US embassy cable - 05WELLINGTON807

C O N F I D E N T I A L WELLINGTON 000807 
 
SIPDIS 
 
NOFORN 
 
STATE FOR D (FRITZ), EAP/ANP, EAP/EP, EAP/RSP, INR/EAP 
NSC FOR VICTOR CHA AND MICHAEL GREEN 
SECDEF FOR OSD/ISA LIZ PHU 
PACOM FOR J2/J233/J5/SJFHQ 
 
E.O. 12958: DECL: 10/16/2015 
TAGS: PGOV, PREL, NZ 
SUBJECT: NZ LABOUR FORMS GOVERNMENT: COALITION OF THE 
UNWILLING 
 
(U) Classified by: Charge d'Affaires David R. Burnett, for 
reasons 1.4(b) and (d). 
 
1. (U) New Zealand Labour Prime Minister Helen Clark 
announced October 17 the formation of a new government, 
involving a Labour coalition with the one-seat Progressive 
Party and confidence-and-supply arrangements with New Zealand 
First and United Future.  Jim Anderton of the Progressive 
Party will continue to serve as a Cabinet minister, but his 
portfolio was not announced.  Outside of Cabinet, New 
Zealander First leader Winston Peters will be Minister of 
Foreign Affairs, Minster of Racing and Associate Minister for 
Senior Citizens.  United Future leader Peter Dunne will be 
Minister of Revenue and Associate Minister of Health. Peters 
and Dunne will be subject to "collective responsibility" 
(i.e., required to support government policies) only in areas 
covered by their respective portfolios. 
 
2. (U) The arrangements yield a 61-seat majority for Labour, 
one month after it won 50 seats to the opposition National 
Party's 48 seats in the September 17 elections.  The Green 
Party has agreed to abstain on votes of confidence and supply 
and gets no ministerial portfolios.  National, ACT and the 
Maori Party are in opposition. 
 
3. (SBU) Labour was unable to ally with the Maori Party 
without undermining its own Maori supporters.  This forced it 
to court the center-leaning parties, New Zealand First and 
United Future, which were unwilling to enter into government 
with the Green Party.  The price of the alliance is steep, 
with New Zealand First winning policy concessions on raising 
social security, or superannuation, payments; increasing the 
size of the police force; raising the minimum wage; and 
securing a review of the company tax rate and the carbon tax. 
 United Future has secured a review of the prostitution 
reform law, and Dunne's revenue portfolio may indicate an 
opportunity to implement "income-splitting," a policy that 
equalizes the marginal tax rate for couples. 
 
4. (U) The Green Party asserted that Labour had been 
blackmailed by other parties, with co-leader Jeanette 
Fitzsimons adding that the party could not support a 
government "held hostage to the policies of New Zealand First 
and United Future."  Fitzsimons said, in exchange for the 
party's abstaining on confidence and supply, the Greens have 
won policy concessions on energy efficiency, solar heating 
and a buy Kiwi campaign. 
 
5. (C) Comment: Keeping the influential foreign affairs 
portfolio outside of Cabinet is unprecedented for this 
trade-dependent nation and will make it hard for Labour to 
show much initiative in foreign affairs during this term. 
While personally appearing favorably disposed to the United 
States, Peters' position outside of government may yield him 
little true influence over foreign policy.  The convention of 
collective responsibility will further restrain Peters' 
criticism on matters of foreign policy.  However, he will be 
far more willing than the previous foreign minister, Phil 
Goff, to report frankly to Cabinet on U.S. concerns. 
 
6. (U) Post will report septel as other cabinet positions are 
announced. 
Burnett