New Zealand: Coalition negotiations – the factors which will matter in the New Zealand political spectrum

Last Updated: 25 August 2017
Article by Andy Nicholls and Frank McLaughlin

Most Read Contributor in New Zealand, September 2017

If New Zealand First ends up with the balance of power after the elections, as current polls suggest, we may have to wait until 12 October to know what the next government will look like. That is when the final count will be delivered to the Governor-General and is the deadline Winston Peters has set himself.

We know from the Pre-election Economic and Fiscal Update (Prefu) that there will be significant fiscal headroom for policy concessions. But what will the big parties be able to wear, and where will they draw the line?

We look at the factors that will be top of mind when the coalition negotiating teams meet in smoke-free rooms behind closed doors.

National's dream result – to form a government with its existing coalition partners; the Maori Party, Act and Peter Dunne – was dealt a hammer blow when Dunne stepped down.

This, combined with the knock the Greens have taken on the left of the spectrum, has put Peters firmly front and centre. Assuming he chooses to enter parallel negotiations with National and Labour, the deal-making could easily stretch out to 12 October because:

  • New Zealand First will have immense bargaining power and will be looking to maximise its influence, and
  • the negotiators will be developing a coalition agreement from scratch rather than building on existing agreements (as was the case after the previous two elections).


The Prefu shows a much stronger surplus for the year ended next June than forecast in the May budget – up from $1.6 billion to $3.7 billion.

But much of that is driven by a bigger tax take than anticipated – an effect that is expected to tail off after this year.

This, plus a slightly lower growth track, means that the surpluses for the following years have been revised downward from the budget numbers.

The fiscal envelope

Given the Budget Responsibility Rules agreed by Labour and the Greens, the fiscal parameters will be much the same between Labour and National. The Labour-Greens have given themselves scope for extra spending on health, education, income support and the restoration of contributions to the Cullen Fund by:

  • setting a slower debt reduction path – 20% of GDP by 2022 compared to National's 10-15% by 2020
  • scrapping the tax cuts scheduled to take effect on 1 April 2018 (total estimated revenue impact almost $6.5 billion over the next four years), and
  • extending the 'brightline' test for taxing capital gains on rental property investors from two years to five years.

Both sides have made allowances within their budgets for coalition concessions. If the race between National and Labour stays tight, they might eat into this provision by ramping up the spending promises. But the scope for this is limited because – for as long as New Zealand has high private sector debt and is running a current account deficit – the government must maintain a relatively strong balance sheet.

Other considerations

Two other considerations which will drive the decision-making are the degree to which different policy items align with a party's branding and, where there is policy disagreement, how big are the rats which the bigger party would need to swallow.


There is a considerable overlap of values across the New Zealand political spectrum, which is to be expected given our small population. So the competing party brands and their points of divergence are often – although not always - more a matter of emphasis than of difference.

Below is our take on the four main brands.

National a strong economic growth focus supported by a small state/low tax preference
Labour a "caring" state, progressive taxes, a concern for those on low incomes
Greens environmentalism and the alleviation of poverty
New Zealand First economic nationalism, support for the elderly and provincial New Zealand

What size the rats?

Any concession which is at odds with these core principles will be a big ask (although almost nothing is impossible when power is the prize). Concessions which may not appeal but can be accommodated within the "brand" will be much less problematic.

The other big consideration relates to how "discrete" an initiative is. Can it be bolted on to the side of the government's programme or is it intrinsic? Is the expenditure large or small, one-off or continuous? Will it have ripple effects into other policies or can it be contained?

On this score, New Zealand First's policy that government agencies should favour New Zealand wool for both floor coverings and insulation, although scoffed at by Bill English, would be much easier for National to accept than would its proposal to set up KiwiFund, a state run KiwiSaver provider to compete with the private sector.

The Greens' success in getting National on board with home insulation programmes is a product of the same thinking. It is relatively inexpensive, delivers a positive benefit and is uncontroversial.

Chapman Tripp will produce commentaries throughout the election campaign on those issues most important to business and to the broader economy.

The information in this article is for informative purposes only and should not be relied on as legal advice. Please contact Chapman Tripp for advice tailored to your situation.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.