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Last Updated: Tuesday, 13 September 2005, 13:16 GMT 14:16 UK
NZ election goes to the wire
By Angie Knox
In New Zealand

Prime Minister Helen Clark (archive)
Ms Clark is hoping to cash in on a strong economy
As New Zealand prepares for a neck-and-neck general election on Saturday, a secretive Christian sect has been in the news as much as the issues.

Don Brash, leader of the main opposition National Party, has had his credibility questioned after he first denied knowing about the sect's controversial leafleting campaign, then admitted he did.

The leaflets target the governing centre-left Labour party and its coalition partner, the Greens, with titles such as "Are you really safe?"

The leaflet affair has been an unexpected bonus for Labour, which is hoping to win a third three-year term in office. Labour's leader, former academic Helen Clark, is an experienced politician and her government has presided over a sustained period of economic growth.

This should be an unloseable election for Labour because of the strongly growing economy
Colin James, political commentator

But Labour is facing a strong challenge from National on the two big issues of race and tax, and opinion polls put the two parties level.

"The polls are reflecting the uncertainty in the electorate," according to political commentator Colin James.

"This should be an unloseable election for Labour because of the strongly growing economy, but cutting across this is the highly contentious issue of indigenous rights. Plus there is a subsidiary issue of large tax cuts promised by National," he said.

Analysts say there has been a shift in public sentiment against what many see as Labour's special treatment for indigenous Maori, who make up around 15% of New Zealand's four million people.

National has taken a popular stand against what Mr Brash calls race-based funding, through which Maori receive targeted government funding for health, education and development. Also under fire are new laws allowing same-sex civil unions, a ban on smoking in public places, and a proposed ban on smacking.

While race relations may have soured, the economy has boomed. Unemployment is currently at 3.7%, the lowest in the OECD, and annual growth has been running at more than 4% over the last five years - higher than Australia and the United States - although it has slowed significantly in the past year.

Don Brash - 23/8/05
Mr Brash, a former central banker, came into politics three years ago

As a result, the Labour government is now sitting on a budget surplus of around NZ$7bn ($4.9bn).

Tax offers

Voters want to know how some of this extra wealth will make its way into their pockets. Both Labour and National have promised tax cuts in their election manifestos.

National is offering a temporary cut in taxes on petrol, generous across-the-board reductions and a promise to reduce corporate tax, while Labour is targeting lower middle income families with its Working for Families tax credit package. Labour is also offering a sweetener for debt-laden students, many of whom will be first-time voters, by proposing to make government loans to students interest-free.

But this election is not just a two-horse race. Nineteen political parties are contesting the 2005 polls, including six newcomers. Under New Zealand's mixed-member proportional representation system (MMP), the larger parties are likely to have to seek support from the smaller parties in order to gain a workable majority in the 120-member single chamber parliament.

Voters cast one ballot for local candidate, another for party of choice
Parliament has 62 general seats and 7 Maori seats decided on first-past-the-post
Remaining 51 seats decided by party vote, under proportional representation

Currently, Labour governs with the support of the Green Party, the tiny Progressive Coalition and the pro-family United Future New Zealand. The Greens and Progressive say they would be willing to work with a new Labour government; United Future says it will seek talks with whichever party gains the most votes.

If it wins, National can count on support from the pro-business Act Party. Another key conservative party, New Zealand First, which currently has 13 MPs, is keeping the big parties guessing. Its leader, Winston Peters, has supported both Labour and National in previous governments, and could well play the role of kingmaker once again.

A new entrant to the political system is the Maori Party, which says it aims to give indigenous people an authentic voice in parliament. The emergence of the new party is expected to encourage a bigger Maori voter turnout.

It is also likely to take votes from Labour, which has traditionally been seen as more sympathetic to Maori aspirations.

Foreign affairs

If there is a change of government, the biggest shake-up is likely to be in foreign affairs.

"If National wins, you'll see an opening of dialogue with the United States," said John Armstrong, political commentator at the New Zealand Herald. "They'll want a closer defence relationship in the hope of getting better trade relations."

New Zealand is seeking to follow Australia's lead in winning a free trade agreement with Washington, but a major stumbling block has been Wellington's liberal internationalist stance.

But whoever forms the new government is likely to face an economic downturn in the wake of sharply higher oil prices and the widening trade deficit.

"It's not going to be an easy ride," cautioned Mr Armstrong. "It will be difficult for a National government to keep its promises on tax cuts. And it will be difficult for a Labour government to maintain its spending plans."

NZ set for fiercely fought poll
07 Sep 05 |  Asia-Pacific
New Zealand's PM sets poll date
25 Jul 05 |  Asia-Pacific

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