The New Zealand Rugby Union (NZRU) is confident the threat of financial penalties will be sufficient to deter provinces rorting the Air New Zealand Cup salary cap.

Rather than follow the National Rugby League's (NRL) lead and also have the ability to strip competition points -- and reduce the cap available to guilty club the following season -- NZRU deputy chief executive Steve Tew considered the organisation's financial penalty scale as reason enough for provinces to operate by the book.

The cap, designed to create a greater competitive balance by spreading top players throughout the 14 provinces, has been a contentious issue for powerful unions such as Canterbury and Auckland.

Both have had to unload personnel to stay inside the $2 million maximum.

"Our view is unions won't be prepared (to risk) the penalties. The penalties are severe -- you'll be buying a very expensive trophy," Tew said at the launch of the Air New Zealand Cup competition here today.

"If you exceed the cap by $100,000...it will get expensive."

Under the penalty provisions, first offenders are penalised $3 for every $1 they exceed the cap.

If a second breach is incurred within five years of the original, the penalty increases to $5 for every $1 while the maximum is $10 for every $1 for a third breach,

Also, where a breach is deemed intentional or reckless, the NZRU has the power to slug the union $10 for every $1 exceeding the cap.

Tew said the possibility of stripping points -- as the New Zealand Warriors suffered this season for exceeding the NRL cap -- was not an option after discussions between the NZRU and New Zealand Rugby Players Association (NZRPA).

"Both were adamant the unions should be penalised financially not the teams," Tew said, adding players would also not be culpable.

"The difficulty is how do you prove whether a player is aware or not if his payment takes his team over the cap?"

The NZRU moved to police the cap yesterday by appointing an auditor to scour each provinces' books.

Craig Neil, New Zealand's former assistant auditor general, will take up his new role as salary cap manager next month.

Former NZRU player management advisor Cameron Good will work as his assistant.

Tew said monitoring the cap was a key component of the NZRU's competitions review, the catalyst for the revamp of the old National Provincial Championship (NPC).

"This is important if we wish to enhance competitiveness and create an even and exciting competition," he said.

Tew said individual province's handling of the salary cap would be "as transparent as possible" though he conceded the NZRU still had to work through confidentiality issues concerning player contracts.

Unions have been given dispensation under the cap for All Blacks, given they will not be available for the entire competition.

A veteran player with more than eight years NPC experience will also be eligible for a long-service benefit not included in the cap.

Dispensation will also be available if an injured player has to be replaced.

Meanwhile, Tew revealed only Canterbury, Auckland and Wellington were operating close to the cap budget.

"We are a fair way off anyone else getting close to it," he said.

NZPA