Deal has some drawbacks but shows Little's grip on his caucus.

Like a good piece of art, the one-page agreement between Labour and the Greens had something in it for everyone.

Green co-leader Metiria Turei's interpretation was "historic" and "a game-changer". National's campaign maestro Steven Joyce thought it was a statement of the obvious.

Prime Minister John Key thought it was good news. His interpretation was that Labour had staggered left and abandoned any pretence of aiming for the centre and that made him a happy chappy indeed.

For United Future's Peter Dunne, it was a declaration of war, given the parties were muttering about ganging up on him to try to take the Ohariu seat. For New Zealand First leader Winston Peters, it was chicanery of the highest order, "conspiring", "machinations", a backroom deal.


For Labour, it is an attempt to portray itself as a viable government-in-waiting. At the moment, Labour and the Greens are four to five points adrift of National. That gap has been constant for quite some time. Where Labour runs into problems is in making up those final few points and then getting the extra needed to actually form a government.

Once the honeymoon period is over, the agreement will come head-to-head with reality.

The reality is the two parties are still vying for the same votes. The agreement simply means they have to be more polite about it. That is where things could get tricky. Labour still needs to grow its vote well above the mid-30s to give voters assurance it will not be a weak leader in any coalition Government. The Greens also want to grow their vote to ensure they outweigh NZ First and are Labour's first choice. But if the agreement simply means the existing votes move around between the Greens and Labour, it will be useless.

In 2014, the Green Party was the least of Labour's problems. It was the random collection of others a low-polling Labour would have needed to form a Government - from New Zealand First to the ill-fated Internet-Mana alliance. Things started to look a bit like the Addams Family. And for some reason, voters were put off by the prospect of the Addams Family running the country.

The exit of those characters means things should be easier for Labour in 2017. Labour is also hopeful National will be weaker. It has watched the PM's personal popularity slowly dip. It reckons National's party support has not followed that slide because people cannot currently see a viable alternative. If people see Labour as a viable alternative it is betting it can pick up some of the soft National voters. That is critical.

Little has learned from Key, who swallowed an entire menu of dead rats in the lead-up to the 2008 election.


In that respect, the deal with the Greens could be a double-edged sword. It shows Labour can work with its own likely coalition partner. But there is the risk those soft National voters and Labour's own working-class voters will opt for NZ First instead of Labour. It will also mean Labour has to answer for the Greens' spending promises as well as its own. Spending was a weak point for Labour in the past two elections without adding in the Greens' as well.

The deal has at least demonstrated Little's grip on his caucus. There is a chunk in that caucus which despises the Greens. Some even call them mean names like "our furry friends".

Yet Little has got things to the stage where even Damien O'Connor - whose nickname is "Chainsaw" because of his advocacy for logging on the West Coast - managed to use the word "positive" to describe the development. That was done through gritted teeth, but it was still done.

Little has managed to drive it home that the ultimate goal is winning and Labour will have do whatever that takes. In that respect he has learned from Key, who swallowed an entire degustation menu of dead rats in the lead-up to the 2008 election, from Working for Families, the nuclear-free policy, the Maori seats and interest-free student loans.

Encouragingly for Labour, there are signs the Greens have accepted this as well. How else to explain Metiria Turei's sudden embrace of doing "dirty deals" in electorates to help a Labour candidate win or try to stave off National's partner, United Future leader Peter Dunne?

Labour has already started muttering about a deal in Auckland Central, where National's Nikki Kaye won by 600 votes in 2014 over Labour's Jacinda Ardern. Ardern only came within coo-ee of Kaye because 70 per cent of Green Party voters in the electorate gave her their tick. That was no small number - the Green Party got 100 more party votes in Auckland Central than Labour.

Pulling Denise Roche off the ballot paper might make sense for Labour. But if the Greens do not have a candidate they cannot take part in public debates and that makes it harder to get the Green message out.

It is an even starker story in Wellington Central, where Green co-leader James Shaw stood in 2014. Labour's Grant Robertson took the seat - again courtesy of Green Party voters. The Greens got 11,000 party votes there - 2000 more than Labour. If they wanted to be mischievous the Greens could argue it should be Robertson who stands aside to give their co-leader an electorate. The Greens will not do that, but they will be very reluctant to give up standing in either of those electorates.

That said, the Green Party cannot refuse to put any flesh of its own on the line. The deal delivered far less than the Greens wanted. The party has not even secured any "right of first refusal" clause on post-coalition talks. But it was the Green Party which pushed for the agreement and did so fairly aggressively.

The agreement has given a glimpse of the type of coalition manager Little would be. His refusal to commit to the Greens completely is because he wants both the Greens and NZ First on board even if he only needs one of them. He wants what Key has got - more than one way to form a majority. Little backs himself to be able to talk Peters into it.

Peters will not set out his own preferences in advance of the election. It is not in his interests because it immediately cauterises a source of votes. Split-voting statistics from last election showed more NZ First voters supported Labour candidates than National. But Peters now has Northland and is targeting electorates such as Whangarei and Rodney. On one hand, he could be helped by Labour and the Greens giving the nod to their supporters to vote for a NZ First candidate in those electorates. On the other, Peters cannot afford to alienate the more conservative provincial and rural vote by siding with a coalition that includes the Greens or even Labour.

As for the various interpretations given to the memorandum of understanding, Finance Minister Bill English had the most unusual. He appeared to think it was some kind of solution to the pickle of the Auckland housing market. He predicted if a Labour-Green coalition was in Government, 30,000 New Zealanders "will pick up sticks and leave" for Australia.

Seen in that light, the agreement would at least go some way to resolving the demand for housing.