Speaker David Carter has ruled that UnitedFuture cannot keep tens of thousands of dollars in party funding and its leader Peter Dunne will be treated as an independent MP in Parliament.
Carter said he would revisit the matter if UnitedFuture re-registered as a party.
Dunne told Fairfax he believed the ruling would cost him around $100,000 in party funding. Parliamentary Service confirmed this afternoon the loss was $122,000, plus a salary cut of $13,900.
UnitedFuture was deregistered as a party last month after it acknowledged it could not be sure it had the required 500 members.
Carter gave the party time to rectify the matter, but he said today it was going to take longer than the six to eight weeks he originally anticipated. Carter said the matter was still with the Electoral Commission. The commission was independent and he did not want to influence its decision.
But the time it would take for UnitedFuture's re-registration to be resolved had the potential to disrupt the business of the House.
His ruling would take effect today and would not be backdated.
He said that as Speaker he had to balance two interests - that it was not tenable for a party to be funded if it was not registered, but that that a party's representation expressed at a general election should not be interfered with lightly.
"As from today the parliamentary membership of the UnitedFuture Party will no longer be recognised as a party for parliamentary purposes," he said, adding that Dunne would be treated as an independent for parliamentary purposes.
In doing so he believed he was balancing the public interest.
In a statement this afternoon, Dunne said he accepted the ruling.
"I think the Speaker had no credible alternative, given the intransigent attitude of the Electoral Commission to UnitedFuture's re-registration process," Dunne said.
"Once UnitedFuture has been re-registered in the next few weeks, I will look forward to discussing the matter once more with the Speaker."
Earlier today the Auditor-General Lyn Provost said it was up to the Speaker to determine whether UnitedFuture should lose Parliamentary funding because of doubts over its membership.
The entire NZ First caucus and Labour MP Trevor Mallard staged a walk-out from Parliament earlier this month after Carter gave UnitedFuture up to eight weeks to apply to be re-registered as a party.
Carter continued to recognise Dunne as a party leader, meaning Dunne's office was still entitled to up to $100,000 of additional funding.
Following the walkout Mallard wrote to the Auditor-General asking her to confirm whether funding being provided to Dunne's office was being spent within the scope for which it was given.
Provost today published her reply to Mallard confirming that if the Speaker continued to recognise UnitedFuture as a party for Parliamentary purposes, the payments were lawful.
"It follows that if the Speaker determines that United Future is no longer entitled to be recognised as a party for parliamentary purposes, its funding entitlements will change accordingly."