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Cablegate: Nz's Election Under the Controversial Mmp

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RR RUEHDT RUEHPB
DE RUEHWL #0370/01 3080613
ZNR UUUUU ZZH
R 030613Z NOV 08
FM AMEMBASSY WELLINGTON
TO RUEHC/SECSTATE WASHDC 5509
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)

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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
----------------------------

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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

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