenses, obtain a new auditor's report on the return and send in both with a covering letter explaining the circumstances.

What does the commission do with returns and audit reports received?

• The commission is responsible for ensuring that political parties comply with their statutory obligations in relation to the preparation, audit and submission of the required return and related documents.  It:
  • Checks to see that the return and audit report are in order.
  • Puts the return and audit report (if in order) on public display within 3 working days of their receipt.
  • Extracts information for summary tables, which are also made available for inspection at its offices, online, and in its annual report to parliament.
  • Raises any outstanding matters with the financial agent or auditor.
  • Considers any response to any matters raised before deciding whether it believes an offence may have been committed, and reporting this to the Police if it does.

What are possible offences?

• You need to check the law for precise wording, but in relation to election expenses, the possible offences include:
  • incurring an unauthorised election expense (s 97(1))
  • entering into an agreement or understanding for the purpose of circumventing the prohibition on incurring unauthorised election expenses (s 97(2))
  • exceeding the spending limit (s 101(1))
  • entering into an agreement or understanding for the purpose of circumventing the spending limit (s 101(2))
  • paying a bill for an election activity later than 40 days of the declaration of election of list MPs (unless the bill is in dispute) (s 102(3))
  • failing to comply with the requirements for the filing of the expense return without reasonable excuse (s 109(1))
  • filing a false expense return (s 109(2))
  • failing to keep proper records for audit purposes (s 110(2))
• The penalties can be substantial, including fines up to $100,000, and up to two years’ imprisonment.  An additional financial penalty determined with reference to the financial benefit may also be imposed.  Party secretaries may be liable for offences committed by financial agents.  Those convicted of corrupt practices (or found on the trial of an election petition to have engaged in corrupt practices) will lose their seat, have their vote struck out, and lose the right to enrol, vote or stand for election for three years.