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What if NZ First had formed a coalition with the Labour Party after the 1996 New Zealand election? The 1996 election made New Zealand First and Winston Peters the 'kingmaker', as the right-wing National Party had 44 seats in parliament and Labour had 37, 61 seats required for a majority and NZ First had 17 seats. NZ First formed a coalition with National after two months of protracted negotiations between NZ First and the two major parties.
This was despite the fact that NZ First was expected to ally with Labour and had been openly opposed to National, even repeatedly publicly ruling out a coalition with National. In July 1996 NZ First deputy leader Tau Henare said, in a speech endorsed by Peters, that he would not be part of a government ‘in which Jim Bolger is the prime minister, in which Bill Birch controls finance, or in which Jenny Shipley is in any ministry which gave her responsibility for social policy’. Later, in both September, and on election night Henare declared and that he would not serve in a NZ First-National government. Also, an election night poll showed that three quarters of NZ First voters preferred a coalition with Labour over National (Kirk, 26 Oct 1996: p.23). Also, according to Vowles' research, ‘two thirds of those who voted for NZ First expected Peters to throw in his lot with Labour and the Alliance' (Trotter, 21 Nov 1997: pp.14-15)

However, during the negotiations, National offered NZ First significant concessions, more than Labour, which expected Peters to ally with them. NZ First history-the coalition decision says "The decision was also understandable, from the point of view that 'National made significant concessions to secure NZ First's support in a variety of areas' (Boston, Levine et al, 1997: p.11). These concessions were mainly in ‘in the areas of immigration, overseas investment, compulsory superannuation (by leaving it to referendum), and aspects of its social policy’ (Boston and McLeay, 1998: p.230). Significantly, National also, at the last minute, agreed to give a newly created position of Treasurer to Winston Peters." Despite NZ First being closer to Labour on many policy issues and being populist, contrasting with the neoliberal economic policies of the National government, "there were some important issues where NZ First and National had a reasonable amount in common, especially in relation to tax policy (where both parties supported further tax reductions), housing (where NZ First preferred only minor modification to National's market-orientated housing reforms) and industrial relations (where NZ First supported most of the provisions of the Employment Contracts Act which National had introduced in 1991) (Boston and McLeay, 1998: p.228)." Also, many NZ First MPs, including Peters, had originally come from the National Party and were more sympathetic to National.
'The coalition decision' also argues that NZ First feared its identity would be overshadowed if it went with Labour and that its identity was in fact closer to National. "The decision to go with National was largely based on the perceived need for the party to retain a valuable and distinctive “brand”. It was feared by the party that if they went with Labour then NZ First would be subsumed as the junior coalition partner and ‘would be seen as having a me-too bit-player role in a government led by a Labour party bent on even more social spending than NZ First was proposing' (James, Dec 1997). Basically Labour and NZ First’s social policies were so similar that the likely results would mean that NZ First would have to share the credit for changes. Going with National meant that NZ First might, by contrast, be able to present itself positively as having hauled National back towards the centre – modifying its extremes. Also, NZ First would be seen as having an influence in social policy with National – and there would be distinguishable achievements that NZ First could present to their constituency of support." Michael Laws said 'The truth was that Peters was always going to lie down with National. Every fragment of conversation, of body language, of facial expression displayed distaste for the Labour option' (Laws, 1998: p.373). This was because, Laws believed, ‘Peters had come to loathe Labour more than National, if only because he had hoped that NZ First might supplant that party as the Government's prime opposition' Peters purportedly said to Laws: "This government isn't just about getting to 1998 or even the next election. We'll carry on past that – we're going to be a real coalition" (Laws, 1998: p.391). Laws understood this to mean that Peters was interested in ‘the kind of coalition in which parties merged forever but appealed to differing voter segments, the Liberal/Country accommodation of Australia being the obvious example’ (Laws, 1998: p.391). However, this did not end up occurring IOTL. Another justification was that an NZ First-Labour government would lack a majority in parliament and therefore need the support of the Alliance, support that would be conditional and not guaranteed. This situation was unattractive to NZ First and would likely result in unstable government. However, it is unclear how much of this is a real reason for Peters to have rejected a Labour-NZ First government or simply an excuse for his decision to do so.
So, what PoD would be needed for Labour and NZ First to form a coalition? Perhaps if Labour won the election outright, pressure would be greater on NZ First to ally with Labour and a coalition would be more feasible. Using the 2011 referendum simulator, I created some alternate results.
1996 NZ election
Helen Clark-Labour: 43+2 32.59%
Jim Bolger-National: 40-1 30.94%
Winston Peters-NZ First: 18+13 14.05%
Jim Anderton-Alliance: 11+9 8.8%
Richard Prebble-ACT: 7+7 5.5%
Peter Dunne-United: 1-6 0.68%
120 seats
61 for majority
Now, Labour and NZ First combined are 61 seats, a majority, while National and NZ First are only 58 seats, no majority. Labour is more stable and has a stronger mandate(in 1996 IOTL, the left lost support and seats). Labour and NZ First form a coalition government after the 1996 election TTL.

What would be the effects of this outcome? Helen Clark becomes Prime Minister three years early? How does her government go? Is the Labour-NZ First coalition stable, or does it collapse as the National-NZ First coalition did IOTL? Who would take over the National Party following their 1996 loss-would it still be Jenny Shipley or a different leader(Don McKinnon? Bill English?)? What would be the outcome of the 1999 election(or an earlier election if the government collapses)? One likely outcome would be that NZ First loses seats, as mentioned above its identity would be suppressed by the coalition with Labour and it would have less appeal than being the populist opposition to National. However, it is likely it would not lose as badly as in 1999 IOTL as the Labour-NZ First coalition would be less unpopular with the party's base than the coalition with National. If National wins, could MMP be abolished? While most parties still supported keeping the new electoral system, National favored a change, and both it and the NZ public may be supportive of a return to FPP if the first MMP government is unstable and/or unpopular. What would be the effects of a National government in the 2000s instead of Helen Clark's 9 year government? One that sticks out is that New Zealand would likely enter the Iraq War in 2003. If Labour wins in 1999, what would be the effects of an earlier Helen Clark government? How long would Labour stay in power? In the longer-term, how would New Zealand politics be affected? What would be the other effects of this change? What if?
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