This record is a partial extract of the original cable. The full text of the original cable is not available.

C O N F I D E N T I A L SECTION 01 OF 04 WELLINGTON 000682 
 
SIPDIS 
 
STATE FOR EAP/ANP, EAP/RSP, EAP/EP, INR/EAP 
NSC FOR VICTOR CHA AND MICHAEL GREEN 
SECDEF FOR OSD/ISA LIZ PHU 
PACOM FOR J2/J233/J5/SJFHQ 
 
E.O. 12958: DECL: 09/06/2015 
TAGS: PGOV PREL NZ
SUBJECT: AS NATIONAL'S SUPPORT SURGES, NZ ELECTIONS TOO 
CLOSE TO CALL 
 
REF: A. WELLINGTON 664 
     ¶B. WELLINGTON 663 
     ¶C. WELLINGTON 658 
     ¶D. WELLINGTON 650 
     ¶E. WELLINGTON 642 
     ¶F. WELLINGTON 566 
     ¶G. WELLINGTON 70 
 
Classified By: Charge D'Affaires David R. Burnett, 
for reasons 1.4 (b) and (d) 
 
¶1.  (C) Summary:  Just 10 days out from New Zealand's general 
elections, the race is too close to call.  Recent polling 
puts the opposition National Party ahead of the Labour 
Government, with one poll showing the spread as much as 8 
percentage points in National's favor.  National seems to 
have suffered no ill effects from a spate of missteps by its 
top officials last week, with voters apparently remaining 
focused more on the party's tax package, race relations 
stance, and other core messages.  Labour has been hurt by an 
increased perception that PM Clark is arrogant and out of 
touch with "mainstream" electorate. The Government has above 
all underestimated the feeling of many Kiwis that they are 
less well-off these days and will be even less well-off with 
the directed spending programs that Labour has thrown up in a 
response to National's tax cut proposals.  But the spread of 
the various poll numbers, together with the large number of 
voters who remain undecided, means its still anyone's race. 
We predict Labour will increasingly focus its strategy on a 
negative campaign: portraying National as having a secret, 
rightist agenda; claiming that "American-style" tax cuts will 
ruin the nation, and assertions that National leader Don 
Brash is an untrustworthy amateur. 
 
¶2.  (C) If National wins more votes than Labour, it still may 
not be able to form a government. The most optimistic poll 
shows National with just 46% total support, and its potential 
coalition partners are thin on the ground.  Although support 
for most minor parties is relatively low during this 
campaign, it is likely that either major party would need at 
least some small party support in order to get a majority in 
Parliament.  The Maori Party has ruled out National as a 
partner, Labour already has the support of the Greens and the 
Progressives.  National has resisted aligning itself with the 
conservative ACT party.  Don Brash has recently met with 
United Future leader Peter Dunne, but Dunne's party is 
unlikely to give National the number of seats it would need 
to claim a majority. National  may benefit from NZ First's 
September 7 announcement that it will vote on major issues 
with whichever major party gains the most votes.  End 
Summary. 
 
------------------------ 
NATIONAL ON THE UP AGAIN 
------------------------ 
 
¶3.  (SBU) After a recent down-tick in the polls, the 
opposition National Party seems to be back in the lead.  A 
September 5 Colmar Brunton poll showed the most decisive 
swing in National's favor, with support at 46% versus the 
Labour Government's 38% (margin of error of 3.2%).  Conducted 
from August 29 to September 1, the poll showed Brash up four 
points as preferred prime minister to 31% and Helen Clark 
down five points to 40%.  It is particularly significant that 
National's bounce follows what was deemed by the media as a 
bad week for the party -- leader Don Brash was forced to deny 
his environment spokesman's claims that National would allow 
logging in national forests, and Brash also got low marks in 
the press for claiming he had held back in a recent debate 
with PM Clark because she is a woman. Labour Energy Minister 
Pete Hodgson dismissed the Colmar Brunton survey as an 
erroneous "rogue" poll that does not track with other recent 
polls, and indeed Colmar Brunton has in the past been 
criticized because it tends to poll more strongly for 
National and negatively against the minor parties. But all of 
the other recent polls have also put National in the lead, 
albeit by a smaller margin. 
 
¶4.  (SBU) Much of National's support has been gained at the 
cost of Labour, rather than  the minor parties.  According to 
the latest DigiPol surveys, the two major parties accounted 
for 82.4% before the National tax policy release and 81.0% 
after the release -- a 1.4 point difference.  However, 
National was up 3.1 points and Labour down 1.9 points from 
August 26 to September 2--a 5.0 point swing. 
 
¶5.  (C) In reftel E, we predicted that National's best shot 
at winning would be if its tax policy won over the voters. 
The plan, released the following week, seems to have done its 
job.  In a recent poll, almost one quarter who said they 
would support National said the tax cut was the deciding 
factor.  Another policy that may appeal to voters is 
National's reiteration of its view that New Zealand should 
end special treatment for Maori and instead address poverty 
as a general issue of concern for all.   National has also 
avoided any appearance of backing the ACT party - the most 
conservative party now in Parliament.  This probably is 
making it harder for Labour to successfully paint National as 
having a secret, rightist agenda.  National has also done 
nothing to court another possible coalition partner, NZ 
First, which is the only small party other than the Greens to 
currently command more than 5% party support in the polls. 
(NB: Under NZ's MMP voting system, parties need to gain one 
electorate seat or 5% of the party vote in order to get seats 
in Parliament in proportion to the total party votes they 
gain.)  National and NZ First's coalition in the 1990s ended 
up collapsing, and National does not want to remind voters of 
this. National's eschewing of a coalition partner is not a 
surprise to us, as a senior party strategist told us that a 
key objective would be to educate voters at the grass roots 
about the importance of the party vote under MMP.  The Nat's 
goal is clearly to win an overall majority.  But MMP was 
designed to limit the ability of any one party to dominate 
Parliament, and Kiwis seem to like this.  It is not at all 
clear that voters will give National the majority it would 
need to avoid a coalition. 
 
----------------- 
LABOUR'S MISTAKES 
----------------- 
 
¶6.  (C) Labour appears to have misjudged -- badly -- the 
number of Kiwis who feel they are less well off than they 
should be.  Ironically, it's the Government's past fiscal 
prudence that has created its problems, and its recent moves 
to increase spending may have made things worse. The 
government's ills first began when its May budget failed to 
return any of its large surplus to taxpayers until 2008: the 
public was not impressed by Finance Minister Cullen's remarks 
that, "Too much jam now is likely to lead to only crumbs 
later."  When it became apparent that voters were being lured 
by National's arguments that the country could well afford to 
"spend" some of the surplus on tax cuts, Labour responded 
over July and August with a number of new programs.  The 
first -- to forgive all interest on student loans for those 
who remain in New Zealand -- gained the Government the 
support of younger voters, but these were most likely to vote 
for Labour or their allies the Greens, if they vote at all. 
The initiative at the same time may have alienated some of 
the lower middle-class supporters who Labour needs to 
maintain as its core in order to win next week.  One National 
party candidate in a Wellington suburb told the Charge that 
working class voters in the district were really angered that 
their tax money was to go to support "spoiled" students, who 
are to get the benefit whether they need it or not. 
Similarly, Labour's biggest gambit -- to greatly expand its 
"Working for Families" assistance and repackage it as "tax 
relief" appears to have missed the mark. Although Kiwis tend 
to view anyone with money as "greedy," just who has enough 
money is of course open to interpretation.  In this case, 
Labour's initiative would for example do nothing for a couple 
with two children earning NZD 90,000 (about USD 64,000), who, 
facing rising housing costs and a relatively high cost of 
living, are unlikely to feel wealthy.  The plan also ignores 
single people and the childless. 
 
¶7.  (C) Labour has also undermined its credibility since, 
having insisted just a few months ago that the cupboard was 
bare, it is resorting to relative profligacy today.  The 
Government's claims that it "found" more money in the form of 
increased tax revenues does not seem convincing. Those who 
had accepted that sacrifices were necessary for the greater 
good are left scratching their heads, although at least some 
of these continue to believe that Government spending is best 
directed to the "neediest."  Still others we have spoken to 
wonder why the Government did not propose these and other new 
programs now on offer before being faced with a close 
election. 
 
¶8.  (C) Confronted with National's successes on domestic 
policy, Labour has attempted to 
a) undermine Don Brash's credibility, and 2) raise fears that 
National has a secret, rightist agenda that includes ending 
the country's cherished nuclear policies.  Neither has proved 
very successful to date.  Brash is anything but slick, and 
has an odd formality about him.  Labour's attempts to portray 
him as dishonest have backfired.  When, for example, Brash 
said he had done badly in his most recent debate with PM 
Clark because he was a gentleman and didn't like to be too 
harsh with women, Labour assumed voters would take umbrage. 
Many did, but others wrote approvingly to the papers, noting 
that total gender equality is a bad idea.  In a strange way, 
Brash's inept response showed the man is no liar: anyone good 
at hiding the truth would have done a better job of 
explaining himself.  National has proven more vulnerable on 
the nuclear issue, but has stuck to its mantra that it would 
not initiate a change absent a national referendum, and only 
then if most New Zealanders want such a vote.  Some voters 
have said that this proves National wants to scrap the policy 
-- how else would the issue of having a referendum come to 
the fore?  But National's firm position, coupled with a 
recent foreign policy paper on its website that promises 
little change, has not given the opposition much new to draw 
on.  We also suspect that in elections, New Zealanders are 
like most others in the world and will vote on domestic, not 
foreign, policy issues. 
 
¶9.  (C) Helen Clark has herself borne some responsibility for 
her party's decline in the polls.  Always perceived as 
somewhat arrogant, she won no favors when she last week 
dressed down an Air New Zealand pilot who announced over the 
intercom (wrongly, it turns out) that the flight she was to 
board was being delayed because she was trying to hire a 
charter plane instead.  The media gave wide coverage to the 
fact it was the pilot's error, but those inclined to think of 
Clark as wanting special treatment because of her status 
found new grist for the mill.  (The incident came on the 
heels of the trial of police officers accused of excessive 
speeding to get an allegedly unaware Clark to a flight last 
summer.)  And while some may not care about Clark's demeanor 
per se, they may view her arrogance as a reminder of her 
party's tendency to back causes such as legalized 
prostitution and civil unions, which are favored by fringe 
groups and not "mainstream" Kiwis. 
 
---------------- 
WHAT HAPPENS NOW 
---------------- 
 
¶10.  (C) It's still anyone's race, though.  In addition to 
the wide disparity in the polls,  as many as 20% of voters 
remain undecided on their party vote.  Many may make their 
decision on election day, or shortly before, and some may not 
vote at all.  We predict that during this time the race will 
begin to look more Presidential, focusing more on Brash and 
National vs. Clark and Labour.  Clark will continue efforts 
to raise doubts about Brash and National's agenda, including 
through sideswipes at the United States.  This has already 
started: the PM said yesterday that U.S. tax cuts were to 
blame for Hurricane Katrina, and that cuts were bad for a 
nation's ability to maintain its infrastructure.  (In 
general, since we reported Labour's anti-American tactics and 
our response (Wellington 566), the attacks have become less 
directed at us and more against National.)  But we doubt the 
anti-American card will be enough to return Labour to a 
comfortable position, as voters will continue to look at 
domestic issues to make their decisions.  Clark's swipes 
about Katrina, for example, are unlikely to be effective 
given that her government was widely criticized for its 
response to heavy flooding on the North Island last year. 
Labour may also try to court the Maori vote, as it will need 
all seven Maori seats to win.  The Maori Party's incompetence 
(Ref B) may help Labour here. 
 
¶11. (C) The real question will be whether National can 
continue to appear dominant in the polls without raising 
questions about its ability to form a government.  So far, 
the role of smaller parties has appeared greatly diminished 
this year.  This is the first year in recent memory where 
Labour and National have differed so much in their policies, 
giving voters a clear choice between them.  The race between 
the majors is also close enough that voters may be more 
reluctant to "waste" votes on smaller parties this year.  In 
addition, the majors have successfully co-opted many of the 
issues that traditional belonged to the smaller parties. The 
National Party has successfully used the law and order, tax, 
and immigration policies of ACT and New Zealand First, and 
garnered significant numbers of their constituencies.  Labour 
has successfully made in-roads on the Greens' student 
constituency (notably with its student loan policy), and the 
leftist Alliance party has fragmented to near oblivion. 
 
¶12.  (C) Nevertheless, in the past most undecided voters have 
ended up voting for smaller parties, and if that remains the 
case this time National may lose out. During the campaign, 
ACT has been courting National, but the latter has come out 
more strongly against helping ACT leader Rodney Hide win an 
electorate seat, without which his party is unlikely to 
survive.  National is wary that aligning itself with ACT's 
libertarian platform will cast National as the rightist party 
Labour claims it is, and is also reportedly angry at ACT's 
campaign tricks to gain National's support.  (ACT Leader 
Rodney Hide almost literally backed Don Brash into a corner 
the other day to secure a handshake, captured by the media.) 
Meanwhile, United Future's Peter Dunne has indicated, 
following a widely-reported meeting he had with Brash 
yesterday, that United and National might campaign together. 
But he has also said he will talk about a coalition with 
either of the major parties, depending on who gets the most 
votes.  Although Dunne's electorate seat is safe, assuring 
his Party's return to Parliament, United Future is currently 
only polling at 2%, which would probably not give National 
enough support to form a government without help from at 
least one other minor party.  National has distance itself 
from NZ First, largely in an attempt to avoid reminding 
voters about the failure of the 1990s National-NZ Coalition 
government.  National may, however, benefit from today's 
announcement that NZ First will vote on major issues with 
whichever major party gains the most votes.  Stay tuned. 
 
 
 
Burnett