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Analysis: Christopher Luxon gets PM job - and deal-making headache

Oct 15, 2023

Fourth time lucky.

After the wondrous John Key years, National tried three successors. None of them measured up.

In November 2021, Christopher Luxon took over a party in tatters. He was picked by 32 caucus colleagues in desperation, as much as hope. Today, he is Prime Minister-elect.

With almost all of the ordinary ballots counted late last night, National had 38.95 percent of the party vote, and ACT 8.98 percent. Between them, they were clinging to 61 seats, the barest possible margin to govern.

The buffer is so slim that Luxon will surely be pushed to seek a deal with NZ First, which completed a stunning surge to return to Parliament with 6.4 percent of the party vote - enough for eight seats.

On the other side of the aisle, Labour had a disastrous night and now faces a leadership crisis of its own. With only 26.8 percent of the vote and a slew of humiliating electorate defeats, Chris Hipkins appeared ready to quit, but for the urging of his colleagues to accommodate a more orderly transition of power.

The Greens fell a little short of expectations, winning 10.7 percent of the party vote, but took a stunning three electorate seats.

Te Pāti Māori joined in the heist of Labour electorates, winning four of them - including Hauraki Waikato which had been held by Nanaia Mahuta for its entire existence.

Meet the new Prime Minister

Luxon might be the most politically inexperienced person ever to hold the office of Prime Minister in New Zealand.

He was ranked 61 on National's list when he arrived as the MP for Botany in October 2020. In the 13 months he was an MP before being chosen to lead, he was scarcely cited.

A Gen-Xer from Christchurch, Luxon was known to the public and had a taste of the news media from his time as chief executive officer of Air New Zealand for seven years. But really, he was totally untested as a politician, let alone a political leader.

His first job was to stabilise the caucus room, which was in complete turmoil. Then, to restore respectability to its polling.

He did both within months, moving National from 27 percent in RNZ's poll of polls to 37.5 percent by March 2022. Weeks later, it edged ahead of Labour, which was at the beginning of a slow decline.

Luxon and family at home on election night (Photo: RNZ/Supplied/National Party).

The morning after the night before

Adrenaline, exhaustion and trays of drinks fuelled the celebrations at election night parties last night. But as the phones are juiced back up and the hotel room blinds drawn back this morning, there will be tension.

Luxon will be PM - no doubt - but this is an awkward result.

Luxon and his advisors know they need to keep the line to NZ First open.

There are half a million special votes still to count. National and ACT might lose a seat from those. Or, they might gain a seat. Maybe more either way.

National will win the Port Waikato by-election to be held next month. Where does all of that leave them? It's hard to be much more precise than: with a margin that's slim to non-existent.

On the one hand, Luxon might want to keep things as simple as possible if there's only a seat in it. The time and effort spent on negotiating with NZ First's Winston Peters might be so great that he'd prefer to live with the risk of a wafer thin majority.

But on the other, a deal with NZ First would be insurance against a rogue MP or two from National or ACT bringing the government down. It would also provide a moderating counterweight - Luxon would have ACT to his right and NZ First to his left to support whatever measure the other one might not like. Handy.

In his victory speech and media appearances afterwards, Luxon cited a comment from Peters about being "willing to help". He said he hadn't called Peters but wanted to "acknowledge" the remark. All very non-committal.

New Zealand First leader Winston Peters at the Duke of Marlborough in Russell on Election Night on October 14, 2023 (Photo: RNZ/Samuel Rillstone).

The Peters problem

What Luxon didn't "acknowledge" was another, much darker series of remarks Peters made last night.

"When we open the books very shortly, we will realise just how serious our crisis in economic terms is," Peters said.

Without naming any names, he suggested there were a lot of unaffordable promises floating around. He almost - but didn't quite - say he was ready to rein them in.

Peters will be thinking of National's $14b income tax plan. He would probably want to delay it. He might also want to shrink it - perhaps by a lot - or even replace it completely with something more targeted.

He also will not be keen on allowing wealthy foreigners (whom National want to tax) to buy our most expensive real estate.

This could all bring a swift end to any notion of a confidence and supply deal with NZ First, assuming they're not absolutely needed.

Luxon's deputy Nicola Willis has staked her role as finance minister on the tax plan.

"If we didn't deliver tax reduction, yes, I would resign," she said during the campaign.

But if you read those words carefully, Willis' pledge does leave room for a short delay in tax cuts and perhaps a modest haircut on National's plan - they'd still be delivering tax cuts, just not exactly of the scale and type they'd promised. A wholesale gutting of the plan, however, would be broken promise territory.

Deal making

That's what makes it all so awkward for National.

It ought to be easy to figure out the details of a deal with ACT and get cracking with a mini-Budget before Christmas.

But hold on. The official results won't be finalised for three weeks. Can they really charge ahead with an ACT deal that doesn't account for NZ First before they know whether or not they need its support?

A vanquished Chris Hipkins (Image: RNZ/Nathan Mckinnon).

Crash, bang, walloped

Still, at least they're not Labour, whose election night result was almost identical to the drubbing National took three years ago.

Winning over half of the vote at the 2020 election looked at the time like an historic aberration at the time. The result last night confirms it.

Main image (RNZ/Anan Zaki): National leader and the country's next prime minister, Christopher Luxon, on Election Night, October 14, 2023.

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