Controversial election spending legislation being rushed through Parliament will validate unlawful spending dating back to 1989, and allow items such as Labour's pledge card to be distributed until the end of 2007.
It also effectively signals the death of a court case taken by Libertarianz leader Bernard Darnton against Helen Clark about Labour's pledge card.
Details of the retrospective legislation were finally seen yesterday as the Government - with the support of New Zealand First, United Future and the Progressives - put Parliament into urgency to pass it.
National used various tactics to try to slow the bill's progress in an often fiery debate which stretched into the night and resumed today at 9am.
National is voting against the legislation on the grounds that it does not require parties to pay back money that was unlawfully spent.
It will try to put heat on all parties by proposing amendments.
As many as three National MPs were ordered from the House yesterday for misbehaviour, amid shouts the legislation "validates thievery".
The legislation is firmly backed by advice from Treasury.
In a paper to Finance Minister Michael Cullen, Treasury states that the Auditor-General's finding that $1.2 million of spending before last election was unlawful "has implications for expenditure since 1 July 1989".
Treasury recommends that "these expenses be validated".
Dr Cullen yesterday repeated that Labour's $825,000 of misspending wasn't intentional.
"It's clear that legislation is the only way to remedy the unlawfulness," he said.
Labour has said it will pay back the money it spent unlawfully, and has begun a major fundraising drive.
Aside from validating spending, the bill also provides new definitions of what Parliamentary Services can pay out on until the end of next year.
Electioneering is ruled out, but the definition of what constitutes that activity is any communication that "explicitly" seeks support for the election of a person or party.
National leader Don Brash last night said the change meant items like Labour's pledge card would be cleared.
"The pledge card, out of this definition of electioneering, would be legal."
The Auditor-General's report said electioneering material was deemed to be something intended to persuade a voter to favour a candidate or party, and was not limited to things which expressly solicited votes.
Dr Brash described the legislation as "cynical and self-serving".
The Maori Party and Act are also voting against the bill, while the Greens are abstaining.
Mr Darnton conceded the legislation would probably scuttle his case.
"That's my reading of it. The lawyers are still looking through to see what options are left, but the wording of the legislation is very broad."
Mr Darnton, however, claimed a moral victory.
"If what Labour says is true, if they really think they were in the right, then they would quite happily see us in court," he said.
'Strong moral call' spurs United Future
United Future has joined the parties committed to repaying spending the Auditor-General identified as being unlawful, leaving New Zealand First out in the cold.
United Future expressed shock when it was told by Auditor-General Kevin Brady that it had wrongly spent $71,867 on election advertising and refused last week to commit to paying it back.
But yesterday, leader Peter Dunne said United Future believed it had no option but to repay the money.
"We think there's been a strong moral call for us to do so."
Labour's 50 MPs, meanwhile, have agreed to dig into their pockets for half their party's $824,524 bill, agreeing to a one-off levy worth about 5 per cent of their parliamentary income.
The Herald had earlier been told each MP would be asked for 5 per cent of their salary but Labour whip Tim Barnett said the agreement reached yesterday might allow for some MPs to pay less than 5 per cent and others more.
There is believed to be considerable annoyance in some Labour quarters, particularly among MPs who might not be standing for Parliament again, about the pay-back plans. That might explain the change, which Mr Barnett said would allow more "flexibility".
Mr Dunne said finding the money would be difficult for his small party and he would not say how much individual MPs would contribute.
"This will be an enormous task, which will place financial pressure on our three MPs, notwithstanding the fact that the Auditor-General has conceded to us that we acted in good faith throughout," he said.
"So now we will have to look to our members and supporters to help in this task and we will be appealing to them directly to assist us."
New Zealand First has a $157,934 debt and leader Winston Peters said yesterday the party's position remained as it was last week.
"We'll pay it back if it's right and lawful."
The party was still taking legal advice, which could result in it seeking a declaratory judgment from the courts, and that would take some time, he said.
Mr Peters said when he used the word "lawful" he was not referring to the passage of validating legislation for the spending going through the House now.
"The passage of the law has no effect whatsoever on the obligations of political parties at all."
- Ruth Berry and Paula Oliver
* Validates expenditure that may have been unlawful from 1989 until the day the bill becomes law.
* Deems the expenditure does not constitute a breach of certain acts
* Provides a new definition of "parliamentary purposes" which will be in force until the end of 2007.
* The new definition clarifies that funding can be used for things like travel and accommodation.
* Also states that funding cannot be used for electioneering.
"Electioneering" is defined as meaning any communication that "explicitly seeks support for the election of a particular person or party; encourages a person to join a party; solicits subscriptions or financial support".