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### Viewing cable 05WELLINGTON719, NZ ELECTIONS: TWO-WEEK WAIT TO SEE WHO'S WON THE

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Reference ID | Created | Released | Classification | Origin
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05WELLINGTON719 | 2005-09-19 05:04 | 2011-04-28 00:00 | CONFIDENTIAL//NOFORN | Embassy Wellington

`

    This record is a partial extract of the original cable. The full text of the original cable is not available.

` `

    C O N F I D E N T I A L SECTION 01 OF 03 WELLINGTON 000719

    SIPDIS

    NOFORN

    STATE FOR D (FRITZ), EAP/ANP, EAP/RSP, EAP/EP, INR/EAP
    NSC FOR VICTOR CHA AND MICHAEL GREEN
    SECDEF FOR OSD/ISA LIZ PHU
    PACOM FOR J2/J233/J5/SJFHQ

    E.O. 12958: DECL: 09/18/2015
    TAGS: PGOV PREL NZ
    SUBJECT: NZ ELECTIONS: TWO-WEEK WAIT TO SEE WHO'S WON THE
    BATTLE,  BUT LABOUR'S ALREADY LOST THE WAR

    REF: WELLINGTON 715

    Classified By: Charge D'Affaires David R. Burnett,
    for reasons 1.4(b) and (d).

    ¶1.  (C) As predicted, New Zealand's September 17 General
    Elections were the closest in years.  Despite starting the
    evening well ahead, the opposition National Party ended up
    one Parliamentary Seat behind the Labour Government.  But the
    Nats refuse to concede defeat and Labour has not declared
    victory, as absentee ballots totaling 10% of votes remain
    uncounted.  Both major parties will be courting possible
    coalition partners in the two weeks before the final tally is
    announced.  We suspect Labour will ultimately be the party to
    put together a government, but it may come at a high cost.
    Both United Future and NZ First have expressed reluctance to
    work with the Greens, NZ First's leader Winston Peters
    remains as unpredictable as ever, and the Maori Party's sweep
    of 4 of 7 Maori seats have left it strongly placed to
    negotiate the terms of its participation.

    ¶2.  (C) It's still not impossible for National to form a
    government.  Potential coalition partner the Act party, all
    but assumed dead, has won 2 seats.  There is also a chance
    that the Greens will disappear during the final ballot count:
    their 5.07% of the party vote is barely above the minimum
    needed to stay in Parliament. If they fall below the
    threshold, the Greens' share of the vote would be reallocated
    among all parties, to National's advantage. The Maori Party
    has also said it remains open to coalition talks with the
    Nats, although we consider a final deal unlikely.  Even if
    National loses the election, however, in many ways it has
    already won the future.  The party has doubled its seats in
    Parliament and taken 11 electorate seats from Labour.  It has
    also swept up almost all of the seats that the minor parties
    have lost.  Most significantly, NZ's electorate has clearly
    moved to the right, a fact not lost on Labour.  End Summary.

    ------------------
    WHERE THINGS STAND
    ------------------

    ¶3. (SBU) It was -- is -- the closest of races.  While
    initially National appeared in the lead by a substantial
    margin, in the end it received 39.63% of the party vote (49
    seats), just behind Labour's 40.74% (50 seats).  Labour's
    party vote share remained virtually unchanged from last
    election, so most of National's gain came from the small
    parties.  NZ First garnered just 5.8% (7 seats, down from
    13), and leader Winston Peters may have lost his electorate
    seat to National in a nasty, hotly contested race.  United
    Future got 2.72% (3 seats, down from 8), and the Greens
    clocked in just above the party vote threshold at 5.07% (6
    seats, down from 9).  In an unexpected turn, Act Leader
    Rodney Hide surprised virtually all observers (except Hide
    himself) and won an electorate seat.  But with just 1.52% of
    the party vote, Act will have just two seats in Parliament,
    down from nine.  Jim Anderton's two-person Progressive Party
    just got tinier -- with 1.21% of the party vote, only
    Anderton will return to Parliament.   The real minor party
    winner was the Maori Party, which won 4 of the 7 designated
    Maori seats.  Because they have two electorate seats more
    than they are entitled to through their party vote share,
    there is now a Parliamentary "overhang."  The number of total
    seats will be 122 for the next three years and,
    significantly, the number of seats a major party bloc needs
    to hold a clear majority has increased to 62.

    ¶4.  (SBU) On election night, a clearly shattered Helen Clark
    thanked voters for making possible Labour's return to power
    and said she would begin to negotiate a government.  Clark
    also reminded voters that she has the experience to do this.
    But with 219,000 "special votes" (absentee ballots)
    outstanding, the buoyant National leader Don Brash has
    refused to concede.  He has pledged he, too, will negotiate
    with minor parties to try to form a government during the two
    weeks it will take to count the special votes and recount all
    the regular ballots. At this point the numbers seem against
    National, although Labour will have problems in its
    negotiations as well.  While it is unlikely, the recount
    could also change the picture dramatically.

    ------------------------------
    WHAT HAPPENS NEXT: DO THE MATH
    ------------------------------

    ¶5.   (SBU) If the Greens' count holds, Labour (with the
    Progressives) will have 57 seats.  But for the remaining 5
    seats things get harder.  United Future has pledged to "talk
    first" with whichever major party wins the most votes, but
    leader Peter Dunne has made it very clear he will be hesitant
    to join in with any government that formally includes the
    Greens.  NZ First leader Winston Peters similarly pledged to
    support whichever major party was ahead, but on election
    night he noted that, given the narrow margins separating
    Labour and National, it was too early to confirm the leader.
    Peters, too, has expressed reservations about the Greens.  He
    now has gone on leave and reportedly did not return PM
    Clark's call yesterday, perhaps in payback for her failure to
    call him at all in 2002.  Clearly, Peters hopes to be a
    kingmaker and is likely to talk with both major parties
    during the two week ballot count.  The Maori party is a
    potential partner for Labour, but just before the election
    the party softened its  automatic rejection of a possible
    coalition with National because of that party's opposition to
    special Maori Parliament seats and bureaucracies.  The Maori
    now say they will talk to any party that approaches them, and
    will let Maori Party constituents decide through public
    meetings which government coalition to back.  At the very
    least, this puts the Maori Party in a much stronger position
    to get what it wants in return for supporting a Labour-led
    Government.  The resulting deal could be very unstable, given
    Clark's unwillingness to concede to Maori demands that she
    backtrack on Labour's foreshore and seabed legislation.

    ¶6.  (SBU) Because of the UF/Green issue, sources in
    Parliament tell us that they believe the likely Labour
    coalition would be Labour-Progressive-United Future, with the
    Greens in a confidence and supply voting arrangement.  This
    assumes, as is rumored, that the Greens recognize there is no
    other way they can be in government.  This would still only
    give Labour 60 votes, which it may be able to make up with
    Maori party support (although as noted this will create its
    own problems).  However, without United Future, National can
    probably do no better.

    ¶7.  (SBU) National's only reliable coalition partner is Act,
    and together the two parties have 51 seats.  If NZ First were
    to back down on it's pre-election pledge, or if National
    squeaks ahead in the recount, that would make 58 seats.  If
    United Future opted out of a Labour-led coalition government,
    say because the Greens insist on being in a formal coalition,
    that would give National's bloc 61 seats.  Brash has also
    made it clear that he has not ruled out talking with the
    Maori Party.  Although on social issues Maori are quite
    conservative, the odds of them actually backing National are
    limited unless National backs down on its pledge to eliminate
    the Maori seats.  It's not entirely impossible, however, that
    National could to find a compromise.  It's worth remembering
    that the Maori Party was founded in protest against Labour's
    Foreshore and Seabed policy, and co-leader Turia reportedly
    despises PM Clark.  It would also not be necessary for the
    Maori Party to back National.  By simply not supporting
    either major party, National would still have one more seat
    than Labour.

    ¶8.  (SBU) In reality, however, the only likely way National
    could form the Government is if the Greens lost their party
    vote share after the recount, and/or National's own share
    increased over Labour's.  The Green vote would be reallocated
    to all remaining parties, and the boost to National would
    enable them to form a majority with fewer minor party seats.
    Labour, meanwhile, would lose it's largest sure-bet partner,
    and would find it difficult to compensate.  In the past two
    elections, however, the Greens have picked up support (and
    seats) from the special voters, a large number of whom are
    students.  If the same holds true this election, National is
    unlikely to benefit from the Greens' loss.

    ------------------------------
    IT'S LABOUR'S LOSS, REGARDLESS
    ------------------------------

    ¶9.  (C) Even if Labour forms a Government, it has in many
    respects lost this race.  Just five months ago, virtually all
    political analysts (including many in the National Party)
    predicted a clean sweep in these elections for the
    Government.  As a result of National's campaign, a reelected
    Labour would be badly weakened, and perhaps unable to pass
    much of the legislation it would want this Parliamentary
    session.

    ¶10.  (C) PM Clark, an astute politician, must also realize
    that the nature of Labour's narrow win (or loss) spells
    trouble for the party's future.  Many MPs close to the PM
    (including Trade Minister Jim Sutton) lost their electorates
    and will return to Parliament as list candidates.  Others saw
    their margins of victory dramatically clipped: Labour lost 10
    electorates to National and Labour's margins in 29 of the 31
    electorates it maintained were sharply reduced.  The country
    is clearly moving to the right.

    ¶11.  (C) National, on the other hand, is on the upswing.
    After 2002's dismal showing of 21%, many predicted the Nats
    would soon become a minor party.  Yet under Don Brash, they
    have gained 11 electorate seats and almost doubled their
    total seats in Parliament.  In strong contrast to PM Clark
    during her election-night speech, Brash appeared totally
    confident.  Labour's obviously weakened position is also
    giving National a boost. One National candidate told us that
    she and others who lost their races have been instructed not
    to stand down their campaign teams.  The party leadership
    anticipates that even if Labour forms the Government, it's
    fragile coalition will not last a full three years.

    ¶13.  (C) As for Don Brash's future, the party he leads is
    credible once more, and will be capable of mounting an
    effective opposition to a decidedly weakened government.  He
    may actually prefer this to squeaking to a victory this time
    around.  Indeed, we suspect that given the tight margins and
    divided electorate in this race, neither major party really
    relishes the chance to take over the reins.

    Burnett

`