New Zealand's National Party clinches deal to form government

Renju Jose and Lucy Craymer
Updated ·2 min read
FILE PHOTO: Christopher Luxon, leader of New Zealand's National Party waves to supporters

By Renju Jose and Lucy Craymer

WELLINGTON (Reuters) -New Zealand's National Party said on Thursday it has reached an agreement with ACT New Zealand and New Zealand First to form a government, ending weeks of negotiations and political uncertainty with the country under a caretaker government.

The center-right National Party won the largest share of votes in New Zealand's Oct. 14 general election but needed the support of both right-wing ACT New Zealand and the populist New Zealand First parties to form a majority government.

Negotiations have dragged on as the three parties had to agree on a political agenda for the coming three years and allocate ministerial positions.

"I'm very pleased to announce that we're in a position where we've concluded negotiations with the respective parties. Those agreements are now before the parties for ratification, which we hope to have this evening," incoming Prime Minister Christopher Luxon told reporters.

"We are genuinely excited."

Both NZ First's Winston Peters and Act's David Seymour confirmed negotiations had concluded.

The conservative National Party won over voters by promising relief for struggling middle-income New Zealanders, and to bring historically high inflation under control while reducing the country's debt. It is expected to announce plans to return the central bank to a single mandate of targeting inflation of 1% to 3%.

The formation of the new coalition government will bring to an end six years of left-wing government led by Labour. Labour lost support with many New Zealanders disgruntled over the country's long COVID-19 lockdown and the rising cost of living.

New Zealand operates a mixed member proportional system, which means coalition governments are the norm and historically it takes roughly a month for a government to be formed but can take longer.

A detail breakdown of the new government's policy agenda is expected to be released Friday. Ministerial appointments are also expected to be announced then.

(Reporting by Lucy Craymer and Renju Jose; Editing by Stephen Coates)