Clark in position to form government

Helen Clark still has to crunch the numbers and come up with a majority. Phil Walter / Getty Images

The Labour Party may be looking to the new cab on the rank to help form a Government after all with caretaker Prime Minister Helen Clark making a phone call to Taraiana Turia before midnight.  

Helen Clark did not arrive at her headquarters until late but when she did she told the gathered hundreds that she would be talking to the leaders of all the relevant parties about forming a Government.

"I'm humbled that we have the opportunity to begin negotiations to form a new Government," she said.

"It has been a tough election campaign and we have had very big money against us.

But today people have give us the opportunity to negotiate a Government again and my objective now is to begin those negotiations which will enable us to lead a Government which brings New Zealanders together."

That appeared to have started with a call to the Maori Party leader before midnight.

Afterwards Turia held a press conference and said she would talk to Clark on Monday but her three sticking points would be that Maori seats would need to be entrenched, the Foreshore and Seabed legislation would have to be revisited and there would need to be a review of all spending on Maori.

Later Clark said her Chief of Staff had also rung the other relevant party leaders.

Prime Minister Helen Clark waited until well after midnight before she fronted the cameras to thank supporters for giving Labour the opportunity to negotiate to form a Government.

Labour has 50 seats and National 49 in the 122-member Parliament, which has increased by two because the Maori Party won four electorate seats, more than its proportion of the party vote entitled it to.

Arriving at her campaign headquarters to the Split Enz's "I See Red", Helen Clark said she had become concerned at the divisions caused by the election. Now, she wanted to bring people together.

As supporters chanted "Three More Years" she said people had given Labour, which won most votes but only just, the opportunity to begin negotiations with other parties to form a government.

Looking tired and far from jubilant with her husband Peter Davis at her side, she pointedly thanked "mainstream New Zealand", referring to the phrase used by National's Don brash.

"This election was finely balanced. The result is close. But we have the opportunity to form a government."

Wearing a pacific lei around her neck, Helen Clark who is bidding for an historic third term as Prime Minister, said she looked forward to speaking to other party leaders over the next two days.

Helen Clark still has to crunch the numbers and come up with a majority, but New Zealand First with seven seats is committed to first negotiating with the party that has the most seats.

So is United Future, which ended up with three seats.

The Greens, with six seats, are a committed Labour ally.

She also has Jim Anderton, leader of the Progressive Party and its only MP in the next Parliament.

National has only one potential partner, the Act Party.

Against predictions, Act leader Rodney Hide took the Epsom seat from National's Richard Worth and kept his party alive.

But it has only two seats, and even if NZ First went with National there would be a total of 58.

The Maori Party is not committed to either of the main parties, although it is unlikely to work with National because its policy is to abolish the four seats it won tonight.

Helen Clark could call on the party for support if she needs it.

Special votes cast by New Zealanders living overseas still have to be counted.

They are unlikely to significantly change the situation, and the Greens usually gain from special votes.

Labour had started the night well behind National but as the big urban polling booths began to announce, Labour closed, then overhauled its rivals.

By 11pm last night, Labour held a one per cent lead over National with 40.7 per cent of the total party vote to National's 39.7.

- NZ HERALD and NZPA