Newsroom Pro's Election special: Winston in the Kingmaker position; Maori Party's collapse robs National of crucial partner; Jacinda stumbled into a $520 bln minefield

Bill English tweeted this picture shortly after his victory speech with the note: "I got back up again, thank you New Zealand." Photo supplied by Bill English's twitter account.

Today's email is a post-election special.

1. A nation in limbo

Saturday night's election result has left the nation on tenterhooks while 384,072 special votes are counted and Winston Peters takes his time to pick a king or a queen. He said he planned to go fishing on a sunny Sunday afternoon in Northland.

The exact shape of the Government will not be known until after the final result is declared at 2 pm on Saturday, October 7, although National has the strongest hand in talks to form a coalition with New Zealand First.

Jacinda Ardern and Bill English both held back from calling Peters on Sunday, but early discussions are already underway between their respective staffs. A decision is unlikely before October 7, although Winston Peters has promised to make his call one way or the other once the writs are returned to confirm the result on October 12.

A surprisingly large number of special votes (15 percent of the total vs 12.2% in 2014) could see National lose a seat and either Labour or the Greens add one, but that won't be enough to change the balance of power. In 2014 there were 293,130 special votes, and that count reduced National from 61 seats to 60 and increased the Greens to 14 MPs from 13. The turnout rose to 78.8 percent of those enrolled from 77.9 percent in 2014 -- again suggesting a youth 'tremor' that is expected to shift one seat from National to either Labour or the Greens. It didn't quite turn out to be a full 'youth-quake' despite over 1.3 million votes being cast before Saturday.

If National were to lose one seat that was picked up by Labour or the Greens, then National would still be ahead on 57 and the Labour-Green bloc would be on 53. Both could form a Government with 66 seats and 62 seats respectively once they added New Zealand First's nine seats.

The key details from Saturday night's result were:

The public polls were right - National's 46.0 percent was above their own internal polls showing around 44 percent in the last week and right in line with both the final public polls by Colmar Brunton and Reid Research (see below).

It was also only one percentage point below National's 2014 final result, despite all the volatility in the electoral landscape over the last eight weeks. National's number of MPs fell from 59 in 2011 to 58 in 2014, although it lost one more in March 2015 when Winston Peters won the Northland by-election. National won that electorate seat back on Saturday night and lifted its total back to 58 on the night. It is a remarkable achievement for an unprecedented fourth term under MMP.

For those wanting to compare the actual results with the poll results, Reid Research was the most accurate, followed closely by Colmar Brunton. Both polls got National and Labour right to within one percentage point. As I pointed out earlier this week, both polls have in past MMP elections tended to over-estimate the Green vote by one or two percentage points and under-estimate the New Zealand First vote by the same amount. That's broadly what happened last night.

There was a Jacinda effect - Labour's 35.8 percent was around one percentage point below the two public poll results early in the last week, although that may be rectified after the counting of a record-high number of special votes.

The 15 percent of the vote still to be counted is above the special vote share of 12.2 percent in 2014, in part because of an unknown but large number of young first time voters, which are expected to favour Labour and the Greens. Labour's vote share was more than 10 percentage points higher than its final result from 2014 of 25.1 percent. Just seven weeks ago, Labour was in danger of a similar result and having as many as 20 fewer MPs. Instead, Labour's number of MPs will rise from 32 to at least 45.

There was a Waiariki effect - The collapse of the Maori Party vote and its ejection from Parliament was the one big surprise on the night and has proved decisive in stopping National from governing on its own again for a record fourth term with its favoured support partners of ACT and Maori. I flagged last week the result in this seat could be a decisive factor and it was.

Labour's candidate (and former TVNZ weather man) Tamati Coffey beat Maori Party Co-Leader Te Ururoa Flavell by 1,321 votes on the night -- a margin too big to be overcome by special votes.

This surprised many given Reid Research and Maori TV published a poll on September 9 showing Flavell had a 20 percentage point lead over Coffey. But pollsters have found it notoriously hard to find survey respondents on the Maori rolls for the physically dispersed and often rural electorates. The poll of only 400 electors was taken between July and September 3 -- an unusually long period, suggesting Reid Research had struggled to find a quick and full sample.

However, one clue to Coffey's success was in the details of the poll, which showed he was leading strongly among 18-34 year olds. They in turn would not have been polled as much in the landline-only poll and Coffey was successful in using his social media skills to create his own version of a 'youth-quake' of voters in Waiariki.

The Maori Party's candidate for Te Tai Hauauru, former league star Howie Tamati, was the last hope for the Maori Party in its attempt to re-enter Parliament on the coat-tails of an electorate MP. Another Reid Research poll put Tamati 13 percentage points ahead of Labour's incumbent Adrian Rurawhe. This too was way off the mark. Rurawhe won on the night with a 1,135 vote majority.

It was so close and yet so far - The irony on a successful night for Bill English is that for the sake of just over 1,000 votes in either of those two Maori electorates and an extra 17,000 or so votes for National, he would have been able to form a Government that was a near match to the ones National formed in the last three terms. And that is even after the retirement of United Future Leader Peter Dunne from his Ohariu electorate just a month out from the election.

Time for a single malt whiskey or two? - In more ways than one, Winston Peters suddenly became relevant because Tamati Coffey was able to unseat Te Ururoa Flavell. If Peters was in a generous mood, he would be sending Coffey a bottle of single malt whiskey. If Coffey wanted to get his career off to a flying start, he would offer to share it with Peters after a fish dinner caught and prepared by Jacinda Ardern and Clarke Gayford.

Ardern's whiskey cabinet in her Wellington office may (or may not) get a workout in the next couple of weeks.

Also, by the way, Gayford, a reality television fisherman of some note, starting the soft lobbying process with this tweet to Peters on Sunday evening:

"@winstonpeters Fish into the low tide at 4:45pm. Light variables from favourable W direction, check water temp, spring Snapper spawn close"

2. The great redeemer

One of the most telling moments in the campaign was when Paddy Gower threw the curliest of questions at Bill English in the Newshub debate on September 4.

Gower asked English what was different between his leadership now and in 2002, when English led National to 21 percent, its worst election defeat ever.

Just over a year after the 2002 debacle, English lost a bitter leadership contest to Don Brash. English eventually worked his way back into the leadership group with the help of John Key, who in turn succeeded Brash in 2006, and led the party before handing over to English as Prime Minister in December.

"I got up," English said in the debate with an immediacy and a brevity that showed his confidence and comfort with his leadership now.

He revisited that moment shortly after his speech late on Saturday night to National's supporters in its Sky City headquarters. His twitter account sent out the picture above with the message: "I got back up again, thank you New Zealand."

It capped off a night of almost-complete triumph for English. (Te Ururoa Flavell's election in Waiariki and an extra 18,000 or so votes for National would have made it complete.)

Many within and outside the National thought he would struggle to capture the affection of the public at large in the way Key was able to. He was seen before the election as a somewhat stiff and wooden politician who could not translate his mastery of policy into a connection with voters at large through the television, or the endless selfie tours through shopping centres.

He surprised many with his energy and his easy and relaxed performance in the shopping centres and warehouse tea rooms on the campaign trail. English's style is different from Key's, but he carries with it the same authenticity in the eyes of voters.

English was forceful in the debates and took his opportunities to put Labour's tax policies under pressure on the trail. His decision to include and showcase his family at campaign events and in the media also helped add some warmth and texture to a public image still dominated by eight years as the conservative numbers man behind John Key. 'Mr No' turned into the slightly uncool Dad with a heart of gold and cheesily bad taste in pineapple and spaghetti pizza.

Bill English's family life is central to who he is, and he even cited it as a factor in December just before he won the National leadership. He had been asked the very same question about what was the difference between English as leader in 2002 and English in 2016.

"The circumstances are quite different than in 2002. I was 39 years old then with six children under 13 so, if nothing else, I have got the opportunity to focus on the job much more now than was the case then," he said.

"I had a lot of obligations and that does effect your job. I have significantly less family obligations now," he said.

He was clearly in his element on Saturday afternoon during a photo opportunity at the Pullman Hotel after a morning of sleeping in and on holiday with his wife Mary and their six children.

That ease in talking to kids and people on the campaign trail became more and more evident the longer it went on. Some had questioned his skills as as retail politician, but his comments over the last week that he had enjoyed the campaign and felt energised rang true, whereas for others it might have seemed trite and formulaic.

His campaign manager, Steven Joyce, may also have wondered too whether English could campaign like his predecessor. He noticed English's mood building too.

"I think he probably campaigned better than he expected, even," Joyce said yesterday.

"We all know him to be a better campaigner than a lot of other people do, because we see him around the cabinet table and all those sorts of things. So we had a chance to show the public a lot of what they haven’t seen previously," he said.

"But he really fed off it, probably, more than he expected. He’s been a great candidate. You know, somebody that’s run five campaigns. You know, John was great, but Bill, you know, he was just determined and unflappable over the course of the five weeks. Great energy."

However, it was English's willingness to confront head-on the issues of child poverty, homelessness and spreading the fruits of economic growth that lifted National's campaign onto another plane that John Key would have struggled to pull off.

English has been on a type of permanent campaign trail over the last four years pushing his big idea of social investment to business leaders, social groups and the bureaucracies in Wellington. His arguments about using big data to target spending at the most vulnerable to lift multiple generations out of poverty resonates across the political spectrum. His below-the-radar campaign as Finance Minister suddenly seemed new and interesting once it was presented to audiences of over a million in the debates. It meant he could appear energised and in possession of a big new idea to confront Ardern's fresh, compassionate and 'relentlessly positive' appeal to voters.

English's social investment idea seems at once to be compassionate without being profligate. The financial logic of using an actuarial approach to the lifetime costs of poverty to justify big up-front social investment appears flawless. It also seems intuitive to many that improving the lives of young poor kids would reduce the long term costs to the health, education, justice and welfare. English's social investment approach allowed him to promote social spending to a conservative set of voters who would otherwise baulk at spending money on other people who had appeared (to them) to have failed to live responsible lives.

That English's idea remains mostly still a theory with some early stuttering attempts at building a larger set of programmes was forgiven by many of the swinging voters who might not have cut Key the same slack.

I heard time and again on the campaign trail from voters who were concerned about the problems of child poverty and homelessness, but who said they believed Bill English when he said he would turn it around. His decision in that Newshub debate with Gower to unveil his target of reducing child poverty by 100,000 by 2020 after years of refusing to set a target was a key moment.

It blunted one of Ardern's key points of attack and presented him as the compassionate conservative that he is.

English is the only politician on the National side with the mana and EQ who could realistically have made that appeal. Not Paula Bennett. Not Joyce. Not Nikki Kaye or Amy Adams (yet). Not Jonathan Coleman and definitely not Judith Collins.

English's campaign was not perfect. He blotted his copybook by following Joyce down the non-existent $11.7 billion fiscal black hole, lending his credibility to an attack that should have limited to tough questions about Labour's spending plans outside of education and health. Instead, Joyce barrelled on and English felt obliged to follow him.

If he confirms the fourth term, English also faces his own questions about his own ability to confront and deal with poor behaviour in his own cabinet. He let a few things slide, including: Murray McCully going rogue on Israel, Brownlee stuffing up his lines on Israel, Coleman's management of his ministry, Bennett's gaffe on human rights for gang members, Todd Barclay generally and Alfred Ngaro's threats to community groups on housing. One trait of John Key he will need to adopt is the ability to sniff the public mood and then ruthlessly and quickly dump either the policy or the person creating the smell.

After this election result, English now has that unparalleled authority within National's caucus to be as ruthless as Key and not cause dissension on the back-benches. His first cabinet choice will demonstrate how confident he is in using that new power to carry out the promises he made to the public, particularly on the issues of child poverty, homelessness and social investment.

In a New Zealand way, English's story is just as potent as John Howard's long journey to the top, back to the bottom and up to the top again in Australia. While it is not quite Churchillian, no other politician in the modern era of New Zealand politicians has shown such grit and been able to recondition himself into a successful leader after failing so spectacularly early in his career. How he uses that new platform and whether he can turn the bright, shiny social investment dream into reality will determine how he is viewed in the longer sweep of our political history.

3. So what happens now?

National goes into post-election coalition talks from today single-minded about forming a government with New Zealand First, but open to whatever flexible arrangements its leader Winston Peters will require to keep them in power, Tim Murphy reports.

Bill English is not toying with talking also to the Green Party as an alternative to NZ First and has already thrown the Act Party, which is anathema to Peters, overboard.

English may be single-minded because in reality he has only one option, whereas Peters has two: he could also try to form a knife-edge majority with Labour and the Greens once the 15 percent of special votes have been counted and any seat redistributions have been declared.

On preliminary results, National has 58 seats, Labour 45, NZ First 9 and the Greens 7. The target to govern is 61.

The two leaders' chiefs of staff spoke yesterday and English expected to begin talks with Peters directly on the negotiations process when Peters was ready. The New Zealand First leader made no calls to other leaders at the weekend as he wants to talk first to his party executive and his caucus.

"On the other side of politics, a three way coalition arrangement with a couple of smaller units and a weaker Labour Party is going to be quite complex."

A former colleague and NZ First MP Richard Prosser, who was demoted by the party before the election, claimed Peters would choose to go with the Labour Party, that he had scores to settle with National, and any consultation with his party would be a sham.

Labour's leader Jacinda Ardern reportedly spoke to Greens leader James Shaw late yesterday to begin sorting a process for talking to Peters. Ardern was still optimistic that Labour could end up in government.

English was explicit that a two party negotiation would be simpler and give stronger and more stable government than three, despite having worked for multiple terms with three or four party arrangements.

He indirectly referred to New Zealand First as one of the "small units" around these negotiations, a reference which Peters could take exception to, despite being just 7.5 percent of the preliminary vote.

"On the other side of politics, a three way coalition arrangement with a couple of smaller units and a weaker Labour Party is going to be quite complex."

Asked if he would consider resignation if his talks with Peters failed and National was forced into Opposition, English said: "We are not contemplating that. We have got a strong vote. If we had the vote that the Labour Party got then we would be talking about Opposition. But we got 46 per cent, almost one in two votes."

Late yesterday he indicated National would be patient but would not be stymied by Peters' timeframes. His National ministers would press on with work on new National policies simultaneous with coalition talks, which he agreed would need to happen at the pace NZ First would set.

Discussing housing, poverty and lifting standards of fresh water, English said: "We are in a good position to be able to apply some real momentum to these issues and they will certainly be part of our planning over the next few weeks. While we will be setting out to negotiate a coalition agreement, we will also be looking at the implementation of that programme that we took to the electorate and any enhancements we can make alongside any negotiation position we come to."

'A number of models'

English on election night referred to both "stable majority government" and "stable operating government" as options to discuss with Peters, and yesterday professed himself open to arrangements that enabled "strong and stable government".

"There are a number of different models...which have been tried through New Zealand's experience of MMP. There are plenty of examples to draw on."

On policies, English said National would want to "negotiate in a way that preserves the basics" of its claimed economic success.

"I would assume New Zealand First is interested in ongoing economic success as well, even if there's some different ways to how that's achieved."

He agreed both parties would have learned from previous coalition talks and governing arrangements, and would expect some indication from Peters if NZ First wanted to hold parallel talks with both National and Labour. "We are going to proceed with a negotiation on the basis that we have a fairly strong position for the National Party... there's a 10 point lead over Labour.

"We want to set about forming a strong stable government with a reasonable majority in the House."

"We are going to deal with the situation that voters have given us. I think that myself and Mr Peters are aware that the voters have been reasonably decisive...and will want to see us build on that fairly expeditiously."

'Let's give him some time'

Jacinda Ardern, speaking at a Labour post-election barbecue, said it would be hard for the parties to have substantive negotiations before knowing their final positions after special votes were counted.

"It's hard to go too far without knowing that remaining 15 percent," she said.

"Parties are wanting to consider their position and to consider the special votes."

Asked if that meant proper negotiations may not start until after the final results were declared on October 7, she said: "It's making sure that everyone's vote has been counted before we start forming a government," but noted "of course we are here ready to have those conversations."

She rejected the proposition that only National had the right to form a government with New Zealand First. "I think New Zealanders would expect that we would form a credible, stable government with the parties they voted into office."

What Peters thinks

Peters said little of substance yesterday, except that his priority was to consult his party. Asked if he was interested in the role of Deputy Prime Minister, he reportedly joked: "Been there, done that."

But a founding member of NZ First and former party president and MP Doug Woolerton, told Rachel Smalley on NewstalkZB early today that negotiating positions were important. By seniority and seats at the table, a coalition partner like NZ First could ensure a bigger party did not try to back-track on agreed promises by claiming no money was available.

Woolerton said NZ First's history as a party with members from both sides of politics meant Peters was used to dealing with both National and Labour mindsets.

A list of policy aims

NZ First policies that could be in line for negotiation and adoption in talks with National could include the bigger party agreeing to:

  • ditch its long-term plan to lift the age people receive superannuation from 65 to 67. NZ First says universal superannuation at 65 is a bottom line. This wouldn't give National an advantage over Labour, which is also sticking with 65, but it neutralises a big Peters bugbear.

  • agree to a binding referendum on the future of the Maori seats in Parliament. It used to be National policy to reconsider them. Its core supporters would have few qualms joining this Peters crusade.

  • agree to a review of sorts of the Reserve Bank Act and the factors the bank must take into account in conducting monetary policy. Peters has been on this for years. It is a core economic plank for National but it is not beyond possibility that some way of amending the settings to address his concerns for a 'flexible' monetary policy and 'sensible' exchange rate regime are considered.

  • tighten its annual net migration targets from the 73,000 a year now to somewhere nearer Labour's 40-50,000 - with an 'elegant solution' on the unskilled and foreign student categories long hated by Peters.

  • rule out more state asset sales. None are planned. But also tighten the sale of land to foreigners and give Peters his register of foreign-owned land.

  • make KiwiSaver compulsory and agree to a state-backed fund - Kiwifund, in NZ First terminology.

  • consider the lower tax rate (20 percent) NZ First proposes for exporter businesses.

  • indulge one of Peters' vanity projects like his 10-point plan to boost the racing industry.

4. So which way will Winston go?

Winston Peters and New Zealand First hold the balance of political power, but which way will the scales tip? A look at Peters’ past gives some hints, but history can only take you so far. Sam Sachdeva analyses the options.

After all the ups and downs of the last few months, the inevitable has occurred. Winston Peters is the king- or queen - maker, but who will he crown?

Taking to the stage at the Duke of Marlborough Hotel in Russell, Peters did his best to cut off speculation over which way NZ First will side, after the initial election results put his party in a position to anoint the next prime minister.

‘We invite you to be patient and not rush out and ask us, 'who you’re going to go with?'. If we hear that one more time I think we’ll be advocating a chance of our political system.”

It’s a futile request, given the obvious interest in who will form the next government - National and NZ First, or Labour, the Greens and NZ First?

Aware of the criticism NZ First copped for weeks of coalition negotiations in 1996, Peters has pledged this time to make a decision public by October 12, when the final election results are made official with the return of the writs.

So what else could Peters have learned from past experience?

Continuity or change?

In the past, Peters has always plumped for the party with the largest share of the vote (National in 1996 and Labour in 2005).

It’s a moral rather than constitutional stance, perhaps also rooted in the realpolitik of taking the most stable option.

However, Peters gave himself room to move when speaking to media in Northland on Friday, saying: "There's been in the last twenty years an emerging convention that you start with the party that has the most votes but that's only a convention.”

The other thing Peters’ previous coalition deals have in common is that they both extended the lifespan of an existing government - but not by much.

National’s third term ended with Peters sacked from Cabinet and the Government turfed out in 1999.

With Helen Clark and Labour, the result was worse: NZ First dipped below the five per cent threshold and exited Parliament, with Labour also gone from power.

With that in mind, perhaps Peters would prefer the chance to start something new.

An added appeal would be the leverage NZ First would have in negotiations with Labour and the Greens, given its increased significance and size relative to the others.

Third wheel?

There are some arguments to the contrary, however.

One is the desire for stability: Peters has said his main reason for rejecting Labour in 1996 was Clark’s inability to guarantee the support of the Alliance as needed for her to govern.

He has clashed repeatedly with the Greens during the 2017 campaign, first when former co-leader Metiria Turei attacked his “racist approach” to immigration then when MP Barry Coates publicly floated the idea of a snap election instead of a Labour-NZ First coalition.

It’s unlikely he was enamoured with Greens leader James Shaw publicly urging him to back a coalition of the left during his election night speech, either.

While Peters has not held back in attacking Bill English and the National government, he did the same to Jim Bolger back in 1996, shortly before signing on as Deputy Prime Minister and Treasurer.

What about his so-called “bottom lines”? Some, including the establishment of a foreign ownership register, cutting net migration, and keeping the superannuation age at 65, would seem to lend themselves more to a Labour deal.

That’s not to say that English and National may be unwilling to bend, however.

Policy and position wins

One participant in the 1996 negotiations told Newsroom earlier in the year Peters would be primarily motivated by policy wins in “highly symbolic, clearly NZ First-branded” areas, such as regional development.

New NZ First MP and former Labour minister Shane Jones could be an option for the economic development portfolio, while his time as a Pacific ambassador could also make him a useful option in foreign affairs.

What Peters might want for himself is harder to guess: with Prime Minister and Finance Minister off the table for both National and Labour, deputy PM may be as good as it gets - and he’s done that before.

Ultimately, trying to figure out which side Peters will come down on is currently a guessing game - and he’s likely to keep both English and Jacinda Ardern guessing for a few days while he extracts the best deal possible.

5. Is there a role for the Greens?

The Greens are leaving the door wide open on any possible coalition arrangements, even refusing to rule out a partnership with National. The next few weeks will see how things shake out, but after bringing the Greens back from the brink, has James Shaw done enough? Shane Cowlishaw reports.

Rubbing his eyes and stepping up to the microphones, James Shaw looked about as pleased as a very tired man could be.

Having led the party back from the brink of oblivion and ensured their survival by a mere 0.9 percent, it was mission accomplished.
But there was also a sense of mild disappointment amongst Green staff as they reflected on what could have been, and what had been lost.

From riding an all-time high in the polls just a few months ago to a decimation of their support following Metiria Turei’s benefit fraud admission, the party will return to Parliament with just seven MPs – half of what they had before.

That will likely rise to eight when special votes are counted, but there is no escaping the erosion of Green power.

Publicly the party is boasting of the new young talent being brought in – Chloe Swarbrick and, most-likely, Golriz Ghahraman. But they have lost seasoned campaigners such as Kennedy Graham, David Clendon, Barry Coates and Mojo Mathers.

The immediate task at hand, however, is the delicate negotiations needed to attempt to woo NZ First leader Winston Peters into a potential Labour/Greens threeway.

Addressing the media on Sunday, Shaw was immediately asked if he would be willing to take a minor role in order to change the Government.

The possibility of sitting on the cross benches providing supply and confidence to a Labour/NZ First government did not sit well - but was also not off the table.

“I’ve always said my goal was to change the Government and to form a new coalition Government with the Labour party afterwards, that’s what I’m working on and I think that possibility remains very real today and will become more so as the special votes are counted," Shaw said.

“In my view, that’s more likely in a full coalition where we work together as colleagues on a common programme for government rather than a minority Government that has to go to the cross benches to get every vote passed.”

As far as a National/Greens marriage goes, the unlikely partnership is at a stalemate.

Shaw said he wouldn’t be picking up the phone but would listen if the Prime Minister called, while Bill English said later in the day that there would have to be “some indication” from the Greens that they wanted to talk.

“It’s my responsibility to [answer the phone] and we’ll have to see what they’ve got to say but one of the things I’ll be saying in return is you know we campaigned on a change of Government and you know what was in our manifesto and you know how incongruous that is with National’s economic manifesto,” Shaw said.

National option highly unlikely

Although the possibility is being thrown around by several pundits, the option is highly unlikely.

It would require 75 percent support from Green Party members, something that seems an absurd possibility given their loathing of National.

Former Greens leader Russel Norman told Newsroom that it would take an extraordinary offer from National to get any deal over the line.

“Obviously it’s highly unlikely but obviously if National went to them with a great offer they would have to think about it…but it’s a very, very high bar so it would have to be an extraordinary offer from National to get over that bar.”

Asked to rate Shaw’s performance there was a long pause from Norman before describing it as “solid”.

He said there had obviously been a huge mistake made at the beginning of the campaign, but the on-the-ground party had mobilised to save the day for the Greens.

With their immediate future secure and coalition negotiations likely to wrap up in the next few weeks attention will eventually turn to the Greens’ leadership.

A new female co-leader will be chosen at next year’s AGM, with Julie-Anne Genter and Marama Davidson frontrunners, but Shaw will also be up for re-election.

Whether the party reward him for returning them to Parliament or punish him for his role in such a disastrous mistake remains to be seen.

6. The devil in the details of the results

One detail in the general election results shows Labour again lost the all-important party vote race to National in three of its heartland West Auckland seats - despite the campaign 'stardust' of Jacinda Ardern, reports Tim Murphy.

The party won all four electorates in the inner and outer west - Mt Roskill, New Lynn, Te Atatu and Kelston - but only in Carmel Sepuloni's Kelston did Labour also win the party vote.

Parties' share of the party vote ultimately determines the government and Labour's nationwide total was 35.8 percent, 10.3 points behind National.

Mt Roskill was former leader Phil Goff's old base and is now in the hands of Michael Wood, Te Atatu is held by Labour's campaign chief Phil Heatley and New Lynn is another former leader David Cunliffe's fortress now held by Deborah Russell. In 2014 the seats saw Labour fall behind National in the party vote, but hopes would have been high given the profile and promise Ardern brought to the battle these past two months.

In each of the losing cases the margins were not large, with National winning by between 400 and 700 votes from total electorate party votes of 24,000 or so.

But Labour needed to hoover up party votes in its own territory like National managed to do in its safe seats across Auckland and in the regions. Sharing the spoils in its bloc of red urban seats was a costly washout.

In National's safe East Coast Bays seat, for example, National scored 63.3 percent of the party votes cast (12,000 ahead of Labour); in its Hunua stronghold south of Auckland it pulled in 64 percent, or about 15,000 votes more than the red team.

Labour's South Auckland seats did perform: Mangere gave its 69.3 percent of its party vote to Labour (meaning 15,000 more votes than National); in neighbouring Manukau East it was 64.3 per cent (an 8500 party vote margin).

The party vote battle in west Auckland could have been swung by National's intense courting of voters from minority ethnic groups. It fielded Paulo Garcia, a Filipino, in New Lynn, its Indian list MP Parmjeet Parmar again in Mt Roskill and Minister for Pacific Peoples, Alfred Ngaro, a Cook Islander, flew the flag in Te Atatu.

When Bill English visited the west six days before polling day, he paid tribute to those representing Pacific and Asian communities.

"They reach a broad range of New Zealanders that, frankly, the National Party didn't used to. It brings a whole lot more people to us who share our aspirations."

He singled out Beeram, who was in the audience with his supporters at the Croatian Society club rooms, as one of the hardest working candidates National had anywhere.

In the two seats New Zealand First had hopes of winning, leader Winston Peters' Northland and star signing Shane Jones' Whangarei contest, NZ First not only got beaten in the electorate vote but received low party vote returns as well.

In Northland, National's farmer support base gave 16,839 party votes to the government, 10,059 to Labour and just 4776 to NZ First. In Whangarei, it was a similar result. The party's two biggest drawcards could not deliver party votes in the numbers it needed nationwide.

In the Maori seats, Labour not only swept the seven electorate votes but hammered the Maori Party on the party vote shares, with the Maori Party in the low double figures and Labour in the late 50s to mid-60s.

Labour's Maori caucus will also feature Manurewa MP Louisa Wall, Rongotai MP Paul Eagle, and - from the list - Willow-Jean Prime, Kiri Allan and Willie Jackson.

On election night preliminary results, the four parties qualifying for list MPs would bring the following candidates to Parliament:

National: 17
Bill English, David Carter, Steven Joyce, Chris Finlayson, Paul Goldsmith, Alfred Ngaro, Nicky Wagner, Brett Hudson, Melissa Lee,
Kanwaljit Singh Bakshi, Jian Yang, Parmjeet Parmar, Joanne Hayes, Nuk Korako, Maureen Pugh, Nicola Willis, Agnes Loheni, (just missing out would be Paulo Garcia, from New Lynn)

Labour: 16
Andrew Little, David Parker, Priyanca Radharkrishnan, Raymond Huo, Jan Tinetti, Willow-Jean Prime, Kiri Allan, Willie Jackson, Ginny Andersen, Jo Luxton, Liz Craig, Marja Lubeck, Trevor Mallard, Jamie Strange, Anahila Kanongata’a-Suisuiki and Kieran McAnulty

(Just missing out, and a possibility after the special vote count, would be Bay of Plenty's Angie Warren-Clark and the Auckland Central candidate Helen White.)

NZ First: 9

Winston Peters, Ron Mark, Tracey Martin, Fletcher Tabuteau, Darroch Ball, Clayton Mitchell, Mark Patterson, Shane Jones and Jenny Marcroft.

(Just missing out, and a possibility after specials, would be incumbent MPs . Three other MPs, Ria Bond, Denis O'Rourke and Richard Prosser are out due to being dropped down the list and NZ First's drop in party vote from 8.6 percent last time to 7.5.)

Greens: 7
James Shaw, Marama Davidson, Julie Anne Genter, Eugenie Sage, Gareth Hughes, Jan Logie, Chloe Swarbrick

(Just missing out and a possibility after specials would be new candidate Golriz Ghahraman, and incumbent MP Mojo Mathers)

In the battle for electorate majorities, the highest went to National's current defence minister Mark Mitchell in Rodney, with a 17,768 election night margin.

Next was Justice Minister Amy Adams, who won by 17,600 votes in Selwyn, National's Andrew Bayly in Hunua, 17,256, Erica Stanford in East Coast Bays, 14,175, Barbara Kuriger (National, Taranaki-King-Country) 13,994, and newcomer Tim van den Molen (National, Waikato) 13,933.

Labour's biggest margins included leader Jacinda Ardern, who was 11,935 votes ahead of National rival Melissa Lee, and Aupito William Sio in Mangere, 11,480.

7. Jacinda stumbled into a $520 bln minefield

Jacinda Ardern's 'captain's call' to consider introducing a Capital Gains Tax in her first term was the strategic error that may have cost her the Prime Minister's job for at least three years.

That could be her fatal decision and it shows why it is so dangerous to even touch the hair trigger of the most explosive issue in New Zealand's political economy.

If only she had known how big a minefield it is, she might have made a different decision in her second week in the job as Labour leader.

Flushed with the success of her first week in charge of the Labour Party and a building wave of 'Jacinda effect' support, Ardern decided her 'relentless positivity' and an ambition to really deal to the housing crisis meant she could venture forth into a capital gains tax debate.

Her predecessor Andrew Little had decided that Labour's campaigns for a CGT (excluding the family home) in 2011 and 2014 had been one of the 'big hairy' policies that had scared middle New Zealand off voting for Labour. He also ditched Labour's plan to increase the age of eligibility for New Zealand Superannuation.

Ardern kept the policy of leaving the age of eligibility at 65, but decided that her generation needed to know she was serious about addressing the housing affordability crisis.

If only she had known what she was dealing with, she might have made a different decision in those days before agreeing with Grant Robertson to let it be known in his debate with Steven Joyce on The Nation on Saturday August 12 that Labour would not rule out a CGT in its first term.

It seemed harmless enough at the time.

The exchange on The Nation that Saturday morning just 11 days after Ardern was elected leader looked like a statement of the obvious that was designed to fly through the keeper.

Asked by Lisa Owen if he could rule out a CGT in Labour's term, Robertson said: "We’ve got a tax working group. I can’t pre-empt what they’re going to come back and decide."

Sensing he was tip-toeing into the minefield, Owen pressed again: "So you can't rule it out? Could come in the first term?"

'Careful where you step '

Watching Robertson's response was like watching someone look over their shoulder while walking forward into a field marked "Mines. Danger!"

"I can’t pre-empt what that group says, but here’s the important point — right now today we have something called the bright-line test that the National Party brought in. It says that if you sell a house that’s not your family home within two years, you’ll pay tax on it. Steven has a form of capital gains tax."

The attempt at distraction only served to pique Steven Joyce's interest. In that moment, Joyce knew he had found a way to disarm the 'Jacinda Effect.'

Immediately, he pounced, setting out National's entire election strategy in one statement on the hoof.

"I think there’s a problem there for the Labour Party, because they’re dodgy on tax. They’re refusing to say about the capital gains, they’ve mentioned a water tax last week, but they won’t tell us how much it is, and then, of course, they’ve got a regional fuel tax they won’t talk about where it goes beyond Auckland," Joyce said.

Within days, Joyce was talking about Labour's 'seven new taxes' and directing his ad agency to focus National's attack on Labour's tax plans. In the last two weeks of the campaign, National's attack ads on tax flooded the nation's Facebook news feeds and successfully shifted the momentum back to National.

Within two days of Robertson's soft reversal of Little's CGT first-term-rule-out, Ardern confirmed that she had endorsed the change in strategy from her predecessor.

I remember, slightly dumbfounded the next week, asking Ardern why was taking the risk of poking the capital gains beast when Labour's own (very clever) policy was to extend National's two-year capital gains tax to five years. That would effectively tax capital gains by landlords in the first five years without prompting an attack from National, who could not credibly attack an extended version of a policy they had introduced themselves.

Ardern's argument was that housing affordability was an urgent issue and she could not afford to wait to help a generation locked out of the housing market.

"I am maintaining our right and ability to act on its findings and do the right thing when we’re in government. We’re yet to know what that will be though,” she told reporters on the Tuesday after Robertson's Saturday morning comments.

“I’ve been very, very transparent on this. We do not think that assets are treated fairly, relative to other forms of taxation in New Zealand. The fact that someone can go out and work a 40-hour week and pay tax on that, while someone can own multiple homes, flick them off for capital gain and is often not treated in that same fair manner, is something that needs to be addressed,” she said.

“Most countries have. New Zealand sits on its own in that regard."

Ardern again made clear it would not apply to the family home, but the genie was well and truly out of the bottle by then.

Why is it so explosive?

People often under-estimate what is at stake in the debate about CGT.

They essentially don't understand how New Zealand's households go about building wealth and arranging their finances. It's an easy mistake to make if you don't own property and you've never built or owned your own business, which Ardern has not done. (She has only recently bought a home with her partner Clarke Gayford).

The family home is at the centre of the New Zealand household's financial thinking. The numbers are enormous and are the most powerful force dragging on any attempts at changing the trajectory of New Zealand's political economy. Regular workers can earn twice and three times more just by owning property than they can from a real job, where they have to pay tax.

'Don't you dare touch my capital gains'

There is so much to lose for property owners, who vote at much higher rates than renters, and for New Zealand's 450,000 small businesses with one to five employees.

The numbers are astonishing and should have been laid out in front of Jacinda Ardern before she decided in a moment of 'Jacinda effect' confidence that it could be overcome.

Just have a look at table C21 in the Reserve Bank's series of statistics on household wealth. It shows that household net wealth rose $520 billion between September 2008 and the March quarter of 2017. That was largely because of a $320 billion rise in the value of housing and land -- none of which was taxed. Some of the rest were rises in the value of capital in Kiwisaver funds and businesses, both of which are untaxed.

It is the dirty little secret of New Zealand's financial life. There is much more money to be made -- tax free -- by buying rental property funded by bank loans than by actually working in real jobs. The leveraged returns over the last two decades have increases household net worth from $427 billion in September 1999 to $1.38 trillion by March of 2017.

That is trillion with a 'T'. That $1.38 trillion is 5.1 times GDP. The gains since National was elected in 2008 are equal to twice the GDP of the country. Over 60 percent of New Zealanders own property and they know their net worth in their bones. It's no accident that homes.co.nz has become a very popular site because it allows home owners to effectively check their net worth daily as their property values rise.

Going for the CGT jugular

Joyce and English sensed the vulnerability and quickly engineered a campaign to highlight the potential risks of a capital gains tax for small businesses that are funded off the family home and for families who depend on the inheritance handed on when an elderly relative passes on.

They then leapt on the possibility that Labour's Tax Working Group would suggest a land tax. They knew this all too well, given their own 2009 Tax Working Group had recommended just such a land tax.

Bill English used a trip to a Lower Hutt retirement village, Ryman Healthcare's Bob Scott complex, on September 5 to ram the point home.

English said Labour needed to be clearer about its position on tax so Kiwi voters could be fully informed.

“You take a group like this (referring to the Bob Scott residents), superannuitants all own their own houses, a lot of them own their own houses, but they don’t have much income," he said.

“They already pay rates and now the Labour leader is floating the idea that there’ll be a land tax on top of your rates."

Within hours, Ardern had to rule out such a tax.

Here comes an inheritance tax

Less than a week later, English highlighted the risk that a Capital Gains Tax could turn into an inheritance tax while talking to vegetable packers in Levin -- many of whom could only ever aspire to home ownership and the windfall capital gains that have come with it.
The idea is that the family home exemption would evaporate upon death. It was an easy accusation to make in the vacuum left by Ardern's reliance on the un-made recommendations of the unformed tax working group.

"I presume, for instance, for the inheritance tax -- which has widespread impact because it's for every family where the parents die and leave the house -- every family who's older parents own a home when they pass away -- it now looks like Labour are entertaining the idea of an inheritance tax on that house," English said with a smile.

"If they bought it 20 years ago for a couple of hundred thousand and now they can sell it for a million then how's it going to work?

"Labour should be upfront with the public. What they're asking the public to do is to vote for a committee in this election to decide one of the most critical issues for our economic success, and that is how the tax system works.

"They're asking New Zealanders to hand them their ATM card and they'll give it back in a year when they've decided how to spend it."
“New Zealanders need to know what they mean by that, otherwise Labour is asking for New Zealanders to give them a blank cheque, that is, ‘Vote us in and we can think of any tax at any rate and you have to pay it, and by the way what we’re spending it on we can’t really show it will make any difference’.”

Again, within hours, Ardern and Robertson ruled out an inheritance tax.

The reversal of a captain's call

By September 14 the pressure was intense and the weight of that $520 billion of untaxed capital gain became too much for Ardern to bare. She reversed her captain's call and said voters could say in the 2020 election whether legislation for a CGT excluding the family home would apply after the election. She had essentially adopted Little's stance again.

No doubt Labour's focus groups and internal polling showed that the dirty little secret of New Zealand life was too dirty to be laundered in public and through the tax system.

"I think it was a crazy brave thing to do," said Stephen Mills from Labour's polling company UMR of the CGT captain's call.

"When I first heard about it (leaving open a CGT in a first term) I put my head in my hands and made a secular prayer that I hadn't heard what I'd just heard," Mills told Kathryn Ryan earlier this week.

Ardern's captain's call was all designed to buy Labour and Generation Rent another six to 12 months of time of a CGT to influence the behaviour of property buyers.

In essence, the political risk was not worth the reward.

Those attacks on Labour's CGT plans through mid to late August coincided with a rebound in polling support for National. They cost Ardern the election.

If only she had known she was attacking $520 billion worth of wealth, she might have thought more than twice in her first week in the job that it was worth the risk.

8. The Maori Party's meltdown

After almost a decade in Government, the Maori Party are no more. Born from the ashes of the foreshore and seabed controversy, their future now hangs in the balance and has forced National to kowtow to Winston Peters. Shane Cowlishaw reports.

This shouldn’t have happened.

An experienced, incumbent MP. A favoured up-and-comer. Polls pointing to their safety.

But the Maori Party is gone. Knocked out of Parliament after failing to win a single seat, and attracting just 1.1 percent of the party vote.

The party’s future was riding squarely on the shoulders of its co-leader Te Ururoa Flavell, who was until last night the Maori Development Minister and MP for Waiariki.

But, in a result that had been dismissed by most commentators in the past few weeks, Flavell was unseated by Labour’s former weatherman Tamati Coffey.

With Flavell gone, hope briefly turned to the electorate of Te Tai Hauaruru where candidate Howie Tamati was tipped to have a chance in unseating Labour’s Adrian Rurawhe.

That was not to be either though, and the Maori Party ceased to exist in Parliament.

Alongside Flavell, another casualty was his political partner Marama Fox, who was likely watching the party vote counter like a hawk, needing 1.2 percent to get in if Flavell retained his seat.

In the end it proved pointless, as Maori support swung strongly behind Labour delivering them all seven of the Maori seats – something Fox likened to a “beaten wife” going back to their partner.

In a Newsroom article on the Waiariki electorate earlier this week, Flavell was confident but admitted the support rallying behind Jacinda Ardern was an unknown.

“Kelvin Davis could be deputy prime minister for goodness sake, so you can’t blunt that and I’m not going to say it hasn’t had an effect, of course it has, because we’ve seen it in the polls.”

Flavell’s demise was possibly partly due to a lack of time spent in the electorate as his Ministerial duties kept him away.

But more likely it was the party’s long association with the National Party that finally came home to roost: it is one of the quirks of MMP that minor coalition parties eventually end up paying for the perceived failures of the Government.

The crumpling of the Maori Party was the main thorn in a largely jubilant night for National.

If the party had maintained its support and brought back two or three MPs then the status quo government could have potentially continued.
Instead, English and his team will have to endure bruising coalition negotiations with Winston Peters as they try and bring black and blue together.

Speaking to media after his speech, it was clear the Prime Minister was disappointed with the Maori Party’s failure.

“I feel some real sympathy for the Maori Party. They made some huge gains for Maoridom and we know that because we worked with them on that. And they’ll feel very disappointed I think that the gains they made weren’t recognised through support for them.”

He was confident National could continue to make those gains for Maori, but it is clear their support has swung even further behind Labour.

Disbelief and anger

Flavell himself was a mixture of disbelief and barely contained anger after conceding defeat.

His plan was to put in three more years and step away from politics on a high.

But that dream is no more and he ruled out running again.

He hinted at potential disquiet within the party, saying there were “things to discuss with the executive,” but now was not the time.

Ultimately, he took responsibility but dismissed suggestions the party had become too close to National.

“People say that but, hell, we got $400m plus in the last three years...we’ve moved legislation and done hugely transformative things around Whanau Ora. Whanau Ora sitting there now, pffftt, what’s going to happen? That’s the disappointment," Flavell told reporters.

The loss of two experienced MPs

Politics aside, Parliament has lost two experienced operators in Flavell and Fox.

The former, an elder statesman of the party, has quietly beavered away as Maori Affairs Minister.

Fox is arguably an even bigger loss. An extremely hard worker, she is respected by politicians across the spectrum as well as the media for her straight-talking, often taking on the role of criticising the Government while leaving her co-leader conflict-free as a Minister.

With another term on the opposition benches a strong possibility for Labour, the question will be whether the plight of Maori suffers after they overwhelmingly switched their support to the red camp.

For Flavell, that’s a question Maori voters may soon be wondering themselves.

“I’m just sad for the dilemma that’s been put in front of our people, OK we’ve lost all our seats and if Labour are not part of a governing arrangement...Te Ao Maori is going to wake up and say ‘what the hang happened?’ and I’ll say ‘you spoke, you gave it, that’s how it is’.”

That is our election special.