English and Ardern to start talks with Peters

Winston Peters will meet with Jacinda Ardern and Bill English separately tomorrow in Wellington for the first preliminary talks on forming a Government. Montage by Lynn Grieveson.

Finally, the talks about forming a new Government are about to get underway, albeit only in preliminary form from tomorrow. The serious discussions won't start until after the specials have been counted and the final result confirmed on Saturday at 2pm. Bernard Hickey reports on the manoeuvring in the pre-start box.

New Zealand First announced today that Winston Peters would have discussions with the National Leader Bill English in Wellington tomorrow morning and with Labour Leader Jacinda Ardern tomorrow afternoon.

But everyone made clear these talks were really about everyone setting out timetables and priorities before the real negotiations start from Saturday. These discussions on Thursday are as much about pre-cooking things so governing arrangements can be agreed in a very tight timetable of just five days until next Thursday. Think of it like pre-heating the oven.

Winston Peters has repeatedly confirmed his planned date for a decision of October 12, which is when the writs are returned to confirm the election result. English has expressed scepticism about meeting that, given his experience of previous simpler negotiations with smaller parties to form three National-led Governments since 2008.

Negotiations between Peters and the two main parties in 1996 lasted almost two months and weren't concluded until December 10, although the election that year was on October 12.

Ardern confirmed the preliminary discussions this afternoon and said she wasn't concerned National had been chosen for the first discussion. She also said an October 12 completion date was still possible, although she would not rule out a longer time.

"One meeting has to happen before the other. I'm not particularly concerned about the order. The importance is that meetings are being had and we're preparing to form a stable coalition government," Ardern told reporters after meeting the New Zealand women's rugby team at the Civic Square.

"I'm not particularly worried about the logistics. The more important thing is we're meeting and getting on with the negotiations to form a stable, durable government," she said.

"These are preliminary talks and special votes remain important. Having this preliminary discussion means we will be able to move quickly once those special votes come in."

Ardern reiterated the importance of getting a running start ahead of the Saturday start gun at 2pm.

"We're being ambitious about working through the issues as quickly as we can, but at the end point forming a stable, durable coalition Government. It is absolutely possible to do it within that timeframe, but it does mean those preliminary negotiations are very important," she said.

Bill English did not talk publicly today, although he also hosted the Black Ferns for a visit in his office.

So what are the negotiating points?

Ardern said Labour had common views with New Zealand First on wages.

New Zealand First campaigned on lifting the minimum wage to $20/hour within three years from $15.75/hour currently, but only if the corporate tax rate was cut from 28 percent to 25 percent, and corporate tax for exporters was cut to 20 percent.

Labour campaigned on lifting the minimum wage to $16.50 per hour and lifting it to two-thirds of the average wage "over time and as economic conditions" allow. That would be around $19.70 currently, given the average wage in the March quarter was $29.90. Labour did not plan any corporate tax cut.

Both Labour and New Zealand campaigned on removing the secondary tax on second jobs, which mean workers over-paid $750 million in tax in 2016.

"We certainly share a common view that we need to lift the wages of those on the lowest wages in New Zealand. All of that I'll be leaving that to the negotiating table, but we do share a focus on lifting the wages of those with the lowest wages," Ardern said.

"There are some shared values, and not least is changing away from the status quo of the last nine years," she said.

Labour and New Zealand First also both campaigned on reducing net migration, albeit by different amounts. Labour proposed changes to rules for international students and lower skilled temporary workers that would cut net migration by 20,000 to 30,000 a year.

New Zealand First promised to reduce net migration to around 10,000 from over 70,000 currently, without being specific about exactly how that was done. New Zealand First also emphasised reducing migration of lower skilled workers, but has shied away from changes that would affect regional employers, particularly in horticulture and agriculture.

Two years ago, National cut its permanent residency target for each two-year period by 5,000 to 85,000 to 95,000 and earlier this year it tightened rules for temporary workers wanting permanent residency, but has not sought to cut current migration levels.

Trade deals and buyers' bans

New Zealand First campaigned for a ban on foreign buyers of freehold land, including for farming and housing. Labour campaigned for a ban on foreign buying of existing homes. Such a ban would require New Zealand to renegotiate its Free Trade Agreements with Korea and Taiwan, and changes to the Trans Pacific Partnership.

National has argued that a stamp duty on foreign buyers would be allowed under those free trade agreements.

New Zealand faces a deadline of sorts on the TPP because leaders of the TPP countries are expected to meet and discuss the agreement on the fringes of the APEC summit in Vietnam on November 8, followed by the East Asia Summits in Manila three days later.

Asked about whether the negotiations would cover the TPP or the FTA changes needed for a foreign buyers' ban, Ardern said: "We've set out some of our views for those negotiations. We've set out clearly that we maintain the ability to ban foreign speculators from purchasing existing homes in our residential housing market. Whether or not they will come up in our negotiations remains to be seen."

She was also asked about New Zealand First's opposition to the Investor State Dispute Settlement (ISDS) mechanism currently in the TPP.

"That hasn't been our focus, but I don't want to presume what will come up in those negotiations and what priorities other parties will place when we come to the table," she said.

Other areas likely to be discussed include New Zealand First's proposals to move the Port of Auckland to Northland and various measures to beef up regional rail routes.

Labour and New Zealand First also have common ground on the New Zealand Superannuation Fund. They both want to resume contributions immediately. Labour specified initial contributions would start at $500 million this financial year, rising to $2.2 billion by 2020/21. However, New Zealand First has also called for the fund to be exempt from having to pay tax. It paid NZ$1.2 billion in tax in the last 12 months.

Trust and fiscal responsibility

Ardern reiterated again that she thought Labour's relationships with Peters and New Zealand First would be important.

"I think the most important ingredient for any conversation with any member of parliament about something as important as forming the government is simply that I bring to the table respect, integrity and I'm a trustworthy partner to deal with," she said.

Ardern also reiterated Labour would stick to its Budget Responsibility Rules that aim to run surpluses over the cycle and reduce debt to 20 percent of GDP by 2021/22.

"We've always maintained will be sticking to our budget responsibility rules so needing to make sure that we do that through these negotiations as well," she said.

Mind the gap

One reason the negotiations feel a bit like a phony war is the results of the special vote count could make it easier for Winston Peters to accept a Labour-Green-New Zealand First combination.

That's because an extra seat or two could lift their combination clear of the 61 threshold. On the current seat count, National on 58 plus New Zealand First on nine seats would comfortably have 67 seats in Parliament, while the centre-left combination would have just 61, with Labour on 45, Green on seven and New Zealand First on nine.

Most expect the Greens to pick up one seat at the expense of National, but some also see a chance that Labour and the Green could pick up one each. That would give Peters the option of picking between National on 56 and Labour-Green on 54. That would give a Labour-Green-NZ First Government a two seat buffer to 61 to cope with any defections or by-election losses.

Ardern said she was hopeful there would be one more seat to add to the Labour-Green side, with the Greens closer to winning one more than Labour.

"Having a bit of extra comfort would certainly be helpful, but we should also keep in mind the numbers that National have worked on in the last several terms of government," Ardern said.

"At any given time that required an additional coalition partner to get supply and confidence agreement to get the legislation through."

She also denied being the underdog and said the option of New Zealand First sitting on the cross benches and abstaining on supply and confidence votes was an option, "but it would be an unusual option."