Inside the coalition: Who’s causing friction, the real power brokers and relationships of PM Christopher Luxon, Act leader David Seymour and NZ First’s Winston Peters

NZ Herald political editor Claire Trevett talked to staff and ministers across the three coalition parties – National, Act and NZ First – to assess how the coalition was operating in practice and what issues tested it most, from the Treaty Principles Bill to the ferries and economic outlook.

Then there were the relationships between the leaders and ministers, how they were getting along behind the scenes, and who had emerged as the key players.

Here’s what we found out.

Ferries: Up ship creek without a paddle

After last week’s long-awaited announcement on the replacement Interislander Ferries, the bonhomie of the coalition’s first anniversary celebrations evaporated.

The issue of the replacement Interislander ferries has been a major sticking point and a big test of the coalition parties’ ability to get agreement on something not foreseen or addressed in the coalition arrangements.

Ahead of that, one of the parties said they could not see how the positions of the three could ever be reconciled.

That remained accurate, even after Finance Minister Nicola Willis announced what the supposed reconciliation would be.

Willis’s default plan to buy two new ferries would kick in next March unless the newly anointed Minister of Rail, Winston Peters, could magic up a better one for the same price.

The NZ First leader and long-standing rail advocate was unwilling to give in, announced he would do better, would start from scratch and issued a tweet quoting from Little River Band: “Hang on, help is on its way.”

A furious Willis certainly looked like she could have done with some help – of the alcoholic liquid variety.

Willis should not take up poker any time soon – her frustration was written in neon on her face. She either did not bother or did not succeed in hiding it.

Finance Minister Nicola Willis and newly appointed Minister for Rail Winston Peters. Photo / Mark Mitchell

Just a week earlier, Peters had described her as hard-working, a better Finance Minister than most, and willing to listen. Now he had made her look a fool.

She made it clear she had delivered on a plan that met the bill, that Peters had spent months pondering it and then refused to accept it and said he could do better. It was no deal – or give Peters a chance to do that.

Asked if she was pleased to hear Peters had said he would take full responsibility for delivering on it, she said “of course. And I’d expect nothing less”.

After months and months of talking about ferries she doesn’t want to be left carrying the can for Peters blocking her solution.

It was a very stark exhibition of the struggles of a coalition.

The standoff over the ferries is not the end of a constructive coalition, but it was the biggest thundercloud it has faced so far.

It also highlighted the limitations of the pressure valves in the coalition arrangement. Those include the process of escalating issues from the ministerial level, to chief of staff, to party leaders.

There is the Coalition Committee – a “clearing house” for leaders to thrash out the gnarlier issues, usually one on one with Prime Minister Christopher Luxon. Luxon and Peters met several times on the issue.

There was also the licence to agree to disagree (used a handful of times, but not in this case, because the money involved was too much for any party to give way).

It showed some issues are not resolvable no matter how many processes there are for resolving things.

Compromises and relationships: Luxon, Seymour and Peters

In practice, the relationships in the coalition are as important as the processes when it comes to dealing with tricky topics.

Back when the coalition agreement was signed, Luxon said he thought it would be “fun” working with Peters and David Seymour. At times, the definition of “fun” has been stretched.

There was an illuminating detail shared by Luxon about the respective relationships he has with Seymour and Peters.

He and his wife Amanda would often dine with Peters and his partner Jan Trotman – either at Peters’ house or his own. His interactions with Seymour, on the other hand, were much more business-like and restricted to meetings.

Those on both the National and Act sides acknowledged Seymour’s relationship with Luxon could be better than it was.

One minister noted that there was “a very positive rapport” developing between Luxon and Peters. The pair did not know each other prior to the last campaign – but the lengthy coalition talks had helped develop a mutual respect which had built over the last year.

The manner in which he dealt with Peters was described as relationship-based, whereas his relationship with Seymour was more “transactional.”

Peters was said to be straightforward to deal with, respectful of Luxon – and the position of Prime Minister – and held to “old-fashioned values”, such as standing by his word.

Peters recently said he valued Luxon’s understanding and practical experience in business.

Peters also left a fair bit of the day-to-day stuff to his chief of staff, Darroch Ball, and to Shane Jones, whereas Seymour was seen as far more of a micro-manager.

That meant Seymour’s talks with Luxon were often used on relatively minor day-to-day stuff, rather than building a solid relationship and reserving meetings for the big issues.

The squeaky wheel on the tricycle: Act (or at least David Seymour)

Until Peters made a late run for the title, both National and NZ First pointed to Act, and in particular Seymour, as the squeaky wheel on the tricycle.

The most publicly visible example of that was his attempts to skewer Luxon for his stance on the Treaty Principles Bill.

The reviews of Seymour by his coalition partners were not exactly flattering – although Seymour might take them as a compliment.

While Act’s ministers and deputy Brooke van Velden were seen as working constructively with the wider coalition in their portfolio areas, Seymour was regarded as intransigent. He was described as contesting every issue to try to differentiate Act, and being territorial over the areas assigned to him in his portfolios.

By contrast, NZ First was seen as taking a more mature, pragmatic approach and able to play the long game, recognising give and take would balance out in the long run.

Seymour’s attempts to claim credit for a large portion of the Government agenda had also put teeth on edge – although Seymour’s view is that this in response to National’s failure to share the credit enough.

One National minister contrasted Act to NZ First (“like a dream”) and put the difference down to NZ First’s more extensive experience in coalition governments compared to Act, which was in its first rodeo.

It was noted that Seymour could rub people up the wrong way. On issues such as the extent of spending cuts, the Treaty Principles Bill and the firearms reforms, Act’s view was that National had “a low tolerance for risk” and was simply scared of putting off soft National voters.

In recent weeks, some of those tensions seeped out into the public domain.

Luxon started batting back at Seymour’s critiques of his position on the Treaty Principles Bill and has publicly told Seymour to stay in his lane more than once.

He dismissed Seymour’s claim that Act was having “a disproportionate impact” on the Government agenda. He has twice suggested Seymour focus on his own portfolios rather than provide a commentary on other issues – including Seymour’s scepticism about the business case for a Waikato University medical school and the ferries deal.

A number in National believed Seymour often still acted as if he was still in Opposition and seemed to put the interests of promoting his own party ahead of the wider interests of the coalition.

Seymour takes a different view of things, telling the Herald he believed Act and himself had been “collegial” in coalition, “and very effective at getting policy change.”

However, he also made it clear he did not think the blame was all one way.

Seymour said there was some tension around occasions on which the coalition parties had not been given the appropriate credit for policies they were part of. “That’s an example of a friction – not exactly coalition-breaking stuff.”

He put it down to “cock-up over conspiracy” but it is clearly something that has frustrated him.

The unveiling of the quarterly plans are a combination of the parties’ policies – but have been fronted by Luxon and National ministers without coalition partners. The most recent involved three National ministers and none from other parties.

The coalition anniversary week provided another example. Each day, Luxon held a press conference to highlight a different area without a coalition partner to be seen and without mentioning them in National’s press releases and other material.

One person from Act noted law and order was a key platform for all three coalition partners, yet Luxon and Police Minister Mitchell had a press conference to announce the new Auckland CBD police station and boast about law and order gains for the coalition anniversary – without inviting or even alerting Act. The first Act knew of it was when the media advisory was sent out.

Nor was NZ First there, despite its MP, Casey Costello, being the Associate Police Minister.

The relationship between Seymour, the Associate Education Minister, and Education Minister Erica Stanford was also described as “pretty testy.”

The two had also locked horns over the funding for charter schools.

That related to Stanford’s resistance to charter schools being paid for out of the education budget, and her concern about the impact on the state school network.

Both sides downplayed that, seeing it as an inevitable stoush given Stanford’s job was protecting state schools and Seymour’s was pushing for charter schools.

Seymour insisted that otherwise the division of responsibilities in education and the working relationship between himself and Stanford was solid.

Act see little wrong in maintaining this tension between the coalition partners – or in pushing National to make deeper spending cuts and to go further in areas such as resource management reforms. Seymour also has few qualms about putting Luxon into an uncomfortable place by questioning his opposition to the Treaty Principles Bill, or any suggestion his chipping at his coalition partners makes it difficult for him to become deputy PM.

Nor are there any apologies from Act for holding National’s feet to the fire on the Waikato medical school – a National campaign promise made with no cost-benefit analysis.

Surprise at the constructive NZ First – with caution

Even Seymour has openly admitted that he was wrong to have an earlier skepticism about working with NZ First.

National too have been pleasantly surprised, those spoken to observed NZ First had been “a dream” to work with and willing to work out a compromise where possible.

Many followed this up with a caveat, noting it was only one year in, and things could get a lot more spicy as the next election loomed and NZ First had to scramble to stay over the 5% threshold.

Peters was described as willing to compromise and pragmatic. There had been an early skirmish over whether NZ First’s gain of 500 new police would be done in two years (the coalition promise) or three years (what the police said was realistic and Police Minister Mark Mitchell tried to shift it to). The answer, after an intervention by Peters, was two years and Mitchell had to backpedal.

However, that was in the very early days of the coalition and Peters was never going to cave into changing the terms at such an early stage of proceedings. He was a bit quieter recently when Police Commissioner Richard Chambers noted it might take longer than the two years.

Since then, there have been compromises.

Peters set out his view of compromise in an interview with the Herald, likening it to giving grades.

“A C is better than an F. We’d like it to be an A but if we’ve got to settle with a C because of your performance or lack of ambition, then sometimes you have to meet people halfway.”

The future of the ferries is the biggest issue that is still in play – and however it ends, NZ First is not likely to get what it might have wanted had money not been an issue.

There were also compromises on the fast-track law – the most significant of which was the backtrack on the initial plan to give ministers, including Shane Jones, the power to decide which projects got the go-ahead.

“That one went right to the top,” one minister said, meaning it ended up being discussed by the leaders.

One insider noted energy was another area NZ First had “felt the brunt of National’s power” as it stalled NZ First’s hopes of a shake-up of the electricity sector.

“We’ve just had to put our big boy trousers on and tolerate it.”

That doesn’t mean NZ First’s policy gains haven’t also been headaches for National.

One example was the Smokefree and vaping reforms, overseen by NZ First’s Casey Costello – which had come under intense scrutiny. The unwinding of the previous Labour Government’s Smokefree plan, including a progressive ban on smoking, was cited by a NZ First source as one of National’s compromises for NZ First. Luxon has had to repeatedly defend the steps the Government is taking against an avalanche of criticism.

“They hate it all, and the fact it’s dragged for so long.”

There was also awareness that the 2017 coalition with Labour had also started in a rosy fashion – and this coalition had not yet come under the blowtorch (or at least not until the ferries). There had been no major long-term issues to deal with, such as Covid-19 – the issue that soured things between NZ First and Labour in 2020 as Peters felt he was locked out of the decision-making.

Everybody loves Shane Jones (except sometimes Christopher Luxon)

Peters’ dealings are at what Jones calls the “rangatira to rangatira” end of things – he only meets with Luxon.

However, Jones is the bigger force down in the trenches.

He is a critical cog behind the scenes and has a lot more influence and power than he had under the previous NZ First coalition with Labour. Peters also now trusts him more and with that comes autonomy.

He is respected by many in National, including Willis and his fellow ministers in finance and infrastructure, including Chris Bishop.

The reasons cited included his prior experience as a minister in Cabinet, his extensive knowledge of the business sector, especially in the primary industries, and the extensive contact list that came with that.

One senior minister said if there was a question or a problem, Jones knew who to go to resolve it.

NZ First minister Shane Jones. Photo / Mike Scott

When it came to the relationship side of things, Jones’ sense of humour helped oil things along – and his willingness to accept when his enthusiasm has gone too far.

He took his talking-to from Attorney General Judith Collins about his critiques of the judiciary well – helped by Peters making it clear to him that Peters agreed with Collins.

However, Jones is not all sweetness and light.

He is said to have pushed hard (but with limited success) on energy sector reforms. He was also reported as taking an occasional swipe at Luxon for his attempts to bring his CEO-style management to the Cabinet table.

The siblings: Relationships between NZ First and Act

The relationship between NZ First and Act was described by one Act insider as being “smoother than anticipated” and more cordial than that between National and Act.

“That was a surprise.”

The NZ First side also agreed that things had worked out well so far.

Seymour and Peters maintain a respectful distance from each other. Their offices are on the same floor of the Beehive, but they do not pop in for cups of tea. There are precious few photos of them together.

One of the few photos of David Seymour and Winston Peters together - taken at the signing of the coalition agreements in 2023. Photo / Mark Mitchell

Seymour said they would talk “on the fringes of meetings” rather than have one-on-one meetings.

Both Peters and Seymour have publicly said that early concerns were misplaced and it had worked out well.

That is partly because both sides are willing to hold their noses and deliver for the other sibling for the sake of ensuring their own stuff gets done.

Any baulking could come at the risk of retaliation.

Seymour has observed the Treaty Principles Bill was a perfect example of the coalition working as it should. Both National and NZ First have criticised it – and will eventually vote it out – but did what they had agreed to do by voting for it at the first reading.

NZ First and Act have also both been good at defending each other’s ministers when the heat has gone on – Peters and Jones have gone into bat for Act’s Karen Chhour, for instance, and Nicole McKee as they came under fire from Opposition parties.

The relationship is managed mainly by the chiefs of staff, Andrew Ketels (Act) and Darroch Ball (NZ First) – and the ministers. Peters was said to have a lot of trust in Ball to handle problems and make decisions, which was put down to Ball’s strong loyalty to Peters throughout the 2020-2023 period NZ First was out of Parliament.

National sources noted Ball’s sway appeared to be greater than that Ketels. One said if Ball agreed to something in a meeting, they knew it would stick, if it was Ketels, they knew it would have to be passed back to Seymour first.

The bits where ministers are working well together

Those from all three parties reported that overall the coalition was working well and none of the skirmishes risked destabilising the whole ship.

“When you get a lot of A-type politicians together, there’s always going to be some issues, but there’s been no big blowouts,” one minister noted.

The biggest problem was dealing with situations not foreseen in the coalition agreements, such as the ferries and cost blowouts for Dunedin Hospital – and what the deteriorating economic outlook (and shape of the government books) might mean for the coalition agreements.

There were “complicated areas” where discussions inevitably dragged out, such as Resource Management Act reforms.

However, law and order and infrastructure were areas where the coalition ministers were working well together.

Budget 2023: Finance Minister Nicola Willis with (from left) Christopher Luxon, Chris Bishop, Shane Jones (obscured), David Seymour and Winston Peters. Photo / Mark Mitchell

Importantly, the core finance team – consisting of Willis, Jones, Seymour, Bishop (and Luxon when required) – was also said to be functioning relatively well, despite protracted debates about how far – and where – spending cuts should fall.

That is the second tier down from the leadership and a crucial team, given it is charged with putting the Budget together.

There had been inevitable clashes, given the different standpoints of the parties.

Seymour’s mantra is for the Government spending cuts to be deeper than Willis is willing to go, for example. He describes that as his biggest compromise, and it is a constant niggle.

Seymour and Willis in general have a more solid, “straightforward” relationship than that between Seymour and Luxon.

Willis was credited with being relatively open about what was coming and involving the coalition partners at an early stage rather than presenting National’s position as a done deal. That reduced the chances of something vetoed after a lot of work had been put into it.

In law and order, the vast amount of policy pushed through is National’s – but all three parties had policies that aligned with the harder law and order approach and Mitchell and associate minister Casey Costello, both former police, have a similar outlook.

Firearms reforms remains a sticking point as Act’s minister Nicole McKee pushes for changes while Mitchell holds the police line.

There was confidence that would be resolved without a massive conflagration. “They are all adults,” one minister said.

Storms on the horizon

Meetings with ministers to front Budget bids are under way, with limited chances of success for anything extra given there is no money and what was set aside has already been committed. Willis has already signalled that will mean more public sector cuts.

The Treaty Principles Bill will bubble away in select committee for the next couple of months, including public submissions. The Act move has become totemic for the wider range of measures under way on Māori issues, a combination of all three parties’ policies.

Seymour has disagreed it was destabilising for the coalition but National wants it done and dusted as quickly as possible, preferably by March next year.

Luxon has made it clear he will not tolerate Seymour digging in to try to delay it going up for its second reading once the select committee is done – the point at which National and NZ First can vote it away.

And then there are the ferries: Peters has until March to come up with the Peters plan to better cater for rail freight on the ferry service.

It’s a fair bet Willis can expect a knock on her door to ask for more time or more money.

Buckle up, Willis, there are a few chapters to go.