Federated Farmers: Waiting for Winston's choice

Winston Peters.

The votes are in and the dust is settling from a dramatic election campaign that see-sawed back and forth. After storming back in the final fortnight National won on the night and notwithstanding the 384,000 special votes still to be counted, it will be the biggest party by a comfortable margin.

But not comfortable enough to allow it to govern on its own or with its previous support parties, two of whom didn't make it back. As was the case in 1996 and 2005, NZ First finds itself in the position as the king - or queen - maker.

What does all this mean for farmers?

It's fair to say that during the campaign there was plenty of rhetoric and policy pronouncements from Labour and the Greens that were not well received by farmers - especially on the environment.

Policies included a water tax (Labour); a nitrates tax (Greens); putting agriculture biological emissions into the emissions trading scheme (Labour); and scrapping the ETS and replacing it with set charges on carbon dioxide, methane and nitrous oxide (Greens). Labour also floated a capital gains tax and a land tax, both of which would hit farming hard.

Enter NZ First and Winston Peters. Since returning to Parliament in 2011 NZ First has been an opposition party and it has campaigned hard against the National Government.

In doing so NZ First courted the farming and rural vote, which it perceived was being taken for granted by National and written off by Labour and the Greens. An analysis of the election night results by electorate showed the top 10 party vote percentages for NZ First all came in rural and provincial electorates.

So, what do the major parties need to do to get over the crucial 61 seats? That Labour needs both NZ First and the Greens onside makes this a potentially tricky combination to manage. That National only needs NZ First (or the Greens) gives them an advantage but only if it weren't for policy compatibility and personalities.

Looking at policy, NZ First aligns more closely with Labour. Both parties share a wish for tighter restrictions on immigration and foreign investment, including on houses and farm land; changes to monetary policy; more spending on health and education; a significantly higher minimum wage and wages generally; more generous paid parental leave; keeping the retirement age at 65; opposition to the Trans Pacific Partnership; and re-entering the Pike River mine.

There are two key exceptions which are crucial for farming. That is opposition to a water tax on irrigation and opposition to the inclusion of agricultural biological emissions in the ETS. Mr Peters, in a speech to Ashburton farmers just days before the election, made it clear that both are no-go areas for him. If Labour was to concede on these two points a major barrier would be overcome.

National has much less policy compatibility with NZ First but agree on 'no' to a water tax and 'no' to agriculture being in the ETS. In other areas National would have to make substantial shifts in policy or NZ First would have to accept they won't get all, or even many, of the changes they say they want.

NZ First says it wants RMA reform, including removing what it calls National's 'race-based' provisions. Now that the Maori Party is out of the picture, National might now feel more open to a change in direction whereas Labour, after sweeping the Maori seats, may be less keen. National may have an advantage here.

Looking at formal arrangements, both Labour and National will likely offer NZ First Cabinet positions either as part of formal coalition agreement (as per 1996) or perhaps more likely a support agreement (as per 2005). Sharing the prime ministership is likely to be off the table but deputy prime minister or a senior portfolio will be.

Personalities are the great intangible but they could be as important, if not more so, than policy or portfolios. National and NZ First have a long history of rivalry and key politicians in both camps have butted heads. If the two parties are prepared to bury the hatchet, building trust and confidence for any deal and forging a constructive working relationship will be high immediate priorities.

Labour may have an advantage in there not being much bad blood between it and NZ First but the relationship between Mr Peters and Jacinda Ardern is an unknown. Furthermore, NZ First will not be keen on being in government with the Greens and sharing the cabinet table with them.

What about the Greens? As a price for winning over NZ First, Labour may need to keep the Greens out of government and instead offer them a supply and confidence agreement. While some have promoted the idea of a National-Greens government the Greens have so far ruled this out due to policy incompatibility and the very idea being anathema to a lot of their people. If they continue this position they have few options, and Labour and NZ First know this.

Whatever the result of the negotiations, Federated Farmers will work hard with the parties in government to get the best outcomes possible for farmers.