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The broadcasting watchdog said it had declined to uphold a law and order complaint about an exchange on RadioLive between Jackson and co-host John Tamihere during the Ports of Auckland industrial dispute in March.
Mr Jackson, a former trade unionist and Alliance Party MP, backed workers' calls for eight-hour shifts and job security, slating port bosses as being "greedy, filthy, right-wing fundamentalists".
Intimidation or violence was needed to stop non-union workers being called in to do the striking workers' jobs, he said.
The radio rant prompted a complaint that Mr Jackson incited physical violence and the destruction of personal property.
Mr Jackson soon retracted his comments and RadioLive issued a statement saying that his comments should not be taken as a call for violent action.
In its findings, the BSA said Mr Jackson's comments were "extreme" and advocated strong industrial action.
But it ruled that most listeners would have judged the broadcast to be a "good humoured, provocative verbal sparring".
"It was a kind of letting-off of steam," the BSA concluded.
"It was not serious advocacy of violence. It was the sort of ranting that our society is willing to allow and not take seriously, particularly on talkback radio."
The BSA took into account Mr Jackson's retraction and explanation and found that listeners had not been encouraged to break the law.
The broadcasting watchdog also released its annual report today, which showed that it received fewer complaints than last year.
The BSA received 195 complaints and issued 162 decisions, compared to a record high last year of 236 decisions.
"We believe that if the system is working well, complaints will drop over time," chief executive Susan Freeman-Greene said.
"The implication of this is that broadcasters breach codes less often, the public are better able to identify breaches and the broadcasters' own complaints processes are more effective, prompting fewer referral to us."