Date posted: 26/09/2017 3 min read

Negotiations start for NZ's next government

New Zealand voters have delivered another uncertain verdict under the country’s proportional representation system, with neither the centre-right National Party nor the combination of the centre-left Labour and Green parties able to command a parliamentary majority.

In Brief

  • The New Zealand election produces another uncertain verdict with New Zealand First holding the balance of power.
  • The National Party can command no more than 59 seats in the country’s 120-seat Parliament.
  • Chartered Accountants ANZ calls for coalition negotiators to avoid ad hoc reforms designed only to meet political objectives.

By Pattrick Smellie.

For the third time since Mixed Member Proportional (MMP) voting was introduced in 1996, the country faces coalition negotiations that depend on the populist New Zealand First party, led by its 72 year-old founder, Winston Peters.

Peter Vial CA, New Zealand Country Head of Chartered Accountants Australia and New Zealand (CA ANZ), says: “We encourage all of the parties negotiating potential coalition deals to focus on sound policies that produce the best economic and social outcomes for New Zealand and to avoid ad hoc reforms that are designed only to meet political objectives.” 

Voting is not compulsory in New Zealand, so it is notable that last Saturday’s election turnout of 78.8% of registered voters was the highest since the last time there was a change of government, in 2008, when Sir John Key led the National Party to the first of three election victories.

Key resigned in December last year, leaving his long-serving deputy Bill English to make the case for a fourth term. The problem for English, despite National winning some 46% of the popular vote, is that two of the three minor parties who have allowed National to govern in the past nine years have been swept from Parliament.

Related: Taxing Times: The quest for certainty and coherence

CA ANZ’s advice on tax policies for the next NZ government.

As a result, based on election night results, National can command no more than 59 seats in the country’s 120-seat, single-chamber Parliament, two short of the slenderest parliamentary majority. NZ First’s nine seats represent English’s only path to power.

So far, the arithmetic does not work so well for Labour, led by its leader of just seven weeks, 37 year-old Jacinda Ardern. It was disappointed with a 35.7% showing on election night and, in combination with the Green Party, Labour can only command 52 seats. 

With NZ First’s nine seats, it would have a one-seat majority. Conventional wisdom says that is too small a margin for comfort.

Bill English, leader of the National Party. Photo: Phil Walter / Getty Images

(Pictured: Bill English, leader of the National Party. Photo by Phil Walter/Getty Images)

However, some 15% of the total vote has yet to be counted and so-called “special” votes traditionally favour parties of the left. That tally won’t be known until 7 October, but all parties anticipate National losing one or two seats from election night.

At that point, a more even contest for the mercurial Peters’ favours would emerge.

In the meantime, and with a tradition of keeping the nation guessing, Peters is saying nothing about his preferences. He has supported both National and Labour-led governments in the past, although has never survived a full term as a minister in either.

On paper, NZ First leans left and interventionist, and looks a natural partner for Labour, but Peters has never liked the Greens and his support base, reduced by Labour’s late resurgence, leans right. 

As this will be his last election, expect Peters to take his time deciding which way to jump. 

Pattrick Smellie is an owner of BusinessDesk, a New Zealand economic and business news service and a one-time NZ correspondent for The Australian.

Main image: Winston Peters, leader of the populist New Zealand First party. Photo by Hagen Hopkins/Getty Images

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