Problems with parties holding hands

The pitfalls of existence within a coalition under New Zealand's MMP system were well demonstrated in 1998 and again in 2002.

In 1998, NZ First leader Winston Peters walked out of the National-NZ First Cabinet over the sale of Wellington Airport.

Four years later Prime Minister Helen Clark called an early election, saying the Alliance meltdown had led to time-wasting tactics by the Opposition that had obstructed legislation.

The Alliance came unstuck over internal differences on New Zealand sending SAS troops to Afghanistan to aid United States military action after September 11. The differences led to crippling leadership divisions within the party.

In both cases, policy differences with the bigger party in the coalition were fundamental.

Although the polls are all over the place, they indicate that next Saturday Labour and National will eat more of the vote than in past MMP elections, putting the squeeze on minor parties. They are already struggling for support, particularly Act, which looks doomed.

That squeeze in support forced Peters to say this week that NZ First would seek an agreement after the election to prop up the party with the most votes on confidence and supply, but sit on the cross-benches and vote issue by issue.

The Maori Party has ruled out supporting National in any circumstances, although Labour still says it's the "last cab off the rank" in any deal.

The two Progressive MPs, led by Jim Anderton, would undoubtedly do a deal with Labour after the election, as they did last time.

So what are the policy fish-hooks likely to arise in other governing combinations?

Labour-Greens

The Greens have said they stand ready to enter government.

A formal coalition is not a sure bet but a real possibility, including the chance that the Greens sit around the Cabinet table.

The Green leadership appears determined that policy differences will not stand in the way of some sort of support deal with Labour, although it will still have to be ratified by the party.

Their policy differences are many and well known. They include the possibility of commercial release of GM organisms (a huge issue in the 2002 election), sending defence personnel to US-led operations in places such as Afghanistan, controlling foreign investment and land sales to foreigners, and any discrimination against welfare beneficiaries by not giving them some Working for Families benefits such as the the in-work payment.

Then there's the role of the Security Intelligence Service and its sister agency, the eavesdropping Government Communications Security Bureau. As well, there's the matter of free trade.

An indication of just how far the Greens might go to appear accommodating and responsible came in a televised finance debate last week when co-leader Rod Donald said he could work in a Cabinet that signed a free trade deal - but expect the Greens to agree to disagree.

There is, however, potential for trouble. An example is the law allowing applications to the Environmental Risk Management Authority for commercial release of GM organisms.

No one should be fooled that just because the Greens aren't talking bottom-lines on GM at this election - as they did in 2002 - that means their supporters would sit back and let it happen.

But the language of the Greens this time is that a deal is possible, reinforced early in the campaign when Clark invited Greens co-leader Jeanette Fitzsimons to campaign with her for a day on transport policies. There are other areas in which they appear to be able to work together constructively. These include maintaining the course on the Kyoto Protocol and introducing the carbon tax, building more renewable power generation, and more regulation in the workplace - although Labour will be watching the business lobby's reaction carefully.

The attitude of businesspeople has the potential to be a danger for any Labour-Green administration.

If too much of the Green agenda were to be agreed to by Labour it could have a chilling effect on business confidence and therefore the economy.

National-United Future

The policies of both parties appear to have few conflicts.

United Future leader Peter Dunne's cup-of-tea photo opportunity with National leader Don Brash was designed to show he could work with either Labour or National.

His stance is to seek a deal with the party with the most votes.

The struggling centre party's polices are mostly pragmatic, and with their emphasis on families are compatible with those of National.

Both agree on the concept of tax cuts, although income-splitting is seen by National as expensive and unlikely to get support. But other family-friendly tax initiatives could get agreement.

Other similarities are a desire for tougher law and order, reform of the Resource Management Act and labour market deregulation, including a probation period when someone is hired.

Dunne has three bottom-lines - maintaining the Families Commission, stopping cannabis decriminalisation and stopping hate-speech laws. National has indicated it won't be axing the commission and it does not support the other two concepts.

National is also more conservative on moral issues than Labour, and United Future managed to hold it together and offer Labour confidence and supply.

United Future deputy leader Judy Turner, who leans towards Labour on social issues, is likely to have more problems adapting to National than would Dunne, who has been a minister in both Labour and National Governments.

Overall, United Future is likely to pose few problems to National in any coalition or support arrangement.

Labour-United Future

A combination already shown to work together, although United Future MPs have grown increasingly unhappy at supporting Labour after it passed social and human rights legislation concerning prostitution and civil unions.

Dunne's bottom-lines could easily be absorbed by Labour as a price for that party's support.

But United Future's leverage with either Labour or National is looking to be far more limited than in 2002, as on present polling it stands to get only a few MPs.

A possible fish-hook on a Labour-United Future combination could be Dunne's support for Taiwan, especially as he may get the foreign affairs portfolio in a deal with Labour.

NZ First

When announcing his intention to stay out of government and sit on the cross-benches, Peters said NZ First did not have enough common ground with either major party on which it could base a formal coalition. In return for a confidence and supply agreement - where NZ First would either abstain or prop up a government if needed - NZ First would be "bargaining" for certain "unwavering principles".

These priorities are a dedicated senior citizen's card called the Golden Age Card, tightening immigration laws, boosting police and the possibility of separating traffic officers from police, an economic plan to boost wages and lift exports, and supporting Peters' private bill to delete Treaty of Waitangi principles from existing laws.

Such a treaty policy could run into problems from Labour but get National's support.

And on immigration, National has already moved towards a tougher line. So has Labour, but to a lesser extent.

Both parties would probably baulk at NZ First's plan to double police numbers as being too costly.

There is little enthusiasm for removing GST from petrol.

There is scepticism from both major parties over NZ First's export plan for a 20 per cent company tax rate for firms with new exports and a 30 per cent rate for other companies. That raises questions about how "new exports" is defined.

Peters said the party would fight for increased New Zealand ownership of infrastructure and key assets and one of its policies is to restrict foreign ownership of "strategic" assets to 24.9 per cent. Both Labour and National would have problems with that.

Peters' economic nationalism would therefore pose major challenges to either big party. As well, he has questioned the scale of National's proposed tax cuts, and any borrowing to support them, as well as railing against Labour's plans for "more welfare" in the form of expanding Working for Families. 

THE POSSIBLE COMBINATIONS: SIMILARITIES AND FISHHOOKS

Labour-Greens

Similarities

* Family assistance through Working for Families

* More renewable power generation

* Funding transport options other than roads

* More workplace regulation, including pay equity and work-life balance

* Remaining in the Kyoto Protocol and introducing carbon tax

* No state assets sales

* Environmental goals

Fishhooks

* Free-trade agreements

* Any commercial release of GM organisms into the environment

* Sending defence personnel to hotspots such as Afghanistan

* Barriers to foreign investment and land sales to foreigners

* Role of intelligence agencies and in the international intelligence-gathering network

* Cutting beneficiaries out of Working for Families payments

* Reforming cannabis law

* Joint regulatory agencies with Australia, such as food standards and therapeutic products

National-United Future

Similarities 

* Tax cuts

* Reviewing Resource Management Act

* Some labour market deregulation

* Tougher stance on law and order

* Axing carbon tax

* Refocusing business help agencies

Fishhooks

* Income-splitting for couples for tax purposes

Labour-United Future

Similarities

* Retention of Families Commission

* Family assistance payments through Working for Families

* Development-friendly Resource Management Act changes

Fishhooks

* More human rights legislation

* Different attitude to Taiwan

National-NZ First

Similarities

* Removing Treaty principles from laws

* Government services based on need, not race

* Tougher stance on law and order

* Getting tough on immigration

Fishhooks

* Raising superannuation to 72.5 per cent of net average wage

* Removing GST from petrol

* Buying back the "family silver" and any sale of large state assets

Labour-NZ First

Similarities

* Concern about the scale of borrowing for tax cuts

* No state asset sales

Fishhooks

* Removing Treaty principles from laws

* Free-trade deal with China and any other low-wage economy

* Getting tougher on immigration

* More moral legislation