"This is simply a satirical song. I wrote it at home and it's the musical expression of my own personal views."
Mr Jones said neither man had received payment for producing the work, but had sold the song through iTunes to recoup some of their costs.
However, the Electoral Commission has not seen the funny side and Watson has received a letter warning that it considers the song and associated video are "election advertisements" under the Electoral Act and "election programmes" under the Broadcasting Act.
The Electoral Commission is also threatening that the sale of the song through iTunes without a promoter statement is "an apparent breach of section 204F of the Electoral Act", punishable by a fine of up to $10,000.
Said Watson: "I object to the suggestion that I am some sort of political promoter. I am a musician and I feel very strongly about this kind of censorship. I believe in artistic freedom."
The commission has told television and radio stations they should not broadcast the song outside of news programmes.
Watson said the prohibition on broadcasting the song applied as a permanent ban, and not just at election time.
The men's lawyer, Wendy Aldred, said the decision failed to take into account Watson's right to freedom of expression under the New Zealand Bill of Rights Act. She had asked the commission to reconsider its opinion or the matter would likely head to court.
In a letter dated August 14, Chief Electoral Officer Robert Peden said if the song or video were broadcast on television or radio, they could encourage or appear to encourage voters not to vote for the National Party or John Key as a candidate.
"This is because of content such as the lyrics: 'I never cared for the fools who want to ruin this country with all their taxes and rules and I'm up here on Planet Key, you get the money, that's enough for me' ... 'I'm up here on Planet Key, immune to the GCSB', 'if you want compassion don't vote for me'."
