New Zealand's Luxon on course for second term, but weaker hand in coalition

New Zealand Prime Minister Christopher Luxon is poised to retain his position as head of a coalition government following the recent election, although his National Party may cede control of key ministries to right-wing coalition partners. Both the centre-right National Party and the main opposition Labour Party received under 30 percent of the vote for the first time in history, losing ground to minor parties across the political spectrum - a trend that analysts attribute to a global shift away from the political establishment.

Preliminary data from the New Zealand Electoral Commission indicates that Luxon's three-party coalition could govern with just a two-seat majority. However, this margin could diminish once overseas and other special votes - comprising one-seventh of the total and typically leaning left - are factored in during the final count on November 27. This potential shift could necessitate the support of a fourth party, the centrist Opportunity, which is poised to enter parliament for the first time.

Westpac's chief economist, Kelly Eckhold, warns that any governing government will struggle to introduce policy and will rely heavily on the goodwill of each individual member of parliament. Luxon will also have to govern without crucial National Party moderates, such as Finance Minister Nicola Willis and Transport Minister Chris Bishop, both of whom lost their seats.

In their absence, Luxon may need to elevate key members from his coalition partners, who have been advocating for more conservative economic and social policies.

New Zealand First desires stricter controls on net migration and insists it must control the country's immigration ministry in any new government. Meanwhile, libertarian ACT Party leader David Seymour stated on Monday that National holding the finance ministry is no longer viable. ACT seeks to reduce government debt through substantial cuts to public spending. As New Zealand First and ACT gain more support, they are gradually pulling the coalition further to the right, according to political commentator Gareth Hughes.

Consensus among analysts is that the decline in support for centre-right and centre-left governments in developed nations mirrors a worldwide trend. In Britain, the left-wing Greens and right-wing Reform UK have gained traction, while Australia has seen the hard-right One Nation rise in some opinion polls. Europe has also witnessed far-right parties in France, Germany, and Austria gaining ground.

Trust in politics is currently at an all-time low, and political leaders must take steps to restore confidence, asserts Opportunity Party leader Qiulae Wong. Wong has stated that she will negotiate with whoever secures the most seats in parliament, making a coalition with Labour unlikely. The inclusion of Opportunity, which advocates for an overhaul of tax policy including an annual NZ$19,400 universal basic income funded by a 1.75 percent annual land tax, could further complicate matters for National.

Regardless of the final coalition configuration, Luxon's position will be precarious, Hughes suggests, as he is unlikely to retain the National Party leadership at the next election.