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In the 2005 election both the National and Labour parties are likely to push election advertising spending close to its limits. So far as Scoop can determine this is the first time this has happened in a New Zealand General election.

However the penalties for a political party blowing their multi-million dollar election advertising budget are paltry.

If a New Zealand political party unknowingly blows the budget the worst penalty the person responsible is likely to face is a fine. If a conspiracy to exceed the party's budget is ever proved the penalty may involve jail time – however the maximum stay in clink is one year.

In the final analysis should a party blow their multi-million dollar budget after brainwashing a nation for months it's more likely they will get a slap with a wet bus ticket – hardly a disincentive to any party trying to keep, or storm, the treasury benches.

National launched their assault on the incumbent Labour-Progressive Government back in June 2005 when, after testing via the internet, hundreds of eye-catching blue and red billboards appeared all over New Zealand. Since then National has sent out millions of leaflets, campaign flyers and created a very slick television advertising campaign.

Meanwhile, Labour has treated residents of Wellington to a nearly thirty-foot-high Prime Minister beaming down from Victoria Street keeping an eye on New Zealand's capital. Labour has also erected giant billboards emblazoned with Don Brash's words relating to the Iraq war and regarding his party's position on state assets sales in all the major centres.

As Labour is standing candidates in all seats - including all seven Maori seats - they are technically allowed to spend about $140,000 more than National. Parties contesting the general election are able to spend one million dollars and then up to a maximum of $20,000 per electorate seat.

Thus, Labour is able to spend $2.38 million dollars and National $2.24 million dollars. On top of this, parties are allocated broadcasting time on radio and television. This money may also be used to help create the advertisements. With nearly twice as many seats as National, Labour was allocated $1.1 million dollars of funding while National is allowed to use $900,000. Parties are not allowed to exceed their broadcasting cap.

When it comes to campaign funding the situation in New Zealand is not what many would call transparent.

During previous election campaigns, trust funds have been used by both ACT and National to funnel money from individuals who want to make large donations without being subjected to the glare of public scrutiny.

National's campaign manager Steven Joyce defended the use of trust funds in late July.

"Trusts can from time to time get together and donate money to a political party. We are required to report the entity we receive it from and that is what we do," Mr Joyce told Scoop.

The entity Mr Joyce is talking about is the trust itself. In the returns for the 2004 year the Waitemata Trust trust channelled $180,000 dollars of donations; who it was that donated is something only the trust knows and will never be publicly revealed. In the 1999 election, when Jenny Shipley was National's leader, more than half a million dollars was channelled through the NZ Free Enterprise Trust. In the 2002 election money being channelled through trusts to National was significantly down on the returns from 1999.

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Wealthy expat Owen Glenn is likely to be the biggest single donor to the Labour Party. The New Zealand Herald reported in June that he would be donating $500,000 to Labour's campaign. Returns at the electoral commission show nearly $200,000 of this sum was donated last year.

All political parties are also able to receive anonymous donations – so long as the party is able to genuinely state that they have no idea where the $50,000 dollars that was slid under the door in a brown envelope came from.

After the recent furore over the Exclusive Brethren launching a late anti-Labour and anti-Green pamphlet campaign, the National Party has tried to turn the focus of the campaign back onto unions supporting the Labour Party.

Luckily for the mouthpiece of this campaign, Deputy leader Gerry Brownlee and National, campaigns supporting pro-union political parties have been deemed by the Newspaper Publishers Association to be supporting the Labour Party. As the NPA has insisted that the Council of Trade Unions and the Engineering Printing and Manufacturing Union's advertisements have had to receive sign-off from the Labour Party, these campaigns will almost certainly count against Labour's campaign advertising spend.

Meanwhile the Exclusive Brethren's pamphlet campaign, estimated at costing well in excess of $500,000, has been able to circumvent New Zealand's electoral advertising system as it never mentions the National Party anywhere on any of the pamphlets. Whether this is money well spent for the Exclusive Brethren who have put their hands up to the campaign – Mr Win, Mason, Lough, Smith Watt and Simmons A and N – remains to be seen.