New Zealand’s unusual election leaves nationalist Peters as ‘The Kingmaker'

AUCKLAND, New Zealand — The campaign for New Zealand’s general election has been an extraordinary one. The run-up to Saturday’s vote included the resignation of three party leaders, the redemption of a prime minister who had previously led his party to its worst-ever result, the ‘Jacindamania’ phenomenon, the ejection from parliament of the country’s indigenous political party and the near-extinction of the Greens.

'The Kingmaker'

Now one man, Winston Peters, leader of the centrist-nationalist New Zealand First Party (NZF) holds the balance of power, having taken 7.5 percent of the party vote, which gives his party nine out of the 121 seats in parliament. He has been in the position of 'Kingmaker' twice before, going into coalition in 1996 with the centre-right National Party and in 2005 with the centre-left Labour Party. 

Mercurial and famed for his pugilistic approach to the media, Peters has been in parliament since 1978, with only one break (2008 to 2011). He was formerly a National MP, before being expelled from that caucus and forming NZF in 1993. He has previously served as deputy prime minister, treasurer and minister of foreign affairs. Now aged 72, it is widely thought — although he has never confirmed it — that this will be his last term in parliament.

Peters won the electorate of Northland in a 2015 by-election but lost the seat on Saturday. He is said to blame this at least in part on a public leak of information about an accidental government pension overpayment (which he promptly repaid) ascribed by him to underhanded play of operatives of the governing National Party. Whether or not that is an accurate appraisal of the situation or the seat merely returned to the party that previously held it, in line with general trends, Peters is nonetheless said to harbour resentment towards National. To compound matters, the motion to eject him from the National Party caucus in 1996 was seconded by none other than Bill English, the current prime minister.

'Jacindamania' 

Probably the most storied aspect of this campaign is the rise of 37-year-old Jacinda Ardern, a charismatic protege of the three-term Labour prime minister, later head of the UNDP, Helen Clark. Just seven weeks before the election, Jacinda Ardern took over as the fifth leader of Labour since Clark’s resignation in 2008. She replaced Andrew Little who had led the party since 2014 and had resigned in the face of polling that placed the party at 24 percent — while the National Party was polling in the mid-40s. 

What followed was nothing short of extraordinary. Ardern, who had long been a popular figure in ‘soft media’ such as women’s magazines and morning television shows, sparked a media phenomenon dubbed ‘Jacindamania’. Her popularity was internationally reported and the media focus on Ardern eclipsed the minor parties who rapidly dived in the polls. Within four weeks, Labour had rebounded dramatically, jumping to 43 percent and overtaking National for the first time in more than a decade.

'Let’s Tax This' 

Among this reversal of fortune, Ardern decided to campaign on numerous taxes, including a proposal to introduce a capital gains tax that has been widely considered to be a significant factor in the defeat of Labour in the previous two election campaigns, and had in fact been retired as a policy by Little. Ardern made a “captain’s call” to bring back the capital gains tax and went further to announce that an expert tax working group would be appointed after the election to decide tax policy to be implemented that term. 

New Zealand is an outlier among wealthy countries in leaving capital gains untaxed except in certain limited cases. Labour’s focus on capital gains is intended to discourage the country’s disproportionately high investment in residential real estate — identified as a major factor in the rapid decline in housing affordability in the cities and particularly the largest city, Auckland. This appeals particularly to younger voters unable to buy their own homes at current prices. 

Although the policy was sold as being a way to encourage more housing affordability, it suffered from not being targeted solely at housing, appearing to include farms and businesses, and having exceptions for “the family home” introduced after the initial announcement. 

A lack of clarity around a proposal to introduce a water use levy with funds raised targeted to restoration of waterways also raised the ire of the powerful dairy and horticultural sectors, introducing something of an urban-rural split to the campaign, to the detriment of Labour which is strongest in urban areas. 

These announcements did not survive media scrutiny and National exploited the lack of clarity in Labour’s tax policy with a particularly effective campaign advertisement repurposing the Labour Party’s slogan of 'Let’s Do This' to 'Let’s Tax This'. The incoherence and ad hoc nature of these announcements, as well as the ensuing back-downs, arrested the party’s momentum.

Under-30s stay home

Hopes of Ardern being propelled into the prime ministership in a ‘youthquake’, in the style of Jeremy Corbyn’s UK Labour election revival after record enrolment and voting by voters under 30, failed to be realised. Voter turnout was up only 0.9 percent (to 78.8 percent) on the previous election. 

Nonetheless, the 35.79 percent of the party vote that Labour achieved on the day (against National’s 46 percent) is the best electoral result for Labour since losing power in 2008. Ardern appears secure as Labour leader and, whatever the outcome of coalition talks in the next few weeks, is tipped as a serious contender for the prime ministership in 2020.

The patient English

After the shock resignation of highly popular prime minister John Key in December 2016, the highly-regarded minister of finance, Bill English, was installed as leader of the National Party and prime minister. Key had won three elections as the leader of National and retained historically high preferred PM ratings. He was best known for his affable, relaxed style to leadership, in stark contrast to English’s rather dour and serious demeanour. English was dogged by his 2002 leadership of the party to its worst result ever. Yet in the intervening 15 years he has gained experience, leading the treasury through the shallows of the global financial crisis. His mien too has thawed throughout the campaign, helping him deliver a party vote only marginally lower than those of the previous nine years under Key. 

Maori Party out

The Maori Party, an indigenous peoples’ party, was voted out of parliament altogether on Saturday. Formed in 2004 by a former Labour MP who left the then-government over a highly controversial piece of legislation that sought to extinguish the legal recognition rights of New Zealand's indigenous Maori, to native title over the foreshore and seabed around New Zealand — where they have maintained a traditional connection with the land and water (Native title holders have the right to be compensated if their land or water are acquired for development or access). 

Non-Maori were concerned that public access would be ceded. Although these fears were mostly baseless they were politically exploited. The issue was a faultline in New Zealand politics until the act was repealed in 2010 with strong views on both sides. 

The party has been in coalition with the centre-right National Party since 2008, winning significant policy concessions and, at its peak, held five seats in the 120-seat parliament, although this was down to two seats in the 2014-2017 term. Characteristic of the typical closeness of NZ’s mixed-member proportional (MMP) representation political model, the outcome of the entire election has hinged on less than 1,500 votes in one electorate. Had Maori Party MP Te Ururoa Flavell held his seat, the current National-led government would have had enough seats, together with ACT’s one MP, to form a government without any other partners required.

Eating the Greens

At the beginning of the campaign, the Green Party of Aotearoa New Zealand was on track for an historically high result. In the end, however, they were fighting for survival. First they lost the centre, then they lost the left. Co-leader Metiria Turei admitted to welfare benefit fraud that she had committed as a solo mother in the 1990s, ostensibly to highlight child poverty. The story garnered sympathy and condemnation in the expected quarters but the narrative started to fall apart when it was discovered that Turei had failed to tell the full truth. 

She did the bare minimum to avoid responsibility for each new disclosure and never apologised for her actions, alienating many Green voters. Eventually she was forced to resign as co-leader and Labour’s rise pulled away left-wing Greens who saw a new hope in Labour.

The Greens saw a brief poll bounce to 15 percent following Turei’s initial disclosure but, ironically, it was Turei’s tactic that set in motion a chain of events leading to the halving of the Green vote. The Greens' rise came at the expense of Labour, taking them to the record low that prompted Andrew Little to step down and install Jacinda Ardern in his place. In the course of Ardern’s meteoric rise, the Green's polling plummeted. It dropped below the five percent threshold required to remain in parliament at one point. On election night, the Greens registered 5.8 percent.

A long wait

New Zealand must now wait until October 12, at the earliest, to learn who will make up its next government. Historically, Peters has always formed a governing coalition with whichever party wins the most seats in parliament. But there is speculation that this time might be different. He will be looking to secure strong legacy policies and ensure that the party survives his retirement from the House. 

A cleaner and less complicated National-NZF coalition may yet be built on respect, legacy policies and righting of past wrongs. Labour may also be able to broker a three-way coalition with NZF and the Greens. It is not uncommon in Scandinavian democracies for the largest party to find itself excluded from a governing arrangement but this would be unprecedented in NZ, and would likely be unstable given long-standing mutual hostility between the Greens and NZF. 

A third, much less likely, option is that NZF may sit on the cross-benches, offering votes only of confidence and supply, accepting or rejecting each government bill. However, although it places NZF in a powerful position, it makes it difficult for them to set a government agenda and would quickly create antipathy towards the party.

Ultimately, although Ardern’s Labour mounted an impressive recovery, they have only consolidated the votes on the left bloc and have taken virtually no votes from National. On the other hand, although National is by far the largest party, their allies on the right have virtually disappeared and the right bloc has diminished from an aggregate vote of 52 percent (National, the economically liberal ACT Party, and the socially and fiscally conservative Conservative Party) to National’s likely final vote of just over 45 percent. 

The election was also striking for the high concentration of the vote to the two major parties at almost 82 percent, the highest over a decade. With 61 seats needed to govern, the projected outcome of the election puts a National-NZF combination at 65 seats and a Labour-Greens-NZF combination at 63 seats. Neither National nor Labour and the Greens can form a government without NZF.

The Kingmaker reigns again.