NZ’s election ends on a knife-edge

By James C. Pearce

No clear winner emerged as New Zealand went to the polls on Nov. 7 in a particularly testy election fought around the cost of living, unemployment and healthcare.

The Labor and National parties were in a dead heat leading up to election day, both deeply unpopular with voters. Labor’s polling numbers shrank under the weight of unpopular leaders, whereas Prime Minister Christopher Luxon, who leads the National Party and right-of-center coalition, has presided over a stagnant economy, stubborn inflation and brain drain. 

Preliminary results showed that the National Party was on 42 seats (19 shy of a majority) and Labor 36. This is historically low support for the two major parties, with a combined vote share of around 60 percent.

Elsewhere, the Greens picked up 16, with coalition partners ACT on 13, New Zealand First on 12, and the new and exciting centrist party, Opportunity, on 7. Te Pāti Māori, which represents Māori interests, got just 5.

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Luxon had governed in a right-of-center coalition with ACT and New Zealand First. Luxon and the Nationals emphasized economic management, restoring a budget surplus and expanding KiwiSaver, New Zealand's retirement savings scheme.

Labor, meanwhile, campaigned on a traditional center-left checklist of reducing living costs, improving healthcare and transport, and investing in housing, jobs and public services.

Yet it is Opportunity that will now play the role of kingmaker, claiming it is open to working with either party. New Zealand holds a general election every three years and uses a Mixed-Member Proportional system or MMP.

Voters make two choices for the representative of their constituency in parliament and a political party. The candidate in a constituency with the most votes wins and becomes an MP.

Political parties, on the other hand, must win at least 5 percent of the total party votes to secure a seat in parliament.

The seats are also allocated proportionately. If a party wins 40 percent of the total party votes, it will get 40 percent of the seats allotted for parties. The New Zealand parliament has 120 seats, of which 71 are allocated to constituencies, and the remaining 49 are distributed to parties proportionately.

Elections rarely result in an outright majority and parties forge coalitions to form a government. Luxon congratulated Hipkins on a "very hard-fought race" before addressing party colleagues, saying, "Whatever the final count, we are incredibly proud of each and everyone for you."

Luxon will now run a caretaker government until the final results are confirmed later in the month.

Negotiations will be tricky. The right-wing coalition could eke out a majority. It will come down to very fine vote margins, with Opportunity holding the keys to power and could result in a new progressive dream team.

Opportunity has some big ideas. Qiulae Wong, its polished 38-year-old female leader, is pitching a universal basic income of NZ210 per week.

The handout, she said, would replace most other welfare payments and provide a cushion for middle-class workers hit by layoffs due to artificial intelligence. To fund the scheme, the Opportunity Party would introduce a tax on urban land at a rate of 1.75 percent of its value per year.

Labor and the Greens could certainly get behind such a scheme. Yet, Wong says she can work with anyone. The millennial leader is pro-business and wants any climate policy to be business-friendly.

In terms of foreign policy, the war in Iran has impacted the cost of living in New Zealand too, working against the government. New Zealand has moved closer to the U.S. and Australia in recent years.

The National Party and Luxon struck a more conciliatory tone to President Donald Trump than, say, Australia’s center-left prime minister, Antony Albanese.

It joined the AUKUS Pillar II security initiative, nearly doubled defense spending, cut humanitarian aid and failed to recognize a Palestinian state in explicit public support of the U.S.

However, Iran, coupled with Trump’s erratic behavior, lack of interest in the Pacific and demands for more cash to pay for the military meant Luxon had to perform a delicate balancing act.

He wanted New Zealand to be taken more seriously, but also had to act seriously at home. As unemployment continued to rise and healthcare concerns rose to the top of voters' minds, national defense faded from the political agenda.

Now that Democrats control the U.S. Congress, New Zealand’s new government may be less inclined to listen to Trump and may prefer to pander to Congress; a left-of-center government led by Labor might just do that.

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