Election 2011 Analysis

The aftermath: leadership contest and government deal-making

[30 November 2011]

Saturday's election proved the opinion polls correct and condemned the Labour Party to its worst ever result under MMP.

The consequences have been almost immediate.

Labour leader Phil Goff gave a dignified speech on Saturday night which hinted strongly he would resign. At Tuesday's caucus meeting he told fellow MPs his resignation would take effect on 13 December. His deputy Annette King is also resigning.

That has set off a contest to decide who will replace them and attempt to lead Labour back into contention at the 2014 election.

Labour first must determine what caused its loss and then decide what it needs to do to win back public support. Clearly the party lost support to the Green Party, which finally got over 10% in the party vote, and possibly some to New Zealand First.

More worryingly for the party is that Labour voters continued to stay at home and not vote, just as they had done in 2008.

After three terms of a Labour-led Government the apathy in 2008 is easy to understand. But the non-vote of this year is more difficult to comprehend.

Labour went into the election promising to raise the minimum wage to $15 an hour, give low income workers a $10 tax break and take the tax off fresh fruit and vegetables. That surely should have appealed to Labour's more traditional constituency.

In the end, Labour might have been handicapped by a number of factors. Instability during its first term in Opposition - and former MP Chris Carter can take particular credit for that - did not help. Nor did a number of scandals involving senior MPs including Shane Jones and former MP Darren Hughes.

So the party and Mr Goff in particular went into the campaign well behind and with a lot of ground to make up. Despite running a strong campaign the party made up no ground on National. Indeed it slipped back from the minimum 30% party vote it had wanted to achieve.

As well, National campaigned strongly on the theme of stability.

Prime Minister John Key, who retains celebrity status, argued successfully that in these times of international economic uncertainty voters could not afford to expose New Zealand to greater risk by changing governments. He emphasised that point by suggesting Labour would need to rely on both the Greens and New Zealand First to form a government.

In the end people voted for a popular Prime Minister and a government which was seen to have managed the country through turbulent times.

National's policy to partially privatise state-owned energy companies and to reform welfare appeared to have no impact on its support.

Policy debate

While Labour was soundly beaten it has made what could be an enduring contribution to the policy debate in this country.

Phil Goff had the courage to propose some policy changes which even John Key, despite his immense popularity, refuses to acknowledge.

When, though, will the country be forced to address the question of raising the age of eligibility for New Zealand Superannuation to 67? While Mr Key argues about Nationals' fiscal rectitude it is clear the present age of entitlement is no longer sustainable.

Most countries are raising the age of entitlement to state pensions. Britain is now bringing forward the time by which it will raise the age to 67 to 2026 to save £59 billion.

Compulsory KiwiSaver and introducing a capital gains tax were all bold policies promoted by Labour but which did not gain any traction with the public.

National, on the other hand, ran a cautious campaign by comparison although it did take a risk with its partial asset sales policy. Being so far ahead in the polls, its strategy was to avoid mistakes.

Aside from National, the two big winners are the Greens and New Zealand First.

Winston Peters has hauled his party back from the brink of oblivion after being bundled out of Parliament in 2008. If nothing else he and his fellow MPs will make the next three years interesting.

The Greens will again face the challenge of making gains from Opposition through whatever memorandum of understanding they can reach with National.

First, though, National has to do deals with United Future, ACT and the Maori Party.

A National-led government is a given because ACT and United Future will support it. Reaching a deal with the Maori Party might be more difficult.

The party lost its Te Tai Tonga MP Rahui Katene and its overall vote was slashed, a sign its supporters are unhappy about its relationship with National. Will it do another deal and run the risk of losing more seats, possibly all three it currently holds, at the next election?

It needs to drive a strong bargain with National but it has only limited negotiating power, given National does not need it to govern.

Mr Key is paving the way for a possible deal, though, by saying the Maori Party does not have to support National's asset sales policy. That could be placed outside any confidence and supply agreement they sign.

On that policy he would have to rely on just ACT and United Future for support. If National loses a seat after special votes have been counted that would then mean a 61 to 59 vote in the 121-seat Parliament in favour of partial privatisation.

Not a strong mandate for what has been a contentious issue, but a majority nonetheless.