Labour is the first political party found to have breached its own election finance legislation.
The Electoral Commission has decided to warn the party rather than passing the complaint on to police for investigation and an electoral law specialist says the commission risks turning the Electoral Finance Act into a "toothless law" if it decides against referring future breaches to police.
The commission said last night it had decided a taxpayer-funded Labour booklet titled We're Making a Difference was election advertising and should therefore carry an authorisation from the party's financial agent, along with that person's home address.
It said it was waiting for Crown Law Office opinions on whether a Labour Party balloon constituted election advertising, and was seeking opinions on an Act Party booklet, distributed to journalists at a party conference, could be deemed advertising.
A National Party discussion paper titled A Blue-green Vision for New Zealand, which included a link to the party's website, was not deemed advertising.
The commission said it would use the examples "for the education of party secretaries and financial agents".
Parties would be put on notice that any similar breaches would be referred to the police, unless they were considered inconsequential to the public interest.
Otago University associate law professor Andrew Geddes said it appeared the commission had exercised its statutory discretion due to general confusion over the new law.
"Everyone has been floundering around a bit not really knowing quite how the rules were going to be interpreted. So this will be kind of a line in the sand," he said on Radio New Zealand.
But he said if it failed to refer further breaches then it risked seeing the Act become a "toothless law".
He said due to the poor way the law had been brought in the commission was having to respond to complaints "on the fly" during election year.
"One of the drawbacks of the way the Electoral Finance Act was brought in is that it is in force now but the commission has not actually had time to look at it and try to work out how it is going to apply these rules.
"So you've got challenges and questions being raised about the rules at the same time as they are meant to be applying to this year's election debate."
The Electoral Finance Act came into force on January 1 and covers the period up until the election.
The National Party has vocally opposed the legislation which it says restricts the democratic right of free speech.
Referring to the offending Labour pamphlet in Parliament last month, National's deputy leader Mr English yesterday accused Labour
of hypocrisy for failing to stick to its own rules.
When National had cried foul over the need for a home address, which it believed could result in abuse or attacks, Labour's
president Mike Williams had described it as "a bit paranoid", he said.
The commission also yesterday said it had decided whether the country's biggest trade union, the Engineering, Printing and Manufacturing Union (EPMU) could register as a third party, but would not release the decision until next week.
If it is declined third party status it will be effectively banned from running an advertising campaign in support of Labour during this year's election campaign.
Under the Act third parties - organisations which are not political parties - are allowed to spend up to $120,000 on campaign activities.
The objector is right-wing blogger and National Party supporter David Farrar.
When the EPMU lodged its application in January, he laid an objection on the grounds that the union was in breach of a provision of the Act which says that "a person involved in the administration of ... the affairs of a party" cannot register.
Farrar's objection is based on the EPMU's affiliation to the Labour Party and secretary Andrew Little's role as affiliates vice-president.