ANALYSIS
Call me a schmuck (you wouldn’t be the first), but after a week of being told we’re close to getting a new government it feels like this time, this time, we may actually be on the cusp of seeing shape and policies of the next ministry.
Policy talks have more or less wrapped up, with the parties cross checking one another’s deals. What was the hold up? Well, the most significant of the “one or two issues” National Leader Christopher Luxon confusingly claimed to be holding up coalition talks over the weekend could be the one that received the least attention.
The issue is hidden in plain sight, with three of the negotiators admitting talks were focused on one particular point: how will the three hitherto warring parties plumb themselves together to form a functional government?
Act leader David Seymour was perhaps most frank about the first challenge speaking to the AM Show on Monday morning, saying what was being negotiated was a three-party coalition government, implying members of all three parties would be sitting inside Cabinet.
“This is three parties coming together in a coalition government. Now, that hasn’t been done before. We’ve had two parties in a coalition with another party sitting off to the side. We’ve brought together three who were competitors, sometimes fierce competitors,” Seymour said.
National Deputy Leader Nicola Willis made similar remarks, telling Nick Mills on Newstalk ZB the parties were discussing “the way we want to work together”.
Luxon repeated the remarks today, saying he was “taking three parties into a coalition government”.
When we think about coalition deals, we often think about policy and baubles. Does National get the Foreign Buyers’ Tax, and who gets to be Deputy Prime Minister? This is unsurprising. In light of a bitterly fought election campaign, the final coalition deal provides a satisfying answer to the question of who wins and who loses.
But Seymour raised an often overlooked point: How do the parties - with leaders who have joked about physically beating one another - work together in government, particularly as the policies described in the coalition deal fade into the distance and new challenges emerge? How do the three parties tackle the unforeseen challenges of 2025 and 2026 without falling apart?
This is a question for whatever type of government were to emerge from talks, but it is particularly true of a government formed from three disputatious parties who have opted for the tightest possible arrangement: having all three parties in Cabinet.
In the past, governing deals have tried to minimise the likelihood of parties falling out.
The first coalition deal of the MMP era, signed between National and NZ First in 1996, left nothing to chance. Using the next three years of fiscal and economic forecasts from Treasury, it estimated the cost of the coalition agreement over and above the existing budget.
The agreement was divided into sections based on portfolio, with each section including an estimated cost to the baseline spending assumptions of the Government, meaning neither side could wriggle out of promises on the basis of cost.
While parts of the 68-page document are justly lampooned for the platitudes and vaguery (one section, for example, pledged the party would implement orthodox economic policies “in line with or better than the best international practice”), the agreement is mainly remembered for being overly prescriptive, front loading three years of decisions, particularly those relating to spending, to avoid a fallout down the track.
The tactic failed spectacularly, when Winston Peters walked away from the deal, arguing National had broken it.
Since then, deals have been shorter and far more vague. Labour’s 2017 deal with NZ First is just eight pages long (although it included a sacred addendum, which ran to many more pages depending on font and spacing), and was incredibly vague. It included only one costed fiscal decision - the creation of the $3 billion Provincial Growth Fund.
One area particularly lacking in detail, which would come back to haunt both Labour and NZ First, is how the parties would consult on any potentially thorny issues.
Labour and NZ First agreed to work together in “good faith and with no surprises, reflecting appropriate notice and consultation in important matters, including the ongoing development of policy” they agreed to “cooperate” and operate with “mutual respect”.
The deal agreed to establish “protocols” for “coalition management, policy consultation, select committee management and non-routine procedural motions”, but actually establishing those protocols was left for later.
The Cabinet Manual, the overarching non-partisan governing rulebook offered some backup, saying that ministers are expected to “consult relevant ministerial colleagues before submitting papers that deal with significant or potentially controversial matters” but it leaves”controversial” undefined, and says it is up to the parties of themselves to work out what each group will and won’t be consulted on.
Famously, this was insufficient for Peters, who claims he was not consulted on the He Puapua report on the implementing the United Nations Declaration on the Rights of Indigenous Peoples (Peters sat on the Cabinet Committee that looked at the paper, but still claims it was hidden from him).
Peters was so outraged by Labour’s decision to keep the report from him, he cited it as the reason for rule them out as a potential governing partner, telling the Herald “no one gets to lie to me twice”.
The 1996 agreement left nothing like this to chance. The first 11 pages of the deal - longer than the entire 2017 agreement - are dedicated to the general management of government.
The detail went right down to seeking the consent of the other party before voting in support of a members’ bill put up by an opposition MP; specifying that Cabinet papers had to be submitted two days before a meeting (stopping the not uncommon practice of ambitious ministers submitting radical papers late so that few ministers would read or understand them); ensuring minority views from Cabinet Committees were fed up to the full Cabinet so that the dissenting view of the minor partner not scrubbed from the record; creating formal committees for consultation between parties; enforcing a minimum level of consultation on all government business, and even requiring all press statements to be signed off by both parties.
While other agreements have tried to minimise disagreement, the 1996 deal went even further, creating a formal dispute resolution body for when things went wrong. The Coalition Dispute Resolution Body comprised the leader, deputy leader, and the party president of both parties and would try to resolve any dispute as a last step before either partner gave written notice it was pulling out of the deal.
A party close to the talks told the Herald that the three parties had been weighing up the certainty that a prescriptive 1996-style deal would give the Government against the flexibility you get from the 2017 deal. The particular challenge is trust. National and Act are broadly on the same page, but they don’t trust NZ First and NZ First doesn’t trust them. That suggests that something closer to the 1996-style arrangement is in the offing.
The Herald has confirmed that Rachel Hayward, the Secretary of the Cabinet has been supporting talks in her role as Clerk of the Executive Council. The Department of Prime Minister and Cabinet told the Herald that in her role as Clerk, her role is to facilitate, on behalf of the Governor-General, the constitutional processes of government that involve the Governor-General (particularly those associated with the transition between administrations.
In that role, Hayward has provided the parties with information about coalition and support agreements and administrative arrangements, along with copies of previous agreements, for their information. Again, this suggests the parties may be comparing and contrasting what did and did not work in prior deals.
What the parties land upon could be a significant evolution for our MMP system. Recent Governments have signalled the end of the FPP-lite style coalition of the Helen Clark - John Key years in which Labour and National were able to maintain their duopoly on power with the help of much smaller parties.
This is the second result since 2017 in which a Government has been formed with a relatively weak major party and relatively strong minor parties. National, Act, and NZ First may be about to form the first major three-way coalition of the MMP era, but it will not be the last.
Thomas Coughlan is Deputy Political Editor and covers politics from Parliament. He has worked for the Herald since 2021 and has worked in the press gallery since 2018.
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