Winston Peters: 7 per cent of the vote, 100 per cent of the power

Winston Peters has 7 per cent the vote, but 100 per cent of the power. With just six days between the final count and a promised decision on who he will make PM, National and Labour have one chance to put their best offers on the table, writes Audrey Young.

Winston Peters stood at the podium in the Beehive Theatrette on Wednesday, in exactly the same place as he did 21 years ago, like the king of the castle.

This time there could be no excuse for voters' remorse.

The 162,988 people who voted for him a week ago knew there was every chance his 7.5 per cent New Zealand First Party would be the kingmaker for National or Labour.

In 1996, the press conference Peters held was at 7pm to coincide with the Holmes television show. The caucus decision was about to be announced after a harrowing eight weeks of negotiations.

This week the 3pm press conference was held ostensibly to answer some questions before embarking on a 19-day process to choose either the biggest team - led by National's Bill English, or the newest team - led by Labour's Jacinda Ardern.

In fact few answers were given. He had scheduled an interview with Sky's Andrew Bolt later that day and needed a local event first to avoid drawing scorn for talking to Australia before New Zealand about the weighty issue of the next Government.

The belligerence on display by Peters has not been unhelpful in cowing the contenders or, as they would have it, giving Peters time.

There has barely been a peep from them since, other than Paula Bennett blundering into the silence by describing Peters' overpayment of superannuation "great gossip".

Winston Peters finishes his address and is swarmed by media at his election party at the Duke of Marlborough in Russell. Photo / Nick Reed

We know what she means. Peters won't. In any normal political circumstance, Peters would have been excoriated for his unwillingness to give the public the most basic information, such as whether talks with other parties might begin before the final results are announced in a week.

But Parliament is an abnormal place at present. Everybody (Apparently) Loves Winston.

Even National's Finance Minister and chief election strategist Steven Joyce, whom Peters calls "Big Ears" in Parliament, talks up a level respect between two of the best campaigners in the business.

"I think Winston and I have a respect for each other actually, just probably of a history in campaigning," Joyce tells the Weekend Herald.

Ardern doesn't know Peters very well at all - and has avoided making any further jokes about enjoying a single malt as she did two months ago on the day she became leader, thinking, wrongly, it might amuse Peters.

Ardern describes her relationship with Peters in terms designed to be as inoffensive as possible. She says it is a "parliamentary relationship".

Meaning? "That means a professional working relationship where there hasn't been a lot of cause for contact in the past."

Greens leader James Shaw on Peters: "I would say polite and cordial but we don't know each other terribly well."

Joyce suggests National has changed its attitude since 1996 when NZ First chose a National coalition, which blew apart under the strains of the old party resentments against the newcomers.

"You had a history of people who came from a first-past-the post background where the Government of the day gets to do what it wants to do and then you get compromise for the first time," says Joyce. "We have certainly experienced in the last nine years compromises at all steps of the process," he says in reference to having had three support parties for the past three terms.

"I think there is a generation of politicians now, virtually every politician, understand that that is what in involved."

Some of what happened back in 1996 will undoubtedly inform the process this time as Peters and his party set about deciding between National or a Labour-led Government.

But much of what happened then will be a guide of what not to do. For example, it is a good idea to think carefully about the venue.

Winston Peters and Jim Bolger seal the agreement with a handshake. Photo / Herald

National had picked a neutral venue for its first meeting between the Bolger team and the Peters team - a large room on the ground floor of the grand parliamentary library.

The first item Peters raised was the venue itself. It had windows that looked on to Hill St and Peters was afraid the discussions could be vulnerable to interception by directional mikes from the street.

Peters preferred a windowless room in Bowen House - and so room 10.02 became home base for the talks, usually National in the morning and Labour in the afternoon, except on the odd occasion that he didn't turn up.

The morning of October 30, Peters didn't turn up at all to a scheduled meeting involving Bolger. It happened to coincide with Peters having been involved in a contretemps with a journalist at 2am that day at the opening of Brava bar in Courtenay Place.

He was there with Labour's Mike Moore and his own deputy at the time, Tau Henare. The way the decision was made by the NZ First caucus may be changed after their previous experience.

Then, the pressure on the MPs, especially new ones, with the artificial deadline for the Holmes show, was intense. It sounded a bit like the jury in 12 Angry Men. According to one participant, if a straw poll had been held at the start of the meeting - and it wasn't - most would have favoured a deal with Labour.

Each person who was responsible for a policy would get up and put Labour's offer on education on the overhead projector, then National's offer. Deborah Morris had co-ordinated the negotiations with National, John Delamere had co-ordinated them with Labour.

At the end of day, they went around the room and each MP had to say which way they thought they should go and why. The participants did not feel manipulated by Peters.

There was overwhelming support for the National deal. Labour simply hadn't offered enough - and not just on Peters' role, but across the board.

Both parties had turned down overtures for giving Peters a period as Prime Minister - although the caucus was not privy to that - and both Ardern and English have ruled it out in 2017.

The approach to National about the Prime Ministership was made in a formal negotiating meeting, with Bolger and Peters absent. The approach to Helen Clark was made informally at the end of the process. The role of Treasurer, effectively usurping incumbent Finance Minister Bill Birch, had been negotiated the night before decision-day over a whiskey bottle.

Only the New Zealand First caucus was present for the decision. Peters' adviser Michael Laws was preparing two speeches for him to deliver, for either eventuality, and two letters to be hand-delivered to the losing side before the announcement.

NZ First leader Winston Peters leaving with members of his caucus after his press conference at Parliament, Wellington. Photo / Mark Mitchell

Doug Woolerton, the party president, took the Dear Helen letter over to Clark. But her offices on the third floor of Parliament were locked off.

Woolerton reportedly spent an agonising time banging on the doors for someone to let him into Clark's corridor to make sure she didn't find out from the Holmes show. At least today there are cellphones, texting and email.

The National agreement was published. It ran to 65 pages and included commitments in 36 policy areas: ACC, agriculture, broadcasting, child support, commerce and industry, compulsory savings, conservation and lands, corrections, defence, education, employment, energy, environment, exports and international trade, fisheries, foreign affairs, foreign investment, forestry, health, housing, immigration, industrial relations, justice, law and order and police, local government, Maori, Reserve Bank Act, senior citizens, social welfare, state services, superannuation, taxation, telecommunications, tourism, transport, and women's issues.

The Labour agreement has never been leaked. Strict confidentiality was maintained during and after negotiations and can give both National and Labour some confidence about any negotiations undertaken in the next 12 days.

New Zealand First's confidence and supply agreement with Labour in 2005 was a much tamer affair than nine years earlier, in part because it contradicted a campaign promise to sit on the cross benches made by Peters in his infamous "baubles of office" speech.

There was some justification for that because without his party's positive support, there would have been a 57-all split between Clark, Jim Anderton and the Greens, and four other parties led by Don Brash. Peters held the balance of power. The deal was done quickly and quietly. The agreement ran to five pages and included only seven policy areas: senior citizens, immigration, justice, Treaty of Waitangi, economy and health.

The big personal prize was Peters getting the plum post of Foreign Minister, which was taken from Phil Goff, but there were others: the SuperGold Card was negotiated then, 1000 extra police staff, and increasing New Zealand super from 65 per cent of the average ordinary time weekly earnings to 66 per cent.

The 2005 agreement is also most remembered for Peters shutting the Greens out of Government - although the Greens suspect Clark was more than happy with his ultimatum. But MMP-wise it was a landmark agreement in giving support parties senior ministerial posts outside cabinet and freedom to criticise the larger party.

It has been the model on which subsequent support agreements for the National-led Government have been based.

How much Peters will take from 1996 and how much from 2005 is not yet clear.

There are at least nine alternative permutations to consider, including taking no part in Government and giving confidence and supply from the cross benches.

Winston Peters with his regions campaign bus. Photo / Warren Buckland

Holding preliminary talks before the final results in a week was an option but one Peters may have rejected in order to acclimatise voters to the view that the biggest bloc of parties is as legitimate an option as the biggest single party.

It has the added benefit of making Labour and National sweat.

Having slowed down the process, Peters has set an unnecessarily punishing timeline for himself.

Peters says the decision will be made by October 12 which is, incidentally, the date the 1996 election was held. With such a tight timeframe and a greater equivalence of alternatives, the talks will have to be conducted in quite a different way to either 1996 or 2005. It is possible Peters will conduct something more akin to a closed tender.

Anyone who has bought a house that way knows how hard it is for the buyer (National and Labour) and how advantageous it can be for the seller.

Under that scenario, the onus would be on National and Labour to present their best - and potentially their final - offers, which may or may not be accepted, or could be referred back for suggested improvements.

NZ First would be freed from the accusation that it demanded anything.

Labour and National could not afford to open their negotiation with a sub-grade offer in the expectation of slowly working up to a final agreement. There just would not be time for that.

The time pressure would be designed to work in NZ First's interests.

Both National and Labour know already what NZ First's policies are; they both know which policies they have no problem with, which could be deal-breakers and which they could amend.

The four policies NZ First highlighted in a glossy leaflet drop in the last week of the campaign were immigration, foreign ownership, middle income New Zealand, and the regions.

The party could also begin talks with National next week - without concluding them before the final results are posted - and then have a few days of talks with Labour if the special votes deliver the left bloc more than its current dangerously thin one-seat margin.

It is surprising that NZ First has not begun talking to National yet, at a point when it has maximum leverage.

Not doing so before the special votes runs the risk having less leverage after the specials are counted should there be no change in the seats, or in the unlikely event of National gaining.

Peters will not be the only person conducting two-party talks.

Ardern has the challenge of ensuring that Labour and the Greens have sorted themselves out before Labour begins talks with NZ First.

Labour Party leader Jacinda Ardern during a media stand-up. Photo / Brett Phibbs

Like Peters, she will be conducting dual negotiations. Informal talks between Labour and the Greens have almost certainly begun.

On past experience, the assumption has to be that Peters will want to deal with Labour only.

Labour has to arrive at the talks knowing exactly what the Greens want from any Government they are a part of, or support.

Ardern's relationship with Greens leader James Shaw is an advantage. They became friends living in London in 2008 when they campaigned together for their respective parties as list candidates.

"Every time the Black Seeds came through town we'd work the line-up outside the Shepherd's Bush Walkabout and so on, anywhere where there were concentrations of Kiwis," says Shaw.

"It was a great campaign, great fun."

The Greens, reading between the lines of what Shaw says, do not want to overplay their hand and be the reason behind any refusal by Peters - but nor are they willing to roll over and have their tummy tickled.

"I would anticipate that Labour would take the lead," says Shaw.

"But that at some point, if we are going to form a Government together, the partners for Government need to get in a room together. But I don't have a particular expectation of what that looks like."

Former Greens co-leader Jeanette Fitzsimons has been seen around the corridors of Parliament this week giving advice as a member of the negotiating team, says Shaw.

She has been "just really, really good. Very practical," he says.

Fitzsimons was a Green member of the Alliance in 1996, a partner Labour needed to sew up as part of its deal with Peters.

There was a strong perception in NZ First that it had not been done sufficiently by Labour.

Alliance leader Jim Anderton held a press conference to back the Labour deal on the day the decision was being made, but he reserved the right of his party to withdraw confidence and supply.

The fact he felt the need to state it did nothing to assist Labour.

Relations between Ardern and Shaw are more convivial than they were between Helen Clark and Anderton in 1996.

The cost of policy gains by NZ First in 1996 was enormous, but so too will be the price of some of the road and rail projects and establishing Northport to replace Auckland port.

The really big one was getting rid of the superannuation surcharge which had been introduced by the Fourth Labour Government in the 1980s and increased by Bolger's National Government.

If there was any non-negotiable item in 1996 it was that policy and came in at cool $5 billion over three years.

Education commitments were priced at $1.8 billion over three years.

Health, too, was expensive with the gains coming in at $1.7 billion over three years, including free doctors' visits and medicines for children aged 5 and under, a legacy which continues today in an expanded form.

National now has $15.3 billion in unallocated operational spending over the next four years, some of which could accommodate NZ First policy.

National Party leader Bill English and wife Dr Mary English arrive at SkyCity Convention Centre on election night. Photo / Greg Bowker

But that figure must also fund increases in health and education and other areas of Government.

Labour has about $6.6 billion over four years but it has already budgeted for increases in health and education and major election promises.

The greater flexibility may lie in capital projects.

National's spending plans for infrastructure is $32.5 billion over four years.

The amount that is unallocated is about $3.6 billion.

Labour has $8 billion. But large amounts of money can be made available by deferring promised projects.

Joyce says there is a lot of flexibility over infrastructure spending beyond the next four years.

"Because of the three-year nature of our political cycle, infrastructure gets to be treated a bit short-term but the next Government over the next three years is going to shape the infrastructure for the six or seven years beyond that.

"That's how long it takes to make stuff happen."

One of the areas in which Peters may be considering exerting some pressure is in the allocation of important ministerial posts, not just his own party but within the larger party.

That would be an area of huge sensitivity for either National or Labour especially if it involved finance.

There have been some whispers that he could try to get former Labour finance spokesman David Parker appointed Finance Minister over Grant Robertson, Ardern's political soul mate.

Peters may not see having a say over such a vital portfolio that much of a stretch. He holds the power.

Peters dislikes being called a kingmaker but a small number of voters have given him that power again.

The country is waiting to see whether he brings to bear the wealth of lessons he has had in exercising that power - or whether history will repeat itself.