The Electoral Commission said that despite statements that the show was an "election-free zone", Mr Key had associated himself with well-known people and had a chance to raise his personal profile unchallenged. It said this was likely to be seen to encourage people to vote for Mr Key or National.
"In the commission's view it is unrealistic for a programme hosted by the Prime Minister or any other prominent politician to be 'election-free', irrespective of its content, when the host is in the midst of contesting a parliamentary election as party leader and candidate."
However, Mr Key narrowly escaped also having to account for the programme as an election advertisement. The commission said that although it would otherwise be considered election advertising, it fell under an exemption for editorial content because Mr Key was under the direction of RadioLive.
That means National does not have to include the cost of it as an election expense, which would possibly have pushed it over the election spending limit.
However, legal commentators yesterday suggested National might have to declare it as a donation instead.
National Party president Peter Goodfellow said he was seeking legal advice on that. He doubted it would be considered a donation because it was not an election advertisement.
However, electoral law expert Graeme Edgeler said it was possible it should be declared as a donation.
"Even though it is not an election advertisement, that doesn't mean the cost of it isn't something that was donated to the National Party or to John Key. It's certainly something that the Electoral Commission should look at."
Mr Key's office said it was now a matter between the police and RadioLive and he would not comment.
Labour laid the complaint with the Electoral Commission and yesterday its deputy leader, Grant Robertson, said Mr Key got thousands of dollars worth of free publicity and should declare it as both a donation and election expense. Mr Key had known about advice from the Electoral Commission that "extreme caution" was needed, but had gone ahead anyway.
"He couldn't resist the opportunity for free self-promotion."
MediaWorks Radio general manager Jana Rangooni was surprised at the finding. She said RadioLive had worked with the commission to make sure the programme would not be in breach of election rules.
"We took all the advice and care we could to ensure this was not an election programme or an election ad."
The commission's decision said it was up to the police to decide whether to prosecute RadioLive. However, it noted it had advised RadioLive of the risk involved in the programme, the close scrutiny it would be given and of the serious penalties involved.
- additional reporting APNZ
THE DECISION
* Referred to police by the Electoral Commission:
* RadioLive's broadcast of the Prime Minister's Hour was an election programme under Broadcasting Act because Prime Minister was friendly with famous people and raised personal profile. Not an election advertisement under the Electoral Act.
* One News 6pm bulletin on November 26, 2011 (Election Day). For a comment which was likely to influence voters.
