Investors looking at New Zealand's election result from across the Tasman and up in North Asia should be breathing a big sigh of relief. They may even open a bottle of champagne or two at the re-election, for a third term, of a centre-right government with a strong mandate for economic reform.
"The result [has] strengthened Key's hand for more pro-business reform of environment and labour laws."
Bernard Hickey, Publisher at Hive News
Voters in New Zealand have overwhelmingly rejected centre-left proposals for bans on foreign buying of assets, monetary policy reform, a re-regulation of the electricity market and the introduction of a capital gains tax, in an election result that even pleasantly surprised re-elected Prime Minister John Key.
The scale of the win by Key's National Party was the biggest since 1951, while Labour's support slumped to its lowest level since 1922. Elsewhere, the centre-left Labour-Green block lost three seats.
A fractious and often bizarre campaign was dominated by allegations National used 'dirty politics' and had approved mass surveillance by security services. But voters reacted against that focus and the involvement of controversial German tech millionaire Kim Dotcom in the campaign to remove Key, who has been New Zealand's most-popular Prime Minister in decades. The Internet Mana party, funded by Dotcom, was dumped from Parliament.
More importantly, the result strengthened Key's hand for more pro-business reform of environment and labour laws, and removed any doubt about the shape of the government and when it would be formed.
Polls had suggested Key's National Party would secure enough votes to win Government for a third consecutive term, but would need the support of either of the more nationalist New Zealand First or Conservative parties.
This would have forced some sort of concession to their calls for bans on foreign buying of land and homes, and would have made further reform of resource management and employment laws much more difficult.
The need for coalition negotiations may also have left the identity of the government in limbo for weeks, creating uncertainty for financial markets.
Instead, voters delivered an historic increase in National's share of the vote to a record high 48.06 per cent from 47.31 per cent in the 2011 election, giving it 61 MPs in the 121 member single House of Parliament, including the extra two MPs it needed to essentially govern alone.
Previously, National needed the support of United Future's only MP, Peter Dunne, the ACT Party's only MP, John Banks, and the Maori Party's three MPs. Opposition from Dunne and the Maori Party to National's Resource Management Act (RMA) reforms forced Key to shelve them earlier this year, while the early resignation of Banks in June put Employment law reform on hold.
The extra two National MPs means National could pass legislation on its own, or if necessary with the new ACT MP, David Seymour, who is expected to support both the RMA and employment reforms.
The ability for National to pass legislation on its own is unprecedented in the post-1996 era of proportional representation, which has always forced the dominant party to form a coalition arrangement or gather support on a case-by-case basis.