A select committee report on the Electoral Finance Bill has doubled the amount lobby groups can spend on political advertising in the run-up to the election, but it has not budged on the January 1 start date from which election spending will be strictly capped.

The justice and electoral select committee reported back on the controversial Electoral Finance Bill today and its recommendations included significant changes to the rules of anonymous donations to political parties, including a $240,000 cap on the total amount political parties can receive in anonymous donations.

It also sets a $10,000 limit on the size of anonymous donations from any individual to political parties.

The bill, which sets the rules for funding and campaigning by political parties and third parties, makes changes to the rules faced by third parties, but sticks with the initial plan to start the official election period on January 1 of an election year - meaning it could run for up to 11 months. In its original form the bill was called anti-democratic by the Human Rights Commission and the Law Society, who called for it to be completely scrapped.

Among the changes in the revised bill:

* There is no change to the "election period" which begins on January 1 of any election year. The current campaign period is three months prior to an election.

* Political parties can only take $240,000 in total from anonymous donations - up to 10 per cent of its expenditure cap.

* A limit of $10,000 on anonymous donations from any one person to political parties - the identity of donors who exceed this sum must be revealed in election returns.

* Anonymous donations exceeding $1,000 must be made via the Electoral Commission. The donor must disclose their identity to the Commission, but the commission can not pass the information on.

* A ban on donations of more than $1000 from overseas corporations.

* Donations over $1000 from overseas people are only allowed if that person is a New Zealand citizen.

* The limit on what third parties can spend in total is increased from $60,000 to $120,000.

* Third parties can spend up to $12,000 on election advertising before they have to register under the new law - up from $5,000.

* Third parties can take anonymous donations up to $5000 - up from $500 - and any donations which are not intended for election purposes will not be covered by the election finance rules.

* The definition of election advertising is changed to omit the clauses which made any statement which took a position with which a political party or candidate was also associated with an election advertisement.

* Penalties for "corrupt practice" are increased from a maximum of one years' imprisonment to two years, and maximum fines of $100,000 - up from $40,000.

The report said it recommended a comprehensive regime for anonymous donations to prevent the possibility of any undue influence on political parties.

The majority report notes the input of the Human Rights Commission, and says it believed the changes to the third party rules and increased expenditure limits "enhanced freedom of expression and upheld the right to participate in electoral process."

The main objection to the initial bill were restraints it placed on freedom of speech because of limits on third parties, and the broad definition of what constituted election advertising which many submitters said would catch the normal day to day businesses of any advocacy groups.

There was also criticism of the different treatment regarding anonymous donations to third parties and political parties - while third parties had to hand any anonymous donations exceeding $500 to the Crown, there were no similar restrictions or requirements to disclose the identities of donors for anonymous donations.

In a minority report, the National Party members on the Select Committee said the bill's process was "flawed" and the hearing of submissions and consideration of the law was rushed.

It also criticised the failure to get cross-party agreement on the provisions, saying it was traditional for electoral law to be developed with cross-party support.

The main report notes that the majority of those on the committee had concerns with a number of the comments in the minority report.

"Despite these concerns, members respect the right of all members to participate and therefore agreement is not withheld."

In its commentary, the Select Committee says there were some unintended consequences of the original draft of the bill, especially in the broad definition of election advertising.

"We recommend changes to that definition so it does not affect the issues based related advocacy that non-governmental organisations carry out," it said.

By Claire Trevett @CTrevettNZH Email Claire