3-Party Gov't Formed; Despite Deal Policy Difference Still Apparent

New Zealand has a new coalition gov't following the agreement announced between incoming PM Christopher Luxon's centre-right National Party, the libertarian ACT, and the populist New Zealand First (NZF) on 24 Nov. As we noted overnight, much market focus will be on the proposed changes to the dual mandate of the RBNZ, with a single mandate of maintaining price stability set to be reinstated.

• The coalition agreement has seen some of the Nationals' major manifestocommitments junkedin order to get NZF on board, namely the plan to reopen the market to foreign property investors with the imposition of taxes on these purchases. The parties have, however, agreed to cuts in personal tax rates.
• Difficulties could become apparent as the gov't gets into budget negotiations. The ACT sits as a small-state, libertarian party favouring major tax and spending cuts, the Nationals as a more conventional conservative party, and NZF as a socially right but economically left-wing party. This could see limits to the extent of cuts in social and welfare spending.
• The coalition agreement sees ACT leader David Seymour serve as deputy PM for the first half of the term, followed by NZF head Winston Peters for the second.
• Peters will also serve as foreign minister. Eastern Daily Press reports: "Peters, [...], said he did not foresee any changes to New Zealand’s current foreign policy on China." In a presser Peters stated that "We expect the Chinese government to treat us the same way, regardless of our size. Size doesn't matter respect does."

Source: Electoral Commission. N.b. Port Waikato seat remains vacant due to death of ACT candidate during campaign and cancellation of vote. By-election takes place 25 Nov, strongly expected that Nationals hold the seat.