Fran O'Sullivan: Opportunity for Clark to befriend Business

Business can breath a small sigh of relief.

Labour's Helen Clark now has the opportunity to shift her Government's style in its second term to be more markedly pro-economic growth.

Tonight's election delivered Clark a strong hand.

She has not won the outright majority which she hoped for when Labour called the early election - but the result ought to deliver stable government, at least in the medium term.

Labour will rule as a minority Government in coalition with Jim Anderton's Progressive Coalition. Clark's ability to govern will be dependent on negotiating confidence and supply arrangements with minority parties.

But the Greens' ability to pull down the Government by making their continued support dependent on lifting the moratorium on GM field trials in October 2003, has been neutered by the rise of Peter Dunne's United Future. The Greens will have eight seats to United Future's nine seats.

We can expect United Future to support the Labour minority government on other issues like trade where the Greens are a stickier bet. But Business will also hope that Dunne will be smart enough to use his new-found proximity to power to get some leverage with Clark on economic issues.

Tonight's result is not the "status quo" victory for the centre-left parties that Clark trumpeted.

The left-of-centre has disintegrated along with the disappearance of the Alliance Party.

There are now only ten MPs to the left of Labour: Greens (8) and Progressive Coalition (2).

At the last election there were 17 left-of centre MPs: Alliance (10) and Greens (7).

Clark will have to toss the Greens some political bones in the next term. But her ability to forge a more centrist approach in Government is strengthened by the reduced circumstances of Anderton's former support base.

The "coalition" will be Labour in all but name and should be able to govern in a stable fashion.

Business will be disappointed at National's dramatic wipeout.

Centre-right parties - National, NZ First, Act and United Future - have 58 seats between them.

But National's ability to lead a strong opposition will be reduced as leader Bill English reasserts his position within a dramatically reduced caucus.

Full election coverage

Graphic: Seats in the 47th Parliament

Full election results