National needs lottery win to pay off its debt

Unless National wins Parliament's version of the lottery it appears stuck between a rock and a hard place regarding its overspending on election broadcasting, facing a worst-case fine of $500,000 if it repays the money.

The party was entitled to spend $900,000 on election advertising but spent an additional $112,000, claiming after the election its media agent had not realised the initial figure was GST inclusive.

It owes the $112,000 to five media agencies, but says the Broadcasting Act makes it illegal to repay them.

National leader Don Brash yesterday tried to introduce a private member's bill clearing the way for a one-off law change to enable the repayment, but New Zealand First, the Greens and the Maori Party opposed it.

All MPs must support such a bill for it to be introduced immediately, otherwise it sits in a ballot where it may or may never be drawn. There is about a 3 per cent chance of a successful draw.

Dr Brash plans to try reintroducing the bill today, but the three parties don't plan to change their minds, placing National in a difficult position.

It must now either leave its creditors in the red and risk being sued by them, or break the law and repay the money.

Out of pocket are: TVNZ $57,369; Radio Bureau $24,895; TV3 $20,013; Sky $6887 and Prime $3327.

Both TVNZ and Canwest MediaWorks (for both TV3 and The Radio Bureau) said yesterday that they wanted to recover the money and had not ruled out suing for it.

The Herald has been told that despite saying it wants to repay the money, National's general manager, Greg Sheehan, and its lawyer Peter Kiely have warned media organisations that legal action to recover the money might be unsuccessful because the advertising was sought on the basis of an illegal contract.

Electoral Commission chief executive Helena Catt said yesterday that National could repay the money without a legislative change, but it would be illegal. The commission would then be obliged to report the overspending to the police as a breach of the law.

The commission would probably report just one breach, but if five payments were made the police could consider each an individual offence, each worth a maximum fine of $100,000 under the act, she said.

The police have already investigated whether to prosecute National for the overspending, but paying over the money would constitute a separate and new breach of the law, she said.

National referred the Herald to Mr Sheehan, but he did not return calls.

Dr Catt said it would be up to a judge to determine the "illegal contract" argument, but it was possible the media companies could argue that as National was at fault for that, the media companies should not be left out of pocket.

The Greens want the money docked from National's broadcasting allocation next election.

NZ First leader Winston Peters said "They broke the law and ... they must face the consequences".