Bloomberg News

New Zealand’s Key Starts Election Campaign to Win Second Term

October 31, 2011

Oct. 31 (Bloomberg) -- New Zealand Prime Minister John Key started his National Party’s campaign for a second term as rivals seek to claw back the government’s lead in opinion polls even after a year of fiscal setbacks and tragedy.

Key’s pitch for re-election on Nov. 26 began yesterday with a pledge to spend NZ$1 billion ($820 million) on school building projects, according to a copy of his campaign speech in Auckland posted on his website. The money will be the “first priority” of a new fund, the Future Investment Fund, that will have as much as NZ$7 billion from the sale of government stakes in energy companies and Air New Zealand Ltd.

The prime minister wants voters to back his program of debt reduction, spending cuts and low taxes that he says will boost incomes as the economy recovers from recession and natural disasters. The National Party had a 53.3 percent approval rating in a poll of 750 voters published Oct. 29, compared with the 30.3 percent support for the main opposition Labour Party, led by Phil Goff.

“Make no mistake -- New Zealanders have a very clear choice this election,” Key said in the speech.

“They can choose to go forward with a strong, stable National-led government,” he said. “Or they can stop and then head backwards with a negative Labour Party that wants to borrow more, spend more, tax more, put more costs on business and push back everyone’s well-earned retirement.”

Year of Disasters

New Zealand is choosing its next leaders after a year blighted by earthquakes, a mining tragedy and its first credit downgrade in 13 years. Key’s government has avoided widespread criticism for its handling of the events and New Zealand’s victory in the Rugby World Cup a week ago remains fresh in the minds of many of the nation’s 4.4 million people.

“National has shown over the last three years that we can deliver strong and stable government in what have been very difficult times,” Key said yesterday.

Goff officially began his campaign last week by saying he would lift the retirement age to 67 from 65 if elected to counter the effect of an aging population on superannuation. New Zealand lost its top credit grades at Standard and Poor’s and Fitch Ratings on Sept. 30 on concern that government and household debt was expanding.

“Things can’t go on as they are,” Goff said in an Oct. 27 statement. “We are not saving enough. We need to do better. We must pay back the debt, save more and live within our means.”

2008 Election

Elections are held every three years in New Zealand. About 2.4 million people voted in 2008, which saw Prime Minister Helen Clark’s Labour-led government removed after nine years in power. About 45 percent of people voted for National that year and 34 percent for Labour.

New Zealand has suffered disasters since September last year, when a magnitude-7 earthquake struck Christchurch, the nation’s second-biggest city. That temblor was followed by a fatal mining disaster, a Feb. 22 quake in Christchurch that killed 181 people and the grounding of a container ship this month that caused the nation’s worst environmental accident.

Key said his government plans to upgrade the nation’s schools, of which 60 percent are over 50 years old, with “quite a number” either leaky or prone to earthquake risks.

The $1 billion in funding will mean an increase of more than 50 percent in the amount spent on school building projects, he said.

“Our goal is to ensure that as much as possible, all schools, whatever their age, can provide the same learning opportunities as new schools,” he said.

Minor Parties

The country’s National-led government is supported by the minority parties Maori, ACT, Mana and United Future. Opposing parties also include Green and Progressive.

New Zealand has had a mixed-member proportional voting system since 1996. Under the system, voters cast two ballots, one for a party and the other for a candidate in their constituency. Seats in parliament are allocated based on the share of the party vote, with members from party lists joining successful constituent candidates to achieve the overall proportion. Parties must get at least 5 percent support or win a constituency to be eligible for parliamentary places.

At this year’s election, a referendum is being held to assess support for the system and gauge the popularity of alternatives. If a majority of voters want change, parliament will decide on whether to conduct a referendum in 2014 to choose between MMP and the most favored alternative.

For news and related information: Stories on New Zealand economy: NZNTGDPC <Index> CN <GO> Most read New Zealand stories: MNI NZ BN <GO> Developed Markets: DMMV <GO>

--With assistance from Tracy Withers in Wellington and Jacob Greber in Sydney. Editor: Paul Tighe, Jim McDonald

To contact the reporter on this story: Chris Bourke in Wellington at cbourke4@bloomberg.net

To contact the editor responsible for this story: Paul Tighe at ptighe@bloomberg.net


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