In today's email we detail the events last night that see us waking up with a new centre-left Government in waiting.
1. We will have a new Government
What a night of drama and change on top of three months of political turmoil like New Zealand has never seen before.
Surprisingly for most, we now have a new Government in waiting that plans to make significant changes to New Zealand's migration settings, monetary policy arrangements, its trade agreements, state-funded housing supply, its approach to climate change and foreign ownership of existing housing.
There will be a completely new set of ministers, including four New Zealand First Ministers in cabinet and three Green ministers outside cabinet.
Most commentators and financial markets had expected an extension of the current National-led Government from nine years to 12 years.
Instead, after a hours of uncertainty and last-minute dealmaking, Winston Peters announced shortly before 7pm on live television that he and his New Zealand First party had chosen to make a significant change in the direction of the country, even though the most successful party on election night was for the status quo.
It's actually been an extraordinary three months. It's worth remembering that as recently as July 8, Andrew Little was the Labour Party Leader, Metiria Turei was the Green Party Leader - and she had just accused Winston Peters of having a "racist approach to immigration."
"My warning to the Greens is don't call New Zealand First racist - an allegation that is spurious - and think there won't be consequences," Peters said later on July 8.
At that point, the prospects of Peters agreeing to join a Labour Government supported by the Greens, or that voters would give them enough seats to do it, seemed ludicrous.
Yet, here we are on October 20 with a new Government.
It will be one where Peters said he had never said a bad word about the Green Party's remaining leader, James Shaw, and it will be a Government where Peters and his fellow New Zealand First ministers will share cabinet committees with Green and Labour ministers.
As recently as August 1, Labour was on the brink of an electoral catastrophe with support at 24 percent. The Greens were on track for 15 percent, while National looked a sure thing for a record fourth term in concert with New Zealand First.
Yet within a few days, Labour had changed its leader, Turei was gone and Jacindamania was in full swing. Less than three months later, we had a new Government.
2. Here's what we know
For the first time since MMP was introduced in 1996, a Government will be formed with the second largest party in charge of a coalition that includes both Green and New Zealand First ministers.
The things we learned on October 20, 26 days after the election were:
- New Zealand will have a Labour-New Zealand First coalition Government that is supported by the Green Party on votes of supply and confidence.
- New Zealand First will have four ministers in the new cabinet and one under-secretary.
- The Greens will have three ministers outside cabinet and one parliamentary under-secretary.
- Labour and the New Zealand First have yet to agree the exact text of their policy agreements or the exact identity of the new ministries and ministers. That will be announced in coming days. A formal formation of the Government and the swearing in of ministers is expected next week.
- The Green Party's delegates voted almost unanimously in favour of supporting the Labour-New Zealand First coalition Government. Only three of the 150 delegates dissented.
- The Green Party also said they had yet to agree on the final details on policies and ministries.
- Bill English wished Ardern all the best as the next Prime Minister and said he had not made a decision about whether to continue as National leader. A National caucus meeting will be held next week.
- National will have 56 seats in Opposition, the largest by any one party in the history of MMP.
- Labour and New Zealand First have agreed to change the Reserve Bank Act, but not move to Singaporean-style exchange rate-targeting system. They both campaigned to include full employment as a target alongside low inflation.
- Labour and New Zealand First agreed to reduce net migration by 20,000 to 30,000, not the cut of up to 60,000 wanted by Peters.
- They also agreed to a ban on foreign buying of existing properties, rather than the full ban on buying of both residential and farm land
- Jacinda Ardern admitted the Labour-NZ First Government would have to renegotiate its free trade agreement with Korea to implement that ban on foreign buying.
- Ardern also said changes to the TPP would have to be negotiated, although she was not clear. Peters opposed the Investor State Resolution Dispute system.
- Peters confirmed Labour and New Zealand First would proceed with the Kiwibuild plan for the Government to build and sell 10,000 new affordable houses per year.
3. How it played out
Winston Peters and his New Zealand First party of nine MPs chose to form a coalition Government with the Labour Party's 46 MPs and a Green Party with eight MPs that will support it with a supply and confidence agreement.
That combination of 63 MPs on key votes was enough to beat National's 56 MPs and one ACT MP. Previous MMP Governments have been led by the largest party and Winston Peters baulked at forming a Government in 1996 that included Green MPs. He also refused to allow Green MPs to be ministers in the 2008 Government he formed with Labour.
This time around Peters chose to change the Government and opted to allow the Government to include Green ministers. He said had never had a bad word for Greens leader James Shaw.
Jacinda Ardern, 37, learned she would be Prime Minister while watching a television broadcast of Peters announcing his decision. As recently as August 1, she was the deputy leader of a party destined to lose the election with just 24 percent support. Ardern lifted Labour to 36.9 percent by September 23.
Peters said the policy and ministerial details had yet to be hammered out. Ardern also said those details would be finalised and announced in coming days.
Ardern later confirmed that New Zealand First would have four ministries inside cabinet and one under-secretary role outside cabinet. Green Leader James Shaw said he expected the Green Party would have three ministries outside cabinet and one under-secretary role. He confirmed the Greens expected to support the Government on supply and confidence.
"Early next week we'll be in a position to sign and release the agreements with both NZ First and the Greens," she told a news conference.
4. Winston's policy wins and losses
Peters he said he expected the Reserve Bank Act would be changed and that the New Zealand dollar had been overvalued. It immediately fell almost one cent to 70.6 USc on the announcement.
He said he had not secured his preferred policy of moving to a Singaporean model for monetary policy, which targets a currency level rather than an interest rate level.
Ardern and her likely Finance Minister Grant Robertson later confirmed there would be reforms to the Reserve Bank Act.
She said she expected Labour's migration policy of reducing net migration by 20,000 to 30,000 would be implemented. That would suggest New Zealand First was unable to get its preferred cuts of closer to 60,000 net migrants per year than Labour's 30,000 maximum.
Peters said Labour and New Zealand First had agreed to implement its platform of restricting foreign buying of property, but did not give details. He also said migration would be restricted, but gave no detail about about the size or nature of those restrictions.
Ardern later said she had agreed to implement Labour's policy of banning foreign buyers of existing residential properties, which fell short of Peters' proposal for a full ban on foreign buying of both houses and freehold land across the country.
5. English gracious in defeat
Bill English was gracious in defeat and said he wished the best for the new Labour-led Government.
He said at a news conference in the foyer of the Beehive that he hoped New Zealanders, including the 44 percent who had voted for National, would support the new Government pursue the opportunities the country had.
Flanked by his wife Dr Mary English, Paula Bennett, Steven Joyce and Todd McClay, English said he had not made a decision about his own future and expected the National caucus to have a meeting next week.
He said he was naturally disappointed with the decision and complimented Ardern on her performance.
"It was a fairly remarkable performance given 12 weeks ago she was the deputy leader of a failing party." he said.
6. So what now with policy?
Newsroom's Foreign Affairs and Trade Editor Sam Sachdeva has taken a look at where the most substantial policy changes might be.
See his full analysis on Newsroom Pro, where it was first published this morning.
7. What it was like on the night
Newsroom's Shane Cowlishaw was with us in Parliament throughout the day and the night and filed this scene piece on how the players reacted and felt.
Shane begins with Winston's arrival and preamble to his announcement it would be Labour shortly before 7 pm.
Peters foreshadowed a great economic downturn that was approaching and hinted a change was needed to prepare, Shane reports.
"We believe capitalism must regain its human face," Peters said.
"We had a choice for a modified status quo or for change.”
See Shane's full piece here, where it was published first on Newsroom Pro this morning.
8. So how might Jacinda perform?
Newsoom's Co Editor Tim Murphy writes over at Newsroom about what type of Government Jacinda Ardern might run, including looking at who might be the potential ministers and their ministries.
See Tim's full story published over at Newsroom early this morning.
Also, see the Newsroom Parliamentary team's video analysis of the events of yesterday.
There's also Rod Oram's weekly column this week on the stock market crash, and his piece from this morning on the election result.
9. One or two fun things
There was plenty of 'are we there yet' style humour around yesterday before the big announcement.
Here's a sample via Twitter:
David Cormack: "It's 2032, Winston still hasn't decided. @jo_moir's run out of biscuits, @rarahsobson's hunting lollycups. The sparrow was bird of the year."
David Cormack: "2051: Winston says he's close. @bernardchickey has grown to 14 ft tall. @henrycooke still won't use uppercase. Sparrow is bird of the year."
Jo Moir after the Press Gallery sat waiting in : "Nobody told us to come to the Beehive theatrette. We are like cows who wandered to the milking shed and the farmer is like, what you doing?"
Emma Hart: "What if, what if, all the journos went to the pub and just left Winston a note."
Rob Hosking: "‘He’s said he’ll make an announcement’. ‘Could mean anything.He could announce he hates us. Like his last presser.’#waitingForWinston #NZpol"
And there was one tweet from October 7 which, not surprisingly, was retweeted a few times last night.
Jordan Williams: "I’m calling it - Winston will go with the status quo. If I’m wrong I’ll walk to work in my undies."