New Zealand election result stalled as PM Bill English and Opposition's Jacinda Ardern woo minor party

New Zealand election result stalled as PM Bill English and Opposition's Jacinda Ardern woo minor party

New Zealand election result stalled as PM Bill English and Opposition's Jacinda Ardern woo minor party

Updated 25 September 2017, 14:00 AEST

It could be weeks until New Zealand has a new government, after a tight election race between incumbent Prime Minster Bill English's Nationals and Jacinda Ardern's Labour Party.

New Zealand Prime Minister Bill English has said it could take weeks for the country to form a new government after a weekend general election left a nationalist minor party in the role of kingmaker.

Key points:

  • Neither Bill English nor Jacinda Arden has the numbers to govern without support from nationalist minor party NZ First
  • PM yet to begin negotiations, Labour set to reach out "within days"
  • NZ First's Winston Peters criticises immigration boom, wants more currency intervention

The uncertainty around the make-up of the new government weighed on the New Zealand dollar, with the currency down 0.45 per cent at $US0.7306 midmorning, after falling as low as $US0.7290.

The incumbent National Party took 46 per cent of the vote on Saturday, well ahead of the challenging Labour Party's 35.8 per cent, but New Zealand's proportional representation system means neither won enough seats in parliament to govern alone.

The Nationals secured 58 seats ahead of a possible coalition of 52 seats between Labour, which experienced a surge in popularity under new leader Jacinda Ardern, and the Green Party.

That left both still needing NZ First's nine seats to reach the 61 seats required to form a government.

Ms Ardern said she expected to reach out in the next couple of days to NZ First leader Winston Peters.

She said Labour shared values with Mr Peters' party and that they would now have to see if they could form a stable government.

Prime Minister yet to negotiate with NZ First

Mr English said he had not yet spoken to Mr Peters, a veteran maverick politician who has served as a cabinet minister in both previous National and Labour governments, but said it was likely talks would take "two to three weeks".

Mr Peters, an outspoken critic of New Zealand's recent immigration boom, has previously backed the party with the largest number of votes.

While both National and Labour are expected to adhere to fiscal prudence, they will likely differ on monetary policy, trade and immigration.

Some expect Labour's plans to cut migration and renegotiate some trade policies will hurt two key sources of growth for New Zealand's small, open economy.

There is also some concern about what NZ First will demand in return for supporting the winning party.

Mr Peters has lobbied for more currency intervention by the central bank, which would weigh on the Kiwi, the world's 11th-most traded currency.

"We now wait to find out who is going to form a coalition with NZ First and that may take some weeks," said Stuart Ive, dealer at OM Financial.

A final tally of the election results is due on October 7,when "special votes", which will make up 15 per cent of the total and which includes overseas votes, are released.

Mr English remains as prime minister in the interim.

Reuters