By Alex Tarrant and David Hargreaves
New Zealand First will enter into a coalition with Labour, meaning Jacinda Ardern will become Prime Minister, completing a rapid rise to the top after taking over as Labour leader less than three months ago.
Ardern said this "is an exciting day".
"We aspire to be a government for all New Zealanders and one that will seize the opportunity to build a fairer, better New Zealand," she said.
“We will work hard to ensure New Zealand is once again a world leader, a country we can all be proud of. We said we could do this, we will do this."
The final details of agreements were still being worked out on Thursday, however NZ First have been offered four Ministerial positions and one under-secretary post, while the Greens will be outside of Cabinet but will have three ministerial posts in areas of their specific interest and an under secretary role and will give the coalition Government support on confidence and supply issues.
NZ First leader Winston Peters has been offered the Deputy Prime Minister role but has not yet decided whether to accept it. Other roles had also been offered to him, he said without elaborating on his or roles for his caucus. He and Ardern did say, however, that New Zealand First showed a strong interest in regional development policy.
Greens leader James Shaw said this was the best result for the Greens - they would still sit on Cabinet commitees and in Cabinet when their specific issues were discussed, but would be free to 'agree to disagree' on other Cabinet decisions if they wanted to.
Shaw said the positions the Greens will get will relate to their three core election platforms - clean rivers, climate change and eradicating poverty - but he wouldn't say what the positions agreed on were, exactly. The Greens later on Thursday voted amongst their delegates to approve the deal they agreed on with Labour.
Labour is set to hold a caucus meeting Friday to "vote" on Cabinet positions for its own caucus, Ardern said.
She also said that the full texts of the agreements with NZ First and the Greens would likely be released next week as well.
Five key policy areas: What Interest.co.nz readers need to know:
Peters wanted a Singapore-style solution but didn’t get it. But we will get, at least, Labour’s proposed changes to the Reserve Bank Act to include full employment as a dual mandate alongside price stability and changes to the Bank's governance and decision-making structure. One would expect there might also be language in the next Policy Targets Agreement about the currency.
It looks like KiwiBuild will get the green light. Peters referenced the building of 10,000 affordable homes per year – in line with Labour’s policy. Interestingly, he said that during the negotiations the parties had clarified what ‘affordable’ really meant.
Ardern was asked what net migration levels would be under this government. She replied: – “you’ll already be familiar with our policy and that is what we’re sticking with,” meaning the 20,000 to 30,000 reduction from targeting low-grade student migrants is the policy. Peters said the focus will be on unskilled workers, and ensuring “genuine export education.” He said those in the regions who needed to bring in skilled workers shouldn’t be worried.
Water and fertiliser taxes
On water tax, it sounds like that’s gone. Ardern said all three parties had a common understanding that they wanted to clean up waterways, but different “methodology” for how to get there. She said a path had been found on which to go forward collectively.
On the nitrates fertiliser, we’re not so sure. James Shaw told media that it was a policy the Greens had run on, where Labour was instead suggesting the water tax. He wouldn’t say if it was in or out.
Ardern and Peters said this was a big area of interest during the talks – there’s even a possibility that Labour gives New Zealand First Ministerial responsibility here. No specific policies yet, though.
Capitalism needs to be reshaped
Peters said the primary driver of the decision was New Zealand’s form of capitalism had become foe rather than friend of New Zealanders.
Capitalism needed to be reshaped by the next government, he said.
Peters said New Zealand First believed an economic downturn was already here, noting the slumping housing market, ebbing consumer confidence and nervous markets.
He also made mention of how a lower Kiwi dollar would be desirable.
The New Zealand dollar had dropped reasonably sharply on Thursday, and fell a little more after Peters made his announcement. On Thursday evening it was at about US70.5c, down over a cent on the day.
He said he had not yet chosen which portfolio to take – as well as Deputy Prime Minister other portfolios had been offered to him, but he wouldn’t say which.
New Zealand First did not have the Finance Minister job. But he said he expected a change to the Reserve Bank Act.
Peters said it was fair to say that if you looked at Labour’s and NZ First’s positions on monetary policy, including two bills that failed by one vote, two times, “that…would be where this change takes place.”
Asked whether he saw his failed private members’ bill on Reserve Bank reform coming back as a private members’ bill, he said, he could see “something like that” but would have to talk to Labour first about it.
I asked whether he expected to go the whole hog in terms of the Singapore-style model where the currency was the key monetary policy tool rather than the Official Cash Rate.
Peters responded that “we should go down the road of the Singapore model...but I didn’t secure that.”
Pending economic doom
Peters began by going over the ground that NZ First had to wait until the special votes had been counted. He said the wait was vindicated. He also said that an eleven day wait for government formation was as short as responsibly possible, drawing contrasts with the long-wait in store for a new German government.
He said the decision was that of his party – not his. There wasn’t full agreement in his caucus, although Peters wouldn’t go into what extent this was the case.
Before announcing he would go with Labour, he hit out at the way both major parties ran their campaigns. He said Labour and the Greens had run a joint campaign as an alternative government. While the media may have lumped NZ First’s potential vote in with them, he said NZ First was never consulted on this.
Meanwhile, that allowed Bill English to run his ‘cut out the middleman’ theme, Peters said.
These two examples were why we were in the position we are today, he said, noting that New Zealand First’s decision – with the MMP environment – would give the governing party a majority.
Then he went into his economic warnings. New Zealand First could not ignore the economic crisis and slowdown that was already here. A slowing housing market, nervous markets, declining consumer and business confidence meant the next government needed policies for economic resilience.
Peters said he was saying all this now so that the media could not blame the coming downturn on New Zealand First – it was here already.
New Zealanders had come to view today’s capitalism not as friend, but as foe, he said. This needed to be resolved.
Peters later said that the next government would focus on regional economic development and resilience.
Meanwhile, he wouldn’t say whether New Zealand First had stopped Labour’s water tax, but did say that NZ First had done the best they could for the people in the provinces and of the rural sector.
Watch Green Party co-leader James Shaw in the video below:
This is the statement Labour issued on Thursday evening:
Labour is pleased to have successfully concluded negotiations with New Zealand First as a critical step to forming a Labour-led progressive Government, says Labour Leader Jacinda Ardern.
“I thank the New Zealand First Party and Leader Winston Peters for agreeing in principle to a coalition arrangement with Labour.
“The negotiations have been courteous, constructive and robust. Throughout, we have focused on our shared values and the policies that can take New Zealand forward.
“We are both committed to forming a strong and durable government that can deal with the many challenges this country faces.
“The Green Party is now undertaking its internal approval process before we confirm final arrangements to form a Labour-led progressive Government. This too has been an excellent process, which I thank James Shaw and his team for.
“This is an exciting day. We aspire to be a government for all New Zealanders and one that will seize the opportunity to build a fairer, better New Zealand.
“We will work hard to ensure New Zealand is once again a world leader, a country we can all be proud of. We said we could do this, we will do this.
“I thank Bill English and acknowledge the service he has given to this country as Prime Minister, and for a hard fought campaign. We both share a commitment to making New Zealand a better place and Bill has left his mark,” says Jacinda Ardern.
This is the full speech Winston Peters gave:
Let’s begin by thanking both the National and Labour parties for the manner in which these negotiations have been conducted and the work they have put into it.
It should be said that during this time elements of how politics should work in an MMP environment were seen with great clarity.
On 23rd September, election day, the effect of over 446,000 votes, or 17% of the total, was not known.
We believed on election night that those uncounted votes would have a profound effect on the final outcome. That’s why we waited until October 7 to find out exactly the numbers we were dealing with, and what that meant, before beginning negotiations with interested parties and bringing this matter to finality as soon as we could, in the most responsible time.
We started negotiations the day after on October 8.
We believe that 11 days from start to finish is not too long to wait and stands in stark contrast to the months that it will take the composition of the German government to be known. Germany had an election on 24th September, the day after ours.
New Zealanders will know the outcome of their election today. The German people will know their outcome in December.
This is a decision made by New Zealand First, and it is its decision, not that of the Leader.
Every New Zealand First MP and board member is a witness to that. We consult and that has been the case in our 24 years of existence as a political party.
Personally, I have entered into two governmental agreements with Prime Ministers from different parties. We have shaken hands on it, and both those former Prime Ministers have confirmed that as a result of that agreement I entirely kept to my word.
In the last campaign the Labour Party and Green Party campaigned as An Alternative Government. On the question of the numerical construction of that government New Zealand First was never consulted, but many commentators, factored in our support as a given.
That enabled the National Party and others in a grouping of four parties, to claim that they were facing a group of three parties, and where New Zealand First was concerned voters should “cut out the middleman”.
Whether people like it or not the strategies of both those alternative groupings failed.
That is why we are in the position we are in now. That said the decision that is about to be announced does not represent over 7 per cent of the vote or 17 per cent or, dare we say, 45 per cent – this decision represents the majority in an MMP Parliament.
The government I was first a member of won 39.8 per cent of the vote.
And that was 10,000 votes less than the opposition party got.
The agreement we have reached is a summation of the policies that survived the negotiations. As the song says, “You can’t always get what you want.”
Our negotiations have taken place against a backdrop of changing international and internal economic circumstances which we cannot ignore.
We in New Zealand First believe that an economic correction, or a slowdown, is looming, and that the first signs are already here:
- In the housing market slowdown
- In Reserve Bank and trading banks nervousness
- In the cessation of hot money into our economy
- In property ownership concerns
- In receding consumer optimism, and
- In ebbing retailer confidence
There were great risks in whatever decision we made and despite our having had no influence on these risks, some will attempt to heap the blame on us.
That those blame caricatures are both spurious and misplaced, won’t stop attempts to misdescribe the cause of events.
That’s why we are putting this scenario out front, right now, so that such attempts will fail.
Awareness of looming consensus has affected our decision.
Our choice today relates to how best we mitigate, not worsen, their impact on as many New Zealanders as possible.
As a party New Zealand First believes it has secured major policies to advance New Zealand economically and socially.
Big or small all of these policies are important.
When we construct the formal agreement summating those matters we have negotiated, these policies will be published.
It is not my privilege or responsibility to summarise them today.
Capitalism With a Human Face
Far too many New Zealanders have come to view today’s capitalism, not as their friend, but as their foe.
And they are not all wrong.
That is why we believe that capitalism must regain its responsible - its human face. That perception has influenced our negotiations.
We’ve had to make a choice, whether it was with either National or Labour, for a modified status quo, or for change. In our negotiations both National and Labour were presented with that opportunity.
Working together, cooperating together, for New Zealand.
We choose a coalition government of New Zealand First with Labour.
Greens vote to approve deal
See the Greens' statement below:
The Green Party is pleased to support a Labour-led Government that will deliver on the Green Party’s goals, following agreement from the Party’s delegates this evening. The Green Party will support the Labour-led Government on confidence and supply.
“We campaigned with Labour to change the Government and that’s what we’ve delivered tonight,” said Green Party co-leader James Shaw.
“I am confident the agreement reached with Labour will deliver the most green change of any Government in New Zealand’s history.
“This is an historic moment for the Greens. We have spent nearly 30 years working towards being part of Government to deliver change for our people and our environment. It’s the first time the Green Party will hold Ministerial positions to deliver real change that benefits our country.
“We plan to make a positive contribution to a Government New Zealanders can be proud of. Our commitment to the country is to provide stable Government while delivering on our priority areas of climate change, water quality, and ensuring a social safety net that treats everyone with dignity.
“Our conservation estate, our oceans, and our native birds will be better protected. Our cities will move faster and their residents will be happier with cleaner transport options and better quality affordable housing.
“The Green Party shares many goals and values with Labour and NZ First. I look forward to working with Jacinda Ardern as Prime Minister and with Winston Peters in a genuine MMP Government.
“We have changed the Government and now we will get on with the job of delivering the change New Zealanders voted for.
“The hard work starts now and the Green Party is rearing to go.”