I’m not entirely sure on the whole process for New Zealand, however, government funding comes for advertising and some election costs, then there is a leader’s fund which can’t be used for election campaigning, and finally there is a Parliamentary Services budget for MP’s offices and secretaries etc. All the rest comes from donations.
In election time, parties are allocated a budget cap. There was (and still is) some controversy over this, as most of the major parties were late in returning the books for checking. In addition, one MP went to court under allegations of overspending. A candidate is allowed to spend up to $20,000 in their electorate campaign. Any campaign material (billboards etc) must be in at least 11 electorates for it to be considered a party campaign material and not a candidate campaign material. The money for a candidate comes from private sources.
Another thing was the National Party (conservatives, standing for financial responsibility) overspend its advertising budget because it “forgot” to count Goods and Services Tax in its expenditure. The result spending $200,000+ more than it should have. It couldn’t pay back the broadcasters, becuase then it would be breaking the law by overspending. At the same, it couldn’t leave the businesses, and a state-owned (and taxpayer-funded) broadcaster short of the money they were owned. It’s solution?
It tried to change the law to give it a once-off exemption!
It was voted down in Parliament, and the matter is still unresolved, though the media may be working on a court case to recover the money.
I think that the current system in New Zealand is the best. A mix of government funding for certain areas to give more parties fairer chances, and private funding for personal campaigns, with caps.