Election 2017

National single-minded about its only option

National goes into post-election coalition talks from today single-minded about forming a government with New Zealand First but open to whatever flexible arrangements its leader Winston Peters will require to keep them in power.

National's leader, Bill English, is not toying with talking also to the Green Party as an alternative to NZ First and has already thrown the Act Party, which is anathema to Peters, overboard.

English may be single-minded because in reality he has only one option, whereas Peters has two: he could also try to form a knife-edge majority with Labour and the Greens once the 15 percent of special votes have been counted and any seat redistributions have been declared.

On preliminary results, National has 58 seats, Labour 45, NZ First 9 and the Greens 7. The target to govern is 61.

The two leaders' chiefs of staff spoke yesterday and English expected to begin talks with Peters directly on the negotiations process when Peters was ready. The New Zealand First leader made no calls to other leaders at the weekend as he wants to talk first to his party executive and his caucus.

"On the other side of politics, a three way coalition arrangement with a couple of smaller units and a weaker Labour Party is going to be quite complex."

Bill English

A former colleague and NZ First MP Richard Prosser, who was demoted by the party before the election, claimed Peters would choose to go with the Labour Party, that he had scores to settle with National, and any consultation with his party would be a sham.

Labour's leader Jacinda Ardern reportedly spoke to Greens leader James Shaw late yesterday to begin sorting a process for talking to Peters. Ardern was still optimistic that Labour could end up in government.

The Prime Minister was explicit that a two party negotiation would be simpler and give stronger and more stable government than three, despite having worked for multiple terms with three or four party arrangements.

He indirectly referred to New Zealand First as one of the "small units" around these negotiations, a reference which Peters could take exception to, despite being just 7.5 percent of the preliminary vote. "On the other side of politics, a three way coalition arrangement with a couple of smaller units and a weaker Labour Party is going to be quite complex."

Asked if his talks with Peters failed and National was forced into Opposition  if he would consider resignation, English said: "We are not contemplating that. We have got a strong vote. If we had the vote that the Labour Party got then we would be talking about Opposition. But we got 46 per cent, almost one in two votes."

Late yesterday he indicated National would be patient but would not be stymied by Peters' timeframes. His National ministers would press on with work on new National policies simultaneous with coalition talks, which he agreed would need to happen at the pace NZ First would set. 

Discussing housing, poverty and lifting standards of fresh water, English said: "We are in a good position to be able to apply some real momentum to these issues and they will certainly be part of our planning over the next few weeks. While we will be setting out to negotiate a coalition agreement we will also be looking at the implementation of that programme that we took to the electorate and any enhancements we can make alongside any negotiation position we come to."

English on election night referred to both "stable majority government" and "stable operating government" as options to discuss with Peters, and yesterday professed himself open to arrangements that enabled "strong and stable government". "There are a number of different models...which have been tried through New Zealand's experience of MMP. There are plenty of examples to draw on."

On policies, English said National would want to "negotiate in a way that preserves the basics" of its claimed economic success.

"I would assume New Zealand First is interested in ongoing economic success as well, even if there's some different ways to how that's achieved."

He agreed both parties would have learned from previous coalition talks and governing arrangements, and would expect some indication from Peters if NZ First wanted to hold parallel talks with both National and Labour. "We are going to proceed with a negotiation on the basis that we have a fairly strong position for the National Party... there's a 10 point lead over Labour.

"We want to set about forming a strong stable government with a reasonable majority in the House."

"We are going to deal with the situation that voters have given us. I think that myself and Mr Peters are aware that the voters have been reasonably decisive...and will want to see us build on that fairly expeditiously."

"Parties are wanting to consider their position and to consider the special votes."

Jacinda Ardern

Ardern, speaking at a Labour post-election barbecue, said it would be hard for the parties to have substantive negotiations before knowing their final positions after special votes were counted.

"It's hard to go too far without knowing that remaining 15 percent," she said.

"Parties are wanting to consider their position and to consider the special votes."

Asked if that meant proper negotiations may not start until after the final results were declared on October 7, she said: "It's making sure that everyone's vote has been counted before we start forming a government," but noted "Of course we are here ready to have those conversations."

Labour's Jacinda Ardern does not believe National is not the only major party with a right to govern with NZ First. Photo: Lynn Grieveson

She rejected the proposition that only National had the right to form a government with New Zealand First. "I think New Zealanders would expect that we would form a credible, stable government with the parties they voted into office."

Peters said little of substance yesterday, except his priority was to consult his party. Asked if he was interested in the role of Deputy Prime Minister, he reportedly joked: "Been there, done that."

But a founding member of NZ First and former party president and MP Doug Woolerton, told Rachel Smalley on NewstalkZB early today that negotiating ministerial positions was important. By securing seniority and seats at the table, a coalition partner like NZ First could ensure a bigger party did not try to back track on agreed promises by claiming no money was available.

Woolerton said NZ First's history as a party with members from both sides of politics meant Peters was used to dealing with both National and Labour mindsets.

NZ First policies that could be in line for negotiation and adoption in talks with National could include the bigger party agreeing to:

- ditch its long-term plan to lift the age people receive superannuation from 65 to 67. NZ First says universal superannuation at 65 is a bottom line. This wouldn't give National an advantage over Labour, which is also sticking with 65, but it neutralises a big Peters bugbear.

- agree to a binding referendum on the future of the Māori seats in Parliament. It used to be National policy to reconsider them. Its core supporters would have few qualms joining this Peters crusade. 

- agree to a review of sorts of the Reserve Bank Act and the factors the bank must take into account in conducting monetary policy. Peters has been on this for years. It is a core economic plank for National but it is not beyond possibility that some way of amending the settings to address his concerns for a 'flexible' monetary policy and 'sensible' exchange rate regime are considered.

- tighten its annual net migration targets from the 73,000 a year now to somewhere nearer Labour's 40-50,000 - with an 'elegant solution' on the unskilled and foreign student categories long hated by Peters

- rule out more state asset sales. Apart from National's late campaign call on selling some Landcorp farms, none are planned. But also tighten the sale of land to foreigners and give Peters his register of foreign-owned land.

- make KiwiSaver compulsory and agree to a state-backed fund - Kiwifund, in NZ First terminology.

- consider the lower tax rate (20 percent) NZ First proposes for exporter businesses

- indulge one of Peters' vanity projects like his 10-point plan to boost the racing industry 

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