Cockiness the curse of third-term Govts but Key determined to keep his team grounded.

John Key yesterday began his third term as Prime Minister with a warning to National MPs and ministers. "I won't be wanting to see any hint of arrogance creeping in."

He also tried to reassure voters that he would not use the majority he was delivered in Saturday's election to lurch to the right.

There was always a risk with third-term governments that they got arrogant and veered off in unexpected ways, Mr Key told reporters.

JASON EDE QUITS: Ex-PM staffer was at centre of Dirty Politics

"In a way, having an absolute majority could exacerbate that situation, so I don't intend to take the party veering off to the right.


"One of the big messages I'll be wanting to give incoming ministers and the caucus is that it is incredibly important that National stays connected with our supporters and connected with the New Zealand public."

Mr Key's acute sensitivity to arrogance was undoubtedly heightened during the election campaign with the release of the book Dirty Politics, containing emails from Whale Oil blogger Cameron Slater and his attack campaigns to former Justice Minister Judith Collins and former staff of Mr Key.

While the book appears not to have damaged National in the polls, the tone of the emails leaves National vulnerable to the Opposition.

"Every time we do something they don't like, it will be because we are arrogant, not because they disagree with the position," said Mr Key. "That's the arm-wrestle that takes place."

Watch: Key: 'A centrist Government '

The main Opposition party, Labour, will be distracted for the next few months over its leadership, with current leader David Cunliffe having already launched a campaign to defend his title.

Labour leader David Cunliffe says opposition parties were denied crucial airtime during the election campaign which saw them losing votes across the board. Mr Cunliffe insisted the loss at the ballot box was "the same proportionate decline" that was seen in results polled by the Green Party and across the left, adding: "It's not specific to the Labour party."

And while that is going on, New Zealand First leader Winston Peters and the Greens are likely to be vying for the unofficial title of leader of the Opposition.

Labour is down two MPs compared with the 2011 election and may yet lose star performer Andrew Little on special votes if the Greens pick up an MP.


The fate of veteran MP Trevor Mallard will also be determined by special votes. Final results must be declared in two weeks.

Labour won the party vote in only five of 64 general electorates - Mangere, Manukau East, Manurewa, Kelston and Dunedin North.

Ms Collins' majority was slashed in Papakura. She will attend a super caucus meeting tomorrow at Parliament where National will farewell its retiring MPs and welcome 15 new faces. She will remain a backbencher for the foreseeable future.

Yesterday, Mr Key began building his new Government, speaking to the old support team of Act, United Future and the Maori Party about again negotiating confidence and supply agreements.

They will be meeting again today and tomorrow in Wellington.

The Prime Minister would like the deals to be done and dusted before the final election results are posted in two weeks, but not because of potentially higher leverage the small parties would have if National's final number in the House is 60, instead of 61, in a 121-seat House. "Most probably simply because we want to get back down to business, not because we are frantic about whether [the numbers] change a lot," he said.

Mr Key has said he is open to co-operation discussions with a larger New Zealand First Party but is not expecting leader Winston Peters to necessarily embrace the notion.

Maori Party co-leader Te Ururoa Flavell is likely to be made Maori Affairs Minister, a role his predecessor, Pita Sharples, held for six years.

United Future leader Peter Dunne will again be offered a ministerial role.

The Act Party appears to have changed its mind about whether it wants its sole MP, Epsom MP David Seymour, to be a minister. During the campaign, leader Jamie Whyte talked up the advantages of not getting too close to National.

Mr Key is also likely to promote a new generation within his own Cabinet to more responsible roles, in preparation for the 2017 election.

Amy Adams, Simon Bridges, Michael Woodhouse, Todd McClay, Maggie Barry, Paul Goldsmith and Louise Upston are seen as fast risers.

Foreign Minister Murray McCully will keep his job, as will Finance Minister Bill English and Economic Development Minister Steven Joyce.

Mr Key said he hoped Parliament could be recalled on October 20 for the Speech from the Throne.

The Prime Minister has received messages of congratulations from Australian Prime Minister Tony Abbott and British Prime Minister David Cameron.

Policies: What's on the table

Cutting numbers on welfare benefits by 2017 and bedding in education reforms are two of the top policy priorities of the third-term National Government, Prime Minister John Key told the Herald yesterday.

He also identified health and housing policies.

And he hinted that a potential tax package, foreshadowed in the election campaign for 2017, could be beefed up if there was an appetite for it.

He said the targets announced during the election campaign to reduce numbers on welfare were "an aggressive target".

Watch: Cunliffe: 'Not a good result'

Labour leader David Cunliffe says opposition parties were denied crucial airtime during the election campaign which saw them losing votes across the board. Mr Cunliffe insisted the loss at the ballot box was "the same proportionate decline" that was seen in results polled by the Green Party and across the left, adding: "It's not specific to the Labour party."

"If we could really get to 220,000 people by 2017 that would be the lowest level since 1988. We really need to keep pushing hard on that."

The current number is 295,000 and reaching the target would mean a 25 per cent drop.

National also set a target of reducing young people on benefits by 40 per cent, from 53,000 to 21,000.

Mr Key also wants to get cracking with the $359 million reform package for teacher professional development, announced in January, because such reforms took time to bed in.

The policy, which financially recognises gifted teachers and principals, has the support of the secondary principals' association and the secondary teachers' union, the PPTA, but it has been rejected by the primary teachers' union, the NZEI.

He identified progress on a trade deal with South Korea, which is close to a conclusion, and the Trans Pacific Partnership as priorities.

Cancer treatment targets would be a priority for the new Health Minister. The new target is for 90 per cent of patients to receive their first cancer treatment within a maximum of 62 days of their original GP's referral, compared with the current rate of 60 to 65 per cent of patients.

Mr Key wants the Homestart scheme for modest income-earners kicked off quickly. It will allow the first-home buyers of a newly built house to get up to $20,000 in a grant.

He said the appetite for possible tax cuts from April 2017 could grow by then and it could be a bigger package if the economy did better.

Lessons from PM longevity

Beware the third-term disease ... John Key is the sixth prime minister since World War II to win a third term in power. Will he lecture his caucus tomorrow on the dangers of arrogance and veering off course after six years in power? How did his five predecessors fare?

Helen Clark (Labour)
Election defeat in 1996. Victories 1999, 2002 and 2005.

The public initially respected Clark as a strong and decisive prime minister, but eventually tired of her all-pervasive style of leadership, Her third term also saw widespread denunciation of Labour as the party of "political correctness", exemplified by Clark's backing of legislation banning parents from smacking their children.

Jim Bolger (National)
Election defeat in 1987. Victories 1990, 1993 and 1996.

Swept to power in 1990 landslide. Scraped back into power in 1993 after coming close to a leadership coup which narrowly failed. Negotiated post-1996 coalition agreement with New Zealand First but was attacked by colleagues for being seen as too close to Peters. Replaced in a bitter coup by Jenny Shipley in 1996.

Sir Robert Muldoon (National)
Victories 1975, 1978, 1981.

Our most cynical and divisive prime minister. Allowed the 1981 Springbok tour to proceed to win votes in provincial New Zealand. His third term was notable for his refusal to deregulate the stagnant economy, instead introducing an unworkable wage-price freeze. His government collapsed after losing its majority in Parliament.

Sir Keith Holyoake (National)
Election defeat in 1957. Victories 1960, 1963, 1966, 1969.

Notable for winning a fourth straight term and admired by John Key as the National PM who comes closest to practising his style of consensus politics. Holyoake's lengthy tenure was during New Zealand's high prosperity in the 1960s. Retired because of his age.

Sir Sidney Holland (National)
Election defeats 1943 and 1946. Victories 1949, 1951, 1954.

The beneficiary of the post-war economic boom sparked by a big jump in wool prices. Best known for crushing the unions during the 1951 waterfront strike. Retired prior to the 1957 election due to ill-health.

-additional reporting John Armstrong