A $1.2 billion fund for regional infrastructure, scrapping plans on allowing foreign buyers back into the housing market, allowing work that could lead to a referendum on Treaty of Waitangi principles, and keeping the superannuation eligibility age at 65.
Tax was always going to be a major sticking point, as New Zealand First has been a staunch opponent of Luxon’s wish to allow foreigners to buy $2 million-plus New Zealand homes, with a new tax on those purchases to help fund National’s tax package. The revenue from the tax was hoped to add an average of $740m a year to the Government coffers.
Instead, Luxon said the tax package - National’s centrepiece in the campaign - would be funded by other means, given there were already “buffers” in its fiscal plan and there would be other savings and “reprioritisations” that could be dipped into.
Among those is the estimated $555m National will no longer be spending to lift the Working for Families abatement threshold from $42,700 to $50,000 in 2026.
There is also the possibility of additional savings from a further shrinking of the public service. National had wanted a 6.5 per cent reduction from certain public agencies - with savings of $594m - while Act wanted a far greater reduction by returning the public service to 2017 levels. National has agreed to look for efficiencies in the public service while keeping the 2017 levels in mind.
Hitting pause on future changes to income tax beyond next year is also not going to lose Luxon any credibility; National’s tax package was to continue adjusting the income tax thresholds for inflation only if it was “affordable and responsible”.
During the election campaign, Luxon said it would be “divisive” to have a referendum on the Treaty of Waitangi principles, which was one of Act’s more important campaign policies.
Luxon has agreed to introduce a Treaty Principles Bill based on existing Act policy and support it to a select committee, which will ensure a national debate without necessarily leading to a referendum.
NZ First leader Winston Peters has long been a champion of keeping the superannuation eligibility age at 65, and Luxon has agreed to this for this parliamentary term - though this isn’t a massive concession as National’s policy was not to start increasing the age until 20 years from now.
The $1.2b capital funding for the regions isn’t totally unexpected; it harks back to the Provincial Growth Fund that Peters wrangled out of Labour in 2017, and while NZ First’s 2023 manifesto didn’t put a figure on such a fund, it stressed the importance of regional infrastructure.
Luxon has also agreed to fund 500 more police officers over two years, 200 more than National had campaigned on but with an extra six months to deliver than NZ First had wanted.
Luxon did not budge on Act leader David Seymour’s wish to scrap the firearms registry, but Luxon did agree to reviewing it, as well as a rewrite of the Arms Act.
Peters and Seymour to split Deputy PM
Peters and Seymour will rotate in the Deputy Prime Minister role in an unorthodox coalition Government arrangement.
Peters bristled at the suggestion he was “sharing” the role with Seymour as the new Cabinet was unveiled today.
The NZ First leader will be Deputy PM for the next 18 months before surrendering the position to Act’s Seymour on May 31, 2025.
Peters has also secured the coveted role of Foreign Affairs Minister – a job he has filled in previous administrations.
The new Government: New Zealand First leader Winston Peters, National leader and incoming Prime Minister Christopher Luxon and Act Party leader David Seymour. Photo / Mark Mitchell
In one high-profile coalition deal casualty, National has abandoned its policy to repeal the foreign buyers residential property ban - that is a significant win for Peters.
Hipkins reacts: Claims new Govt’s policies ‘will ultimately take New Zealanders backwards’
Outgoing Prime Minister Chris Hipkins has congratulated the new Government.
He said the caretaker Government would work with it to make sure the transition was smooth.
He called the policies agreed by the three parties a “very confused and contradictory and grab bag of commitments that will ultimately take New Zealanders backwards”.
Hipkins said the new Government was prioritising landlords over renters, the oil and gas industry over New Zealand’s international reputation, and also the tobacco lobby.
“We’ve also seen that even before they go into government, our predictions before the election that their tax cuts didn’t add up have, of course, proven true.
Chris Hipkins has congratulated the new Government, but claims policies will take New Zealanders backwards. Photo / Mark Mitchell
“By abandoning their plan to allow foreign buyers back into the market, which wasn’t going to add up anyway, they have revealed an at least $3 billion hole in their own tax plans.
“They’ve been completely silent about how they’re going to pay for that.”
Hipkins said he believed additional borrowing was likely so the new Government could fund its tax cuts.
“That means inflation will stay higher for longer, interest rates will stay higher for longer, and ultimately New Zealanders will pay more than they’re likely to benefit from the tax cuts the National Party is offering.”
Hipkins said he believed David Seymour and Winston Peters had been “running circles” around Christopher Luxon over the past few weeks.
He claimed we had seen the “seeds of some very divisive debates” from the new Government.
NZ Labour and Chris Hipkins to review what led to the disastrous 2023 election result. Illustration / Rod Emmerson
“This is definitely going to be a government that drives New Zealanders apart and lead to more polarisation of the country than we have seen to date,” he said.
“They already committed to very, very significant reductions in government department expenditure, and now they’re saying they think they can find more. At the same time, they’re also making commitments to spend more money as well.
“There is no plan. There’s a reason for that, over the last six weeks they’ve come up with a whole lot of commitments but have no idea how they’re going to pay for them.”
He said of tobacco changes: “Christopher Luxon and the National Party were attacking us for being too slow to do more around vaping.
“Now they seem to be dialling the clock backwards at a very rapid rate, deregulating more the vaping industry and committing to deregulating the tobacco industry. That’s not putting New Zealanders front and centre of the Government’s programme.”
Hipkins also said it was “interesting they’re proposing to abolish co-governance arrangements when they’re putting one in place for the deputy prime ministership”.
He said Labour’s role as the Opposition would be to hold the Government to account, to propose “better ideas” and to put itself in a position to win the next election.
“I’m very disappointed that, across the totality of agreements announced today, we’ve seen a real attack on workers. We’ve seen millionaires prioritised over workers,” Hipkins said.
Outgoing Prime Minister Chris Hipkins doubts many New Zealanders voted for what has been agreed upon by the new coalition. Photo / Dean Purcell
“Their plans to repeal a whole variety of provisions in our employment laws will ultimately help to drive wages down in New Zealand, leaving workers worse off.”
He said of coalition talks and the election result: ”I don’t think New Zealanders necessarily voted for all the commitments in all of the agreements we’ve seen today, though.”
He said parties would be switching offices around the parliamentary precinct over the weekend.
He said any “te reo Māori ban” would be a massive step backwards.
“We’ve been making progress on that. Other countries with an indigenous language have been taking steps towards better integrating that into everyday use, and I think that New Zealand going in the opposite direction is a step backwards.”
He added: “In terms of repealing the Treaty provisions in legislation, let’s see what that looks like, but I think there will be lots of unintended consequences. They’re turning their backs on four decades of jurisprudence.
“I think the ongoing attacks on Māori, that are very prevalent throughout the documents released today, will be a huge concern to Māoridom in general.”
Hipkins said he thought it was “a bit unusual” that the future Minister of Climate Change - a National MP - would be placed outside Cabinet.
He said the last Minister for Climate Change not being in his Cabinet was a reflection of the fact he was not in the Labour Party.
And he said of the Deputy PM situation: “Every parent knows when you take turns at something that’s a form of sharing.
“Whether Winston Peters ever gives it up, who knows?. He probably will.”
Seymour opens up on his party’s stance on Māori policies
Act Party leader David Seymour says whether the bill on Treaty principles made it off the ground would depend on him persuading New Zealanders it should.
Talking just an hour after Chris Hipkins’ criticism, Seymour provided further insight into what his party hopes to achieve and the battle they face.
“Our coalition partners ... are nervous that it’s going to create a lot of enmity and destruction - I don’t believe that’s true,” he told Newstalk ZB’s Heather du Plessis Allan.
“I think it’s a debate New Zealanders want to have, need to have, and are very capable of having.
“Once we get it [the bill] there, I think we’ll actually see some people change their minds, you know, the Treaty actually is worthy of debate.
“The principles have never been defined by anyone except the courts, the bureaucrats and the Waitangi Tribunal, instead of people at large who actually have to live in the country.”
Seymour said giving Act the opportunity to prove its case was all it needed right now: “If we can’t, then so be it”.
On Māori wards, Seymour said people should have a say on whether wards are formed in their councils.
“It could be done in line with the next council elections or earlier, but that’s a matter for the Minister of Local Government,” he said of a referendum on Māori wards.
“What Act has agreed with our partners in coalition is that we are going to make sure people have a say. If they want divide race-based wards, we won’t stand in their way.”
Seymour also took the chance to talk about the justice system, saying while he respected the courts’ independence, “we can send messages from the New Zealand public to the judges through legislation”.
“Changes we propose will be a shift in the principles of the Sentencing Act from what we have right now where it says the judge has to give the minimum possible sentence, instead they will have to give the minimum possible sentence with regard to public safety, which is already there, but also the victim.
“We want to send a message to judges that I think most New Zealanders want sent. We get the whole idea of being kind to the criminals and they’ll be kind back, but we don’t think it’s worked.”
Regarding the monitoring of ankle bracelets, Seymour said, “it had become clear, you know, look at the guy who shot some people in downtown Auckland six months ago, how somebody who was guilty of breaking a woman’s throat bones by strangling her could be on home detention - that’s the kind of case that triggers a review”.
On interest deductibility for landlords, Seymour said he had compromised with National and New Zealand First.
“We made the argument it should be done immediately, the National Party would like to do it over a much longer timeframe of several years. We have compromised that it would be done faster.”
On his relationship with Peters, Seymour said, “I know we can have a working relationship, which is what is important. We can work well, because we’ve achieved over the past four weeks or so a pretty big shift in our positions to form a coherent Government.
“I don’t really go to work to like people,” he said of his feelings towards Peters, “that’s why I’ve got friends and family.”
‘How can you have a waka on the road?’: Winston Peters on pending name changes
Incoming Deputy Prime Minister Winston Peters has wasted little time in taking aim at the rebranding of Government departments with Māori names.
“It’s already had one person leave the inquiry because of concerns about that. We want to know why you would limit the terms of reference.”
Peters couldn’t answer whether the current inquiry would continue alongside another.
Speaking on removing Treaty principles from current legislation, Peters said there was no requirement for them to be there in the first place, “so why would they be there?”
Peters said the “Treaty of Waitangi industry” was creating work for itself.
He said it wouldn’t be complicated to remove Treaty principles from legislation, “we live in a computerised age”.
Peters said building a highway around the Brynderwyns was the party’s number one priority.
He wouldn’t be drawn on when this would be done either.
Earlier: Seymour suggests Act trumps NZ First for ministerial roles
Seymour told media this morning he was confident his party has secured a favourable coalition deal - and suggested his party trumped NZ First in the ministerial stakes.
He wouldn’t directly answer questions about how many ministers Act had been given or how many spots the party had within Cabinet.
Seymour said he was unaware of what ministerial portfolios both National and NZ First had been allocated.
However, when pressed, Seymour admitted he thought Act’s presence in Cabinet was proportional to the election’s party vote. Act received 8.6 per cent of the party vote, while NZ First got 6.1 per cent.
What to expect in the first 100 days
On Thursday evwning a jubilant Luxon was evening giving nothing away about the deal National had struck, including who has been given the role of Deputy Prime Minister, which was one of the final sticking points in negotiations.
“I won’t get into any of that until the deal has been ratified by the respective parties,” he said, adding he was “100 per cent” confident the deals would be ratified by the parties’ respective boards. Act’s board had already been consulted on a deal as required under that party’s constitution. National’s board had signed off the deal as of late afternoon yesterday, leaving only NZ First.
Luxon promised to announce the shape of his Cabinet later on Friday, after briefing MPs.
He called the Governor-General Dame Cindy Kiro on Thursday to say he was on the verge of announcing the deal, and was set to call her again on Thursday night after the parties’ respective boards had ratified the deal. Kiro will look for public statements from the three parties that Luxon has the ability to form a government, which will be obvious by today.
Luxon said he wanted to have a swearing-in ceremony for ministers on Monday.
Rehearsals for the state opening of Parliament took place there yesterday. Luxon said he wanted Parliament open by December 5, allowing three weeks of sitting time before the House rises for Christmas.
Seymour told the Herald the Government would announce a 100-day plan shortly after the announcement of the coalition deal. Seymour hinted some of this would include repealing legislation, potentially under urgency.
“There may well be some things where the existence of legislation that we no longer want to exist and that is costing a large amount of money and therefore, it actually requires urgency to stop that waste.”
National had promised to repeal the Government’s RMA reforms by Christmas and revert to the old system. It also wants the Clean Car fee or “ute tax” gone by the end of the year.
Luxon defended the length of negotiations, the longest bar one since the advent of MMP in 1996, saying the deals were detailed enough to justify the length of time spent negotiating them.
“I’m really proud of the negotiations... When you see the deals... you will understand how comprehensive they are, we cover a tremendous amount of policy,” Luxon said.
“I’ll take as long as it takes, it’s been important for me to go through this in a really disciplined way.”
Derek Cheng is a senior journalist who started at the Herald in 2004. He has worked several stints in the press gallery and is a former deputy political editor.
