The New Zealand National Party announced that it reached an agreement with “ACT New Zealand” and “New Zealand First Party” to form a government on 23 November 2023. This ended weeks of negotiations and political uncertainty under an interim government.
The center-right National Party won the most votes in the general election on 14 October 2023, but needed the support of both the right-wing ACT New Zealand and the populist New Zealand First Party to form a majority government. Negotiations were protracted as the three parties sought to establish a common political agenda and share ministerial positions over the next three years.[1]
New Prime Minister Christopher Luxon made the following statements on the subject:[2]
“I am pleased to announce that we are at a point where we have completed negotiations with the relevant parties. These agreements have now been submitted to the parties for approval. We hope to get approval this evening. We are really excited.”
The Conservative National Party was able to win votes by promising prosperity for middle-income New Zealanders and pledging to control historically high inflation and reduce the country’s debt. The party is likely to task the Central Bank to bring inflation down to between 1% and 3%.[3]
The formation of a new coalition government would bring to an end six years of a left-leaning government led by the Labor Party. Labor had lost the support of many New Zealanders due to the country’s long Covid-19 lockdown and rising costs of living.[4]
The fact that the National Party won the election with the largest number of votes determined the potential for the government to come to power. However, the need to ally with other right-wing parties to secure a majority presents the challenge of political stability and a unified vision for governance.
The National Party’s formation of a coalition with ACT New Zealand and the New Zealand First Party demonstrates the need to unite different political views and demands. Coalition governments require the ability to balance different interests and represent broad segments of the population.
The National Party’s promised relief for middle-income earners and the commitment to contain high inflation appear to have been placed at the center of the government’s economic policies. This may reflect the government’s intention to focus on economic stability and citizens’ welfare.
The Central Bank’s plan to reduce inflation to between 1% and 3% is one of the focal points of economic policy. Such a policy shift could bring a more specific and focused approach to tackling inflation. But the practical challenges and economic consequences of its implementation should also be considered.
New Zealand’s previous left-leaning government was criticized for Covid-19 restrictions and the rising cost of living. How the new government will approach these issues and offer an alternative to previous policies will be important.
The long process of forming a coalition government may create social uncertainty. The public may have expectations about the new government’s capacity to address problems quickly and effectively. The announcement of the new government’s policy agenda and ministerial appointments will provide a clearer understanding of what direction will be followed in the economic, social and foreign policy areas. As a result, New Zealand’s new coalition government will carefully consider how to fulfill its election promises, respond to public expectations, and strengthen the country’s economic health. The government’s challenges and successes will be important factors in shaping the country’s political and econom
[1] “New Zealand’s National Party Clinches Deal to Form Government”, Reuters, https://www.reuters.com/world/asia-pacific/new-zealands-national-party-reaches-deal-form-government-2023-11-23/, (Access Date: 23.11.2023).
[2] Same place.
[3] Same place.
[4] Same place.
