New Zealand First leader Winston Peters watches the election results under the watchful eye of the media at Tauranga Racecourse, November 1999. (Photo by David Hallett/Getty Images)
New Zealand First leader Winston Peters watches the election results under the watchful eye of the media at Tauranga Racecourse, November 1999. (Photo by David Hallett/Getty Images)

PoliticsSeptember 20, 2017

Winston’s history: what can we learn from the NZ First deals with National and Labour?

New Zealand First leader Winston Peters watches the election results under the watchful eye of the media at Tauranga Racecourse, November 1999. (Photo by David Hallett/Getty Images)
New Zealand First leader Winston Peters watches the election results under the watchful eye of the media at Tauranga Racecourse, November 1999. (Photo by David Hallett/Getty Images)

In 1996, NZ First went into coalition with Winston Peters’ old party. In 2005 it propped up a Labour government. Branko Marcetic looks back at those examples and how they fared.

Only a few months ago, with Labour in polling doldrums and an apparent mood of anti-establishment change in the air, New Zealand First seemed destined to achieve their best ever election result. One bout of Jacindamania later, NZ First has dropped significantly in the polls. In spite of yo-yoing poll numbers and some trainwreck media appearances, however, the party remains on course to decide whether Bill English gets three more years as prime minister or Jacinda Ardern will take the reins after September 23.

What can the parties themselves and New Zealand as a whole expect from these possible scenarios? We have some clues. This is, after all, not the first time NZ First, which has only ever had one leader, Winston Peters, has been in the position of having to prop up the next government, having entered into a coalition with National after the 1996 election, and a confidence-and-supply agreement with Labour in 2005. The episodes are a study in contrasts.

The 1996 example: National and NZ First

The 1996 election came at a crucial point for both parties. National’s reforms, particularly in the healthcare sector, had been hugely unpopular, a vulnerability for the party despite its victory over Labour and an area it pledged to soften on in the next three years. NZ First, meanwhile, was contesting only its second election ever, formed only three years earlier when Winston Peters quit National over ideological differences, pledging to roll back National’s neoliberal reforms.

Winston Peters and Jim Bolger at the coalition agreement signing. Grab: TVNZ

The NZ First-National partnership was always going to be an uneasy one, given that National was the embodiment of the post-1984 neoliberal experiment, the defeat of which Peters and the party made their cause célèbre. Yet the coalition agreement was at first viewed as a victory for NZ First, an example of the outsize clout it wielded in the new government.

Among other things, it included $3 billion of extra spending on health and education, more police, the rolling back of National’s health care reforms, no more sales of specific assets and a referendum on compulsory superannuation, a provision NZ First had campaigned on and one that narrowly survived the coalition talks (and would ultimately be defeated by 92% of voters in a referendum).

It took six months for the Sunday Star-Times to suggest the agreement was a “a useless appendage”.

Only three months in, Jenny Shipley – then minister of State Owned Enterprises – told the press NZ First had agreed to the sale of eight Energy Corporation dams, despite the company being specifically listed in the coalition agreement as safe from asset sales. Helen Clark relished the chance to attack Peters on this point, asking, “How many more secret privatisations did NZ First sign up to during its coalition talks?” Jim Anderton, leader of the Alliance, called it the “fastest betrayal in New Zealand political history”.

“You cannot win every battle,” Peters protested.

More was to follow. NZ Post was deregulated. Kindergartens were removed from the state sector. And ministers spoke of more deregulation on the horizon. As journalist Ruth Laugesen pointed out, National likely felt emboldened to be reformist, ironically, because NZ First’s support strengthened its hand in parliament.

As early as the end of December, Labour claimed it was getting hundreds of disgruntled NZ First supporters as new members. By mid-March, support for the party had fallen nine points to 4%, and by April, Peters – once the country’s most preferred PM – saw his approval rating fall to 17%. His stronghold of Tauranga swung away toward Labour. It was a decline partly caused by a feelings of betrayal among supporters, and partly by several scandals related to the party, such as Peters’ alleged physical assault of John Banks.

It didn’t help that Peters’ new role as Treasurer forced him to seamlessly morph into the very thing he had declared war against. In his first press conference, he called for more government cost-cutting and called on ministers to present him with ideas for savings. “He now talks more in the language of National than NZ First,” wrote the Sunday Star-Times, calling him “an unexpectedly zealous Treasurer”. Michael Cullen mocked him as a “market darling and Treasury poodle”.

But it was in health, under the tumultuous tenure of then-Health Minister Bill English, that the incompatibility of the two parties was at its most pronounced. National’s pre-1996 healthcare reforms had arguably been its most radical, introducing the profit motive for hospitals, forcing them to compete for funding and shutting down hospitals that were unprofitable. NZ First had called it “privatisation by stealth”, a sentiment shared by numerous others.

English had been upgraded to health minister in order to put a gentler face on what was ultimately the same market-driven approach. First-time NZ First MP Neil Kirton was made associate health minister to stop this approach. The two did not gel.

“It was never an easy relationship,” Kirton told me.

Kirton says English was a “child of Treasury” who was too ideologically wedded to free market reforms to make a true change in direction. In fact, many of the most significant shifts – such as introducing free health care to kids under five – were brought by NZ First, and were hard (and very publicly) fought.

The party also suffered its fair share of losses. It was not even a month before English publicly said most of the coalition promises were “plucked out of the air” and couldn’t be afforded. When National put forward plans for a joint public-private heart unit at Christchurch Hospital, breaking a direct promise of Kirton’s, Labour and Alliance called on him to resign (the government ultimately overturned it). The law was tweaked so hospitals would have to run in a “business-like” fashion instead of as businesses, a change that substantially did nothing. Kirton repeatedly complained that English wasn’t honouring the coalition agreement.

Kirton and English’s uneasy relationship deteriorated. Kirton loudly and publicly criticised English’s health policies. Their respective offices began leaking damaging information on each other, such as when Kirton leaked information about planned health cuts and closures that English wanted kept out of the public eye, or when English’s office was suspected of leaking how much Kirton was spending on consultants. The Waikato Times reported that Kirton had changed his locks so English’s staff couldn’t enter his office. English called for a probe into a contract awarded to an ad agency run by Kirton’s father-in-law (he was ultimately cleared of wrongdoing). Kirton would be sacked within a year, at which point he leaked more damaging information about health cuts.

By October – a mere 11 months into the coalition – Peters was being booed by 600 elderly people at a Wellington Grey Power event, with a combative Peters insulting members of the angry crowd, telling one to “put your false teeth back – I could hear you better”.

In fact, both parties were bruised by chaotic partnership. A year into the coalition, the Sunday News asked voters their verdict. “Bloody awful,” said one Peters voter. “People made promises and didn’t keep them. We haven’t had a coalition government yet.” He complained about the infighting and said he wouldn’t vote NZ First again.

Another, a National voter, said: “I’m not happy at all. I voted for National, but I didn’t vote for them to go in with Winston Peters.”

By the two-year mark, the coalition collapsed. The Evening Standard had warned in 1996 that NZ First’s betrayal of Kiwis who had voted for it to get National out of government “may result in the party’s slow demise rather than its strong survival.” This prediction aged well. The party’s popularity plummeted, and it was punished in the 1999 election by falling below 5%, and would have dropped out of parliament had Peters not retained his Tauranga seat by a whisker. Also punished was National, beaten by Labour by 8 points.

The 2005 example: Labour and NZ First

NZ First’s deal with Labour in 2005, by contrast, was more successful. Some of this was owed to the fact that it was a confidence and supply agreement, which meant NZ First MPs were kept out of Cabinet, and could also be allowed to embark on their own quixotic battles without necessarily tarnishing the image of the government as a whole. But the greater ideological overlap between the two also made for a better functioning coalition.

Winston Peters having a grand old time with Helen Clark, Governor General Dame Silvia Cartwright and Peter Dunne following the swearing in ceremony at Government House in 2005. Photo: Marty Melville/Getty Images

Once again in the position of kingmaker, Peters held out for a month for the best deal possible, infamously undermining his campaign-era distaste for the “baubles of office” by accepting the position of foreign affairs minister, and in the process setting a new precedent: a minister who wasn’t in Cabinet. The NZ First party president resigned in protest.

In return, Labour granted the party plenty of concessions, among them: 1,000 extra police; tighter rules on immigration and greater powers for immigration officers; a rise in the pension from 65% to 66% of average weekly earnings; the introduction of the SuperGold card; an increase in the minimum wage; and a further moratorium on asset sales.

In contrast to the conflict-ridden first few months of the 1996 coalition, media commentators found a surprisingly strong partnership. “The marriage of convenience,” wrote the Dominion Post‘s Martin Kay, “shows all the signs of lasting the distance.” Tracy Watkins wrote that “the only appearance of instability has been generated from within Labour’s own ranks,” owing to a host of minor scandals (though Labour continued to poll in the 40s six months in).

Instead of being yelled at by Grey Power, Peters received their thanks, when his deal in 2007 ensured $13.78 a week more for the annual increase in superannuation than Labour would have offered. The party even got an additional victory, when it pushed Labour early on into conducting an inquiry into rates rises by threatening to vote for then-ACT leader Rodney Hide’s rates-capping bill, which Labour opposed.

Of course, it wasn’t entirely smooth sailing. When finally unveiled, the SuperGold card was a bit of a flop, offering small discounts on products like paint, ferry tickets and warrants of fitness instead of benefits like cheaper power. A Hawkes Bay Grey Power spokesman complained that it offered nothing better than Grey Power’s own card. A row between one NZ First MP and Labour’s Justice Minister Mark Burton also erupted when Burton announced the results of the rates inquiry without inviting NZ First to the press conference, preventing them from rightly taking credit for the results in public. Still, this was far from the Kirton-English blood feud of 1997.

Labour also took some flak. The decision to award Peters – who had spent previous elections claiming that immigrants were trying to “Asianise” New Zealand and warning of the New Zealand Muslim community’s “militant underbelly” – the foreign affairs porfolio was criticised heavily both here and overseas. The Age in Australia called him a “bizarre” choice that was met with “a mixture of amazement and consternation”. When Clark travelled to Brussels at the end of November 2005, a German Green Party MP for the European parliament told her he “can’t understand [the choice of Peters], though I’ve tried,” because he was “diametrically against the position you’ve adopted for six years”.

Labour also had to indulge some NZ First tendencies that it likely wasn’t particularly fond of, such as supporting Ron Mark’s bill that would have allowed kids as young as 12 to be put in jail for burglary, assault or stealing a car. Labour was only obligated to support it to select committee, and following this, the bill failed.

All in all, though, the Labour-NZ First coalition was considerably more harmonious. Even when Peters started openly criticising the government, such as about foreign debt, it didn’t seem to matter, with Michael Cullen waving it off as Peters simply airing his long-held views as leader of NZ First. (It’s unlikely Cullen would or could have been so blasé had the parties been in a formal coalition).

Although the Labour-NZ First partnership ultimately fared surprisingly well, it didn’t do the parties themselves much good. NZ First support had fallen to between 1% and 2% by April 2007, perhaps, as Martin Kay speculated at the time, because its victories and actions were being subsumed by its larger partner, though the party’s public procrastination over paying the $158,000 it had misspent in the election also hurt it.

Shortly before the 2008 election, Peters stood down as a minister after the Serious Fraud Office launched an investigation into undeclared donations to his party. At the election, Labour trounced by 11 points by National, and thrown out of government, though this was due to a combination of John Key’s popularity and third term drag. NZ First fell below the 5% threshold, and dropped out of parliament altogether.

And 2017 ..?

Though the two had their differences, their 2005 partnership lasted the full three years and racked up some important policy wins for NZ First – the SuperGold Card is still the policy most associated with the party, and Peters is now campaigning on introducing an upgraded version. That said, the voting public did not congratulate NZ First for its deal, tossing it out of parliament for the next term.

The party’s hopping into bed with National in 1996 certainly eroded its voter base. It wounded Peters’ own public standing, and saw many of the party’s goals either watered down or outright abandoned.

While that may make Labour seem likeliest to prevail in any head-to-head contest for NZ First’s affections, don’t be so quick to call it. If there’s one thing Peters knows, it’s how to keep both the public and political commentators on their toes.

Keep going!