(Updates with voting closed in eighth paragraph.)
Nov. 26 (Bloomberg) -- New Zealand voted today in an election that polls show will hand Prime Minister John Key a second term and the task of steering a recovery from the worst natural disaster in 80 years amid global economic turmoil.
Key’s National party held an average 24-point lead over the main opposition Labour Party in five opinion polls published in the past week. The surveys show the 50-year-old multimillionaire and former foreign exchange head at Merrill Lynch & Co. could become the first party leader to capture more than half the votes cast in a New Zealand election since 1951.
Since winning the 2008 election, Key has managed the economy through a global financial crisis and the Feb. 22 earthquake, which devastated the Christchurch business district and killed 181 people. Key’s National party has pledged to sell state assets and overhaul welfare to eliminate a fiscal shortfall, while the Labour party led by Phil Goff plans to raise taxes on capital gains and high income earners to erase a record NZ$18.4 billion ($13.6 billion) deficit.
Key has had “considerable challenges thrown at him domestically as well as offshore and he still seems to have the air of competence and being in control,” said Annette Beacher, Singapore-based head of Asia-Pacific research at TD Securities. In the next term, New Zealand must “recommit to a surplus and reiterate they are going to contain debt by asset sales,” she said.
New Zealand lost its top credit grades at Standard & Poor’s and Fitch Ratings in September, with both citing concern that government and household debt was too high. Still, New Zealand stocks have outperformed in the region, with the NZX 50 Index down 2.9 percent this year compared with the MSCI Asia Pacific Index’s 21 percent drop.
The New Zealand dollar peaked at a record high in August, above 88 cents against the U.S. dollar. It traded at 74.05 cents in late New York trading yesterday.
Voting in New Zealand isn’t compulsory, with about 79 percent of the electorate -- some 2.4 million voters -- participating in 2008.
Polling ended at 7 p.m. local time at about 2,700 stations across the country. More than 50 percent of the stations are expected to report results by 10 p.m., the Electoral Commission said on its website.
Opinion surveys predict Key will better the 45 percent support he won in the 2008 election, when he ended nine years of Labour government. The National party won 54 percent of the vote in 1951.
National had 50.9 percent support in a DigiPoll of 850 people conducted Nov. 17-23 for the New Zealand Herald newspaper. The survey had a margin of error of 3.6 percentage points. In a poll for TV3 News, National had 50.8 percent support. The survey of 1,000 voters was conducted Nov. 16-23 and had a margin of error of 3.1 percentage points.
In a non-binding referendum alongside today’s election, voters are being asked to retain or change the mixed member proportional system. In a second question, they will be asked to choose between four alternatives.
If at least half of the voters opt to keep the MMP system, the government has committed to a review in 2012 to address its functionality. If a majority wants a change, parliament will decide if there is to be another referendum in 2014 to choose between the MMP and the most-favored alternative in today’s vote.
Key has criticized the MMP system used since 1996, indicating that he’ll vote against it. Under the current system, Key will have to form a coalition if he doesn’t win more than 50 percent of the vote, as happened in 2008 when he assembled a government with support from the ACT party, the Maori party and the one-seat United Future party. In the last election, National won 58 seats in the 123-seat parliament.
Labour leader Goff, 58, could form a government by cobbling together a coalition with support from the Green, New Zealand First and Maori parties, if ACT and United Future, Key’s likely allies, don’t win enough votes to stay in parliament.
Under the MMP, New Zealanders cast two ballots, one for a party and the other for a candidate in their constituency. There are 63 general constituencies and seven special constituencies reserved for native Maori voters. Parliament is comprised of the constituency winners plus a list of party members who are determined by the percentage of the vote their party receives. Parties need to garner five percent of the vote or win a constituency to get into parliament.
The Christchurch earthquake and a temblor in September last year that didn’t cause any fatalities damped consumer spending in the country’s second-biggest city, and New Zealand faces a NZ$20 billion reconstruction bill. While the Treasury Department forecasts annual average growth of 2.3 percent in the year ending in March, the central bank has said the country may not be immune to a worsening of the European debt crisis.
If Key wins he will face some tough choices, said Philip Borkin, an economist at Goldman Sachs New Zealand Ltd. in Auckland.
The global economic outlook means surpluses “will be a difficult task to achieve,” Borkin said. The situation will require “some potentially difficult and unpopular decisions to be made.”
For news and related information: Stories on John Key: NSE JOHN KEY ZEALAND <GO> Most read New Zealand stories: MNI NZ BN <GO> Reports on New Zealand elections: TNI NZ ELECT <GO> Top New Zealand stories TOPZ <GO>
--Editors: Patrick Harrington, Chris Bourke
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