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R 030613Z NOV 08
FM AMEMBASSY WELLINGTON
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INFO RUEHNZ/AMCONSUL AUCKLAND 1774
RUEHBY/AMEMBASSY CANBERRA 5302
RUEHDN/AMCONSUL SYDNEY 0741
RUCNARF/ASEAN REGIONAL FORUM COLLECTIVE

UNCLAS SECTION 01 OF 04 WELLINGTON 000370 
 
SIPDIS 
SENSITIVE 
 
STATE FOR STATE FOR EAP/ANP 
PACOM FOR J01E/J2/J233/J5/SJFHQ 
 
E.O. 12958: N/A 
TAGS: PGOV PHUM KDEM NZ
SUBJECT: NZ'S ELECTION UNDER THE CONTROVERSIAL MMP 
SYSTEM 
 
WELLINGTON 00000370  001.2 OF 004 
 
 
¶1. (SBU) Summary.  On November 8, New Zealand goes to 
the polls under the Mixed Member Proportional (MMP) 
parliamentary system.  Though initially popular when 
introduced in 1996, the country is now divided over 
MMP's merits.  If National forms the next government, 
it has promised to review MMP.  Labour and the smaller 
parties, all of which have benefited from MMP, have 
expressed little desire to review the system.  In order 
to form a government, both Labour and National are 
unlikely to get a popular majority of Parliamentary 
seats and therefore will need the support of one or 
more smaller parties, a situation which can give a 
minor party a disproportionate voice in government 
policy.  As with past MMP elections, the minor party 
that holds the balance of power will be able to 
influence the policy agenda of the next government.  We 
summarize here the sometimes perplexing MMP system, the 
controversy it has generated, and how it may determine 
New Zealand's next government.  End Summary. 
 
NZ's Proportional Representation System 
--------------------------------------- 
 
¶2. (U)  Since 1996, New Zealand has operated under the 
"Mixed Member Proportional" (MMP) system.  Prior to 
1996, New Zealand's voting system was the simple 
plurality, winner-takes-all voting system.  In 1993, 
the then-National Government, bending to a growing 
public desire to move away from the plurality voting 
system, held a binding referendum in conjunction with 
the general election that year on whether to change the 
1993 Electoral Act in order to establish a MMP system. 
The pro-MMP vote won by a comfortable margin, 54 
percent to 46 percent. 
 
¶3. (U)  Under MMP, each voter casts two votes, one for 
a local electorate MP (a constituency seat), and one 
for a political party.  Prior to the election, each 
party submits a rank-order listing of its proportional 
candidates.  Each registered party's total number of 
party votes decides its share of seats in Parliament. 
A person can be a "dual candidate" by standing for an 
electorate seat as well as being on the party list.  A 
dual candidate who wins an electorate seat has his or 
her name deleted from the party list, and replaced by a 
lower ranked name. 
 
¶4. (U)  In order to gain a share of Parliament seats, a 
party must first qualify either by winning at least 
five percent of all the party votes cast, or by winning 
at least one electorate (constituency) seat.  Each 
qualified party is allocated enough party vote (list) 
seats to add to any electorate seats it has won so that 
its total number of seats is close to its share of all 
the eligible party votes cast.  Parties fill their list 
seats by drawing off the allocated number of candidates 
in the order in which they appear on the party's list, 
and voters cannot change that order.  The MPs chosen in 
this way are called list MPs. 
 
Overhang:  Parliament Size Can Vary Under MMP 
--------------------------------------------- 
 
¶5. (SBU)  Fundamentally, each party holds seats in the 
new Parliament in proportion to its party vote, not the 
number of electorates it wins.  If a party, usually a 
minor party, wins more local electoral seats than its 
percentage of the proportional vote, this makes it 
impossible for another party, usually a large party 
such a Labour or National, to hold the number of seats 
it should according to proportional principles within 
the original 120-seat Parliament.  The solution is 
overhang.  The Electoral Commission determines how many 
seats need to be added to 120 so that each party has no 
fewer seats than its proportional vote.  These extra 
seats are the overhang. 
 
¶6.  (SBU)  The overhang is a contentious issue because 
the greater the overhang, the higher the majority 
needed for a party to form a Government.  Under the MMP 
system, the New Zealand Parliament conventionally has 
120 seats.  The current Parliament has 121 MPs - the 
one extra MP being earned by the Maori Party 2005 
election when it won more electorate seats than the 
party vote gave them, i.e., its party vote gave it 
 
WELLINGTON 00000370  002.2 OF 004 
 
 
three seats but the party actually won four electorate 
(constituency) seats. 
 
Coalition and Minority Governments the Norm 
------------------------------------------- 
 
¶7. (U)  Since the MMP system was introduced in 1996, 
there has never been a majority government (where one 
party holds the majority of seats in Parliament thereby 
allowing it to govern alone without a coalition with 
other parties).  Since 1996, New Zealand has only ever 
had coalition governments (where one of the two major 
parties makes an informal agreement with one or more 
parties).  The current Labour-led governing arrangement 
is a coalition government formed with New Zealand 
First, United Future and the Progressive Party. 
 
Governments Formed in Post-Election Period 
------------------------------------------ 
 
¶8. (U)  In order to form a Government under MMP, one 
party or bloc of parties must command a majority of the 
votes in the House of Representatives.  When a majority 
is secured, a government is formed and the leader of 
the biggest party becomes Prime Minister (although 
formally the Prime Minister is selected by the Governor 
General).  In past MMP elections, the post-election 
periods have been a contest between the two major 
parties, Labour and National, to be the first to secure 
enough minor party support to form a governing 
majority. 
 
¶9. (SBU)  The post-election negotiating period does not 
normally last more than couple of weeks.  This period 
can, however, take longer as it did in 1996 when 
Winston Peters' New Zealand First Party took eight 
weeks to decide whether to support National or Labour 
(Peters eventually chose National after it promised to 
make him Treasurer.  Labour refused to promise him this 
position). 
 
Caretaker Government Until New One Formed 
----------------------------------------- 
 
¶10. (SBU)  During the negotiations to form a 
government, the current government remains in office, 
but limits its actions pursuant to the common 
convention of a caretaker government.  It is expected 
that the new government should be formed before January 
8, 2009, the last possible date for Parliament to sit 
following the 2008 election.  Though unlikely, it is 
possible that a caretaker government could continue 
beyond this point until new government is formed.  More 
informally, there is strong pressure for parties to 
complete formation of a government before summer 
vacation begins in mid-December. 
 
Referendum on MMP Overdue 
------------------------- 
 
¶11. (SBU)  When the 1993 Electoral Act to introduce MMP 
was drafted, a clause was inserted to allow for a 
review of the system after two MMP elections and to 
determine whether there should be a another referendum 
on electoral reform.  However, the country still awaits 
a review as the parliamentary committee established in 
2000 to examine MMP could not reach a decision on 
whether another referendum was needed. 
 
Country Divided Over MMP 
------------------------ 
 
¶12. (SBU)  On August 3, National Party leader John Key 
promised that a government led by his party would hold 
a binding referendum on MMP no later than 2011 
followed, if necessary, by a second referendum to 
establish what system should replace it.  However, many 
minor parties rely on MMP for their place in Parliament 
and a future National government could struggle to win 
sufficient support for a referendum.  Prime Minister 
Clark has been unenthusiastic about any change in the 
current MMP system, as it favors the Labour Party, 
which is the natural ally of the largest minor party, 
the Greens.  In a recent newspaper opinion piece, 
former New Zealand Prime Minister Mike Moore (Labour) 
 
WELLINGTON 00000370  003.2 OF 004 
 
 
criticized MMP as an "inherently unstable" electoral 
system which produces "squalid and sordid" post- 
election deals. 
 
¶13. (SBU)  The New Zealand public is divided over the 
merits of MMP.  A Research New Zealand poll of August 
2008 found forty-six percent favor a return to the old 
plurality voting system with forty-one percent in 
support of MMP.  Many New Zealanders are not 
comfortable with the hidden deals with minor parties 
that characterize MMP governments.  There is some 
public anxiety that small parties are able to wield a 
disproportionate amount of, sometimes radical, 
influence on policy agendas. 
 
Post-Election MMP Opposition Could Surge 
---------------------------------------- 
 
¶14. (SBU)  Since 1996, the party with the most party 
votes has led the government and there is public 
consensus (and tacit understanding among the political 
parties) that this is a fair reflection of the will of 
the people.  However, if Labour in 2008 is able to form 
a government despite losing to National on the party 
vote, then many New Zealanders may see this as contrary 
to the will of the country, and resentment towards MMP 
could rise.  Key has asserted that the biggest party has 
the right to form the government but Labour has 
disagreed, noting that governments should be formed by 
the community of interest within parliament.  Minor 
parties have been coy on the issue, paying lip service 
to due regard to the party that leads in party votes. 
 
How Labour Forms an MMP Coalition 
--------------------------------- 
 
¶15. (SBU)  Helen Clark is an astute and successful 
exponent of MPP.  She has built and maintained durable 
coalition and minority governments with a range of 
smaller parties, some with vastly different political 
philosophies.  Going into the 2008 election, Clark can 
rely on three parties - The Greens, NZ First and the 
Progressives - to offer support for a Labour-led 
government.  Despite this ready-made coalition of 
support, Labour faces three challenges in forming the 
next government.  Despite a narrowing gap, Labour is 
still polling significantly behind National.  Labour's 
final party vote must exceed thirty-five percent to 
give them any hope of forming a viable coalition.  In 
addition, the Greens vote must be close to ten percent. 
Finally, Winston Peters' NZ First must win an 
electorate seat or meet the five percent party vote 
threshold to return to parliament.  However, recent 
polling suggests that it will be difficult for Labour 
or the Greens to reach their watershed 35 and 10 
percent, respectively.  It will be almost impossible 
for NZ First to secure the five percent needed to 
return to parliament. 
 
How National Forms and MMP Coalition 
------------------------------------ 
 
¶16. (SBU)  Going into the 2008 election, National is 
ahead of Labour in the polls and is well positioned to 
secure the most party votes.  Nonetheless, National is 
unlikely to reach fifty percent and will therefore have 
to rely on support from the smaller parties.  Thus far, 
only two minor parties - the centrist United Future and 
the right-wing ACT Party - have signaled their intent 
to support a National-led Government.  If National 
polls in the high forties, then the support of United 
Future and ACT, likely to get a maximum four sets 
between them, may be enough for National to form the 
next government.  If National gets less than 47 
percent, as some analysts predict, then the only other 
real option open to National to form the next 
government is to persuade the Maori Party to support 
it.  (Note:  The Greens and Progressives have already 
signaled that they will not support a National-led 
Government, and Key has ruled out working with Winston 
Peters' NZ First Party, even if it does return to 
Parliament). 
 
Maori Party Likely Kingmaker 
---------------------------- 
 
WELLINGTON 00000370  004.2 OF 004 
 
 
 
¶17. (SBU)  In most MMP elections, there is usually a 
smaller party playing the role as kingmaker.  Its 
decision to support one of the two main parties will 
essentially decide the next government.  In 2008, the 
kingmaker role is very likely to be filled by the Maori 
Party, which is expected to return to parliament with 
five, possibly seven seats.  The Maori Party has been 
careful not to signal which party it will support, and 
both Labour and National have courted it ahead of 
November 8. 
 
The Second Campaign 
------------------- 
 
¶18. (SBU)  Unless one party gets fifty percent of the 
votes, which is unlikely at the 2008 election, the next 
government may not known until well after November 8 as 
Labour and National engage in a second campaign:  a 
post-election negotiation period with the smaller 
parties.  The Maori Party has stated that it will 
conduct a week-long series of consultation with its 
supporters around the country to seek guidance as to 
whom to support.  Recent Maori polling suggests that as 
much as 70 percent of Maori voters prefer Labour as a 
partner in government -- a significant challenge for 
National.  The Maori Party could extract significant 
concessions from the major parties in the post election 
period. 
 
Comment:  The Decisive Election for MMP 
--------------------------------------- 
 
¶19. (SBU)  the more critical the role of a coalition in 
forming New Zealand's next government, the more 
pressure will grow to reconsider MMP.  Two scenarios 
could prove particularly contentious:  first, if Labour 
wins fewer seats but forms the government by winning 
more minor party support; second, if Maori wins 
concessions from National seems contrary to National's 
platform.  Either scenario could increase calls for an 
MMP referendum as New Zealanders grow wary of the 
excessive influence minor parties have wielded over 
government policy under MMP.  End Comment. 
McCormick