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Political forces
Feb 27th 2003
From the Economist Intelligence Unit
Source: Country ViewsWire

The Labour Party



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The Labour Party became the largest party in the 120-seat parliament after the November 1999 general election and despite some political setbacks early in its first term, including some run-ins with the business sector over policy direction, increased its seat tally from 49 to 52 in the next election held in July 2002. Labour is the senior partner in the coalition government and controls fiscal policy as well as the overall thrust of policy direction.

Labour is New Zealand's oldest political party and was formed out of the trade union movement of the early 20th century. Traditionally, its support has come from lower-income workers and trade unions. The Labour governments of 1984-90 shifted away from the party's fundamental ideology of collective choice and a strong state role in the economy, and adopted instead a hard-headed, free-market approach of deregulating the economy and reducing the size of the welfare state. The continuation of these policies by National-led governments since 1990 created an ideological identity crisis within Labour in the mid-1990s and generated significant internal divisions between the left and right factions of the party. The Labour Party currently supports a more hands-on role for government, stressing the need to "intervene intelligently" to shift the basis of the economy away from commodity-based export production into "knowledge-intensive" industries.

The National Party

Support for National fell steadily from 1997 as a result of growing dissatisfaction with National's coalition with New Zealand First. Economic recession in 1998 further dampened support and by late 1999 this had manifested itself in a strong "time for a change" mood among voters. Nine uninterrupted years of government by the National Party were ended by defeat in the November 1999 general election.

National has struggled to adapt to its role as the main opposition party to the Labour-Alliance coalition. In particular, a broad-based approach to economic policy by Labour has made it difficult for National to define a policy platform that clearly differentiates itself as an alternative to Labour. Dissatisfaction with the party over its direction culminated with the replacement of Jenny Shipley by her deputy, Bill English, as party leader in October 2001. Mr English has signalled a desire to develop more "pragmatic" centrist policies to target Labour's wide support base, reflected by a distinct push within the party to replace "old-guard" MPs associated with the economic reforms of the early 1990s with generally younger members. However, the party suffered its worst ever performance in the July 2002 election and the main opposition National Party has struggled to make an impact in recent months. The party recorded its worst-ever general election performance in July 2002 and Mr English has since come under growing pressure from within the party for his apparent inability to challenge the government.

The Alliance and the Progressive Coalition

The Alliance, led by its creator Jim Anderton, joined with Labour in government as the junior coalition partner in November 1999. To the surprise of many political observers, the Alliance developed a smooth working relationship with its coalition partner and several key policy planks of the Alliance, including paid parental leave and the creation of a state-owned bank, were approved under the coalition. However, coalition stability arguably occurred at the expense of popular support for the Alliance and by early 2002 some opinion polls put support for the party below the 5% threshold required for proportional representation under MMP (down from 7.7% of the total party vote in the 1999 general election).

This generated substantial tensions within the Alliance, with one faction of the party, dominated by supporters of Mr Anderton (including the majority of Alliance MPs) favouring coalition stability, and the other, led by the party president, Matt McCarten, and some party officials, wanting greater differentiation of the Alliance's policies from those of Labour. Matters came to a head in early April 2002, when Mr Anderton and seven of his MPs announced that they would leave the Alliance and found a new party, the Progressive Coalition, after the July 2002 election (MPs are not allowed to change party within the lifetime of a parliament). The Progressive Coalition won two seats in the election, compared with 10 seats for the Alliance in the previous election, and is the junior coalition partner in the Labour-led government, where Mr Anderton is the minister for economic and regional development. The Alliance failed to win any seats in the 2002 election.

The Green Party

The Green Party gained parliamentary representation (seven seats) by the narrowest of margins in the November 1999 general election, following the finalisation of vote counts, and informally supported the Labour-led coalition government during its first term on confidence and supply (finance) issues. But the support of the Greens proved fickle. In December 2001 the party abstained from a government supply vote in protest at the government's superannuation policies and in May 2002 the government threatened to withdraw support for Labour unless the latter agreed to extend the moratorium on the use of genetically modified organisms in agriculture scheduled to expire in October 2003.

In contrast to the Alliance, of which the Green Party was a member up until the 1999 election, public support for the Greens strengthened over the first term of the Labour-led government and the party won nine seats in the July 2002 election, compared with seven in 1999. Despite the souring of relations between the two parties in 2002, the prime minister signed a post-election agreement to consult the Greens on any legislation of particular interest, although there is no agreement providing for wider support from the smaller party.

ACT New Zealand

ACT New Zealand was founded in 1995, as the Association of Consumers and Taxpayers, by the former Labour finance minister, Sir Roger Douglas, who was responsible for much of New Zealand's economic restructuring in the mid-1980s. ACT originally portrayed itself as a radical centre-right party and advocated abolishing all income tax. This failed to gain the support of a sceptical public and, in early 1996, ACT relaunched itself with a "flat-tax" policy, proposing a 19.5% rate, for both personal and company tax. Its leader since early 1996 has been Richard Prebble, a former Labour cabinet minister, who initiated the privatisation of many state assets in the mid- to late 1980s. Support for ACT slipped during the mid-1990s, although it still gained nine seats in the 2002 election, unchanged from 1999. Over the first term of the Labour-Alliance government, ACT at times enjoyed a higher profile in opposition than the National Party, although mostly as a result of revelations of potential or actual scandals. The party fought the 2002 election campaign on tougher law and order measures and the need to guard against a Labour majority government.

The New Zealand First Party

The New Zealand First Party, led by Winston Peters, won 17 seats in parliament in the 1996 election, although the party's subsequent coalition agreement with National soon broke down and half of the party's 16 remaining MPs defected to support National as independents in August 1998. NZ First failed to reach the threshold of 5% of the total party vote normally required for proportional representation in the 1999 general election, but still clung on to four indirectly elected seats as Mr Peters narrowly held on to his own electorate seat (the 5% threshold is only adhered to in the event of a party's failing to win at least one electorate seat). However, a strong anti-immigration campaign and pledges to end what the party regarded as excessive Maori claims for restitution made under the Treaty of Waitangi, as well as to toughen law and order measures, saw a surge in support for NZ First in the 2002 general election, when the party won 13 seats to become the third largest party in parliament.




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