New Zealand
Coalition horse-trading begins after tight NZ poll
By Paul Tait
Sep 18, 2005, 11:04

WELLINGTON (Reuters) - Jockeying for potential coalition partners began on Sunday after New Zealand Prime Minister Helen Clark's Labour Party pipped the National opposition by one seat in a nail-biting election.

Clark is poised to become the first Labour leader ever to win three straight terms after she stormed home to finish ahead of former central bank governor Don Brash's National Party.

Labour had 40.7 percent of the vote compared with 39.6 for conservative National when initial vote counting ended late on Saturday, although around 10 percent of the ballots have yet to be counted.

That would translate into 50 seats for Labour in a 122-seat parliament, down one from the previous parliament, compared with National's 49. Results will be declared official on October 1.

The close result, with both parties short of an outright majority, means at least two weeks of political horse-trading with the six key minor parties who won seats, in a bid to create a workable coalition government.

Brash has refused to concede defeat but Clark, who remains caretaker leader, appears to have the most potential allies.

"What I intend to do is keep open phone lines and talk with a range of party leaders," Clark told Radio National.

"I have one objective now and that is to form a stable government which can keep the progress New Zealand is making going ahead."

Local markets were likely to be unfazed after opinion polls had pointed to a tight finish.

"It's just a hanging situation at this stage and I don't think the market will take much notice of it," Ulf Schoefisch, chief economist at Deutsche Bank, told Reuters.

The campaign was fought mainly on local issues like tax, spending and indigenous Maori rights. Clark trumpeted her record of stable government, economic growth averaging 4 percent over the past five years and low unemployment.

BRASH FIGHTS ON

Brash, a 64-year-old political novice, fought hard and his promises of NZ$9 billion worth of income tax cuts over three years almost pushed him across the line.

He refuses to give up, saying that 218,000 votes still to be counted could tip the balance in his favour.

"My colleagues and I will be working diligently over the next few days and weeks to put together a National-led government," Brash said.

A change of government appeared possible when National took an early lead in the vote count but Labour clawed its way back when returns came in from major urban centres like Auckland, New Zealand's biggest city, and the capital Wellington.

"The critical thing now is for everyone to take a deep breath, it has been a hard-fought election that has exposed a lot of divisions in New Zealand society and, as well as forming a stable government, my desire is to address how we can start healing some of those wounds," Clark said.

National almost doubled the vote it won in 2002 but it took votes away from minor centre-right parties with which it could form coalitions.

Labour can probably count on at least another seven seats from the Green and Progressive parties.

United Future and nationalist New Zealand First, who have 10 seats between them, have vowed to support whoever has won the most seats on key issues of confidence and finance.

The Maori Party, which won four seats, is also unlikely to join National after Brash vowed to end special privileges for Maori, who make up 15 percent of the 4.1 million population.



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