Page last updated at 00:49 GMT, Wednesday, 10 September 2008 01:49 UK

Demise looms for NZ's kingmaker

By Joe Boyle
BBC News

Winston Peters, 03/09
Mr Peters has been forced out of government three times

A flamboyant and controversial statesman, Winston Peters has been central to New Zealand's politics for more than a decade. But with weeks to go until a general election, a financial scandal is threatening to bring him down.

No date has been set for the election - it is expected to be in mid-November. But the campaign billboards are already going up across the country.

The Labour Party, going for a fourth consecutive term in office, wants to talk up its flagship policies on the environment. The main opposition National Party wants to concentrate on the economy.

One chamber, the House of Representatives
121 MPs representing eight parties
Mixed member proportional representation based on the German system, introduced in 1996
Each elector gets two votes - one for the local candidate, one for the party
Currently there are 52 seats from party lists, 69 from constituencies

But the only event of the past fortnight to divert any attention from Mr Peters was an interview in which National leader John Key likened himself to Barack Obama - a cause of much mirth to his critics.

The signs are not good for Mr Peters, the leader of New Zealand First, the junior partner in the country's coalition government.

The Serious Fraud Office is investigating claims that donations made to his party were not used for the purposes the donors intended.

Mr Peters himself is up before parliament's privileges committee over a NZ$100,000 (38,170) donation he used to pay legal fees.

And a separate police inquiry is looking into claims that the party failed to declare a NZ$80,000 donation last year.

Last Friday he temporarily stepped down from his post as foreign affairs minister, and NZ First's poll rating has plummeted.

Yet analysts are fearful of writing him off.

"His chances are less than 50-50, but he's a remarkable survivor, so you never can count him out," says Colin James, a political columnist for the New Zealand Herald.

'Moths to a flame'

Struggling to push their policy initiatives above the clamour of scandal, both of the main parties have found themselves embroiled in the drama.

The government's critics have been keen to know how much Labour Prime Minister Helen Clark knew of NZ First's funding. She says she accepted the party's explanation that the confusion was caused by honest mistakes in accounting.

Prime Minister Helen Clark
Helen Clark is going for a fourth consecutive term as prime minister

"They're a small party with a rather amateur organisation. These things can happen," she told journalists last week.

Although Mr Peters has stood down, he is still on a minister's salary and privileges and Mr Key has called for Ms Clark to sack him. She has refused.

So despite his party heading for an electoral collapse, which will most likely see it lose all its parliamentary representation, Mr Peters continues to dominate the headlines.

Businessman Sir Robert Jones, a former Peters supporter and donor, believes that may suit him fine.

"[He wants] to always be unpredictable and constantly surprise so that despite his anathema to the media they would never ignore him. And they didn't, drawn like moths to a flame," Sir Robert wrote in the Dominion Post.

'Milked the system'

Between 1978 and 1993 Mr Peters was an MP for the National Party, before leaving to form NZF on a platform of anti-Asian immigration.

He benefited from the introduction of a new voting system in 1996 known as mixed member proportional representation (MMP) whereby everyone gets two votes - one for the party and one for the local candidate.

Labour Party 49 MPs
Part of governing coalition
National Party 48 MPs
New Zealand First Seven MPs
Confidence pact with coalition
Green Party Six MPs
Co-operation pact with coalition
Maori Party Four MPs
United Future Two MPs
Confidence pact with coalition
ACT New Zealand Two MPs
Progressive One MP
Partner with coalition
Independent Two MPs
Source: NZ Parliament website

Parties need to win a single seat or 5% of the vote nationally to be represented.

Since the system was introduced, the country has never given a party an overall majority - leaving the smaller parties to play kingmaker.

Therese Arseneau, a political analyst from the University of Canterbury, says this is a role Mr Peters has played well - though she adds that he "really milked the system" in 1996.

For weeks after that election, he went back and forth between the two major parties asking each one what they could give him until finally plumping for the National Party - despite having vowed never to work with them again.

In 2005 it again fell to Mr Peters to choose. He pledged to deal only with the party that had most seats, and formed a government with Labour.

But this time Mr Key - the narrow favourite to form the next government - has said he will not go into a coalition with Mr Peters, robbing him of the ability to play Labour and National against each other.

"That's really taken away the pivotal role he had," says Ms Arseneau.

So assuming that New Zealand voters once again award neither of the major parties an overall majority, the way could be open for the country's raft of other minority parties to hold sway.

The balance of power is tight - National currently has 48 MPs to Labour's 49 in the 121-member House of Representatives.

Labour rules with the backing of NZ First, the Greens and two smaller parties - making up 16 MPs.

The Maori Party, with four MPs, and ACT New Zealand, with two, are the other parties with representation. Both are currently in opposition.

If the poll is tight, analysts believe the Maori Party may end up choosing the government.

But once the dust settles after another closely-fought campaign, few New Zealanders would be surprised to wake up to headlines proclaiming Winston Peters as the kingmaker once again.

Timeline: New Zealand
16 Apr 08 |  Country profiles
Country profile: New Zealand
16 Apr 08 |  Country profiles

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