AS NATIONAL'S SUPPORT SURGES, NZ ELECTIONS TOO

C O N F I D E N T I A L SECTION 01 OF 04 WELLINGTON 000682

SIPDIS

STATE FOR EAP/ANP, EAP/RSP, EAP/EP, INR/EAP
NSC FOR VICTOR CHA AND MICHAEL GREEN
SECDEF FOR OSD/ISA LIZ PHU
PACOM FOR J2/J233/J5/SJFHQ

E.O. 12958: DECL: 09/06/2015
TAGS: PGOV PREL NZ
SUBJECT: AS NATIONAL'S SUPPORT SURGES, NZ ELECTIONS TOO
CLOSE TO CALL

REF: A. WELLINGTON 664

B. WELLINGTON 663

C. WELLINGTON 658

D. WELLINGTON 650

E. WELLINGTON 642

F. WELLINGTON 566

G. WELLINGTON 70

Classified By: Charge D'Affaires David R. Burnett,
for reasons 1.4 (b) and (d)


1. (C) Summary: Just 10 days out from New Zealand's general
elections, the race is too close to call. Recent polling
puts the opposition National Party ahead of the Labour
Government, with one poll showing the spread as much as 8
percentage points in National's favor. National seems to
have suffered no ill effects from a spate of missteps by its
top officials last week, with voters apparently remaining
focused more on the party's tax package, race relations
stance, and other core messages. Labour has been hurt by an
increased perception that PM Clark is arrogant and out of
touch with "mainstream" electorate. The Government has above
all underestimated the feeling of many Kiwis that they are
less well-off these days and will be even less well-off with
the directed spending programs that Labour has thrown up in a
response to National's tax cut proposals. But the spread of
the various poll numbers, together with the large number of
voters who remain undecided, means its still anyone's race.
We predict Labour will increasingly focus its strategy on a
negative campaign: portraying National as having a secret,
rightist agenda; claiming that "American-style" tax cuts will
ruin the nation, and assertions that National leader Don
Brash is an untrustworthy amateur.


2. (C) If National wins more votes than Labour, it still may
not be able to form a government. The most optimistic poll
shows National with just 46% total support, and its potential
coalition partners are thin on the ground. Although support
for most minor parties is relatively low during this
campaign, it is likely that either major party would need at
least some small party support in order to get a majority in
Parliament. The Maori Party has ruled out National as a
partner, Labour already has the support of the Greens and the
Progressives. National has resisted aligning itself with the
conservative ACT party. Don Brash has recently met with
United Future leader Peter Dunne, but Dunne's party is
unlikely to give National the number of seats it would need
to claim a majority. National may benefit from NZ First's
September 7 announcement that it will vote on major issues
with whichever major party gains the most votes. End
Summary.

--------------
NATIONAL ON THE UP AGAIN
--------------


3. (SBU) After a recent down-tick in the polls, the
opposition National Party seems to be back in the lead. A
September 5 Colmar Brunton poll showed the most decisive
swing in National's favor, with support at 46% versus the
Labour Government's 38% (margin of error of 3.2%). Conducted
from August 29 to September 1, the poll showed Brash up four
points as preferred prime minister to 31% and Helen Clark
down five points to 40%. It is particularly significant that
National's bounce follows what was deemed by the media as a
bad week for the party -- leader Don Brash was forced to deny
his environment spokesman's claims that National would allow
logging in national forests, and Brash also got low marks in
the press for claiming he had held back in a recent debate
with PM Clark because she is a woman. Labour Energy Minister
Pete Hodgson dismissed the Colmar Brunton survey as an
erroneous "rogue" poll that does not track with other recent
polls, and indeed Colmar Brunton has in the past been
criticized because it tends to poll more strongly for
National and negatively against the minor parties. But all of
the other recent polls have also put National in the lead,
albeit by a smaller margin.


4. (SBU) Much of National's support has been gained at the
cost of Labour, rather than the minor parties. According to
the latest DigiPol surveys, the two major parties accounted
for 82.4% before the National tax policy release and 81.0%
after the release -- a 1.4 point difference. However,
National was up 3.1 points and Labour down 1.9 points from
August 26 to September 2--a 5.0 point swing.


5. (C) In reftel E, we predicted that National's best shot
at winning would be if its tax policy won over the voters.
The plan, released the following week, seems to have done its
job. In a recent poll, almost one quarter who said they
would support National said the tax cut was the deciding
factor. Another policy that may appeal to voters is
National's reiteration of its view that New Zealand should
end special treatment for Maori and instead address poverty
as a general issue of concern for all. National has also
avoided any appearance of backing the ACT party - the most
conservative party now in Parliament. This probably is
making it harder for Labour to successfully paint National as
having a secret, rightist agenda. National has also done
nothing to court another possible coalition partner, NZ
First, which is the only small party other than the Greens to
currently command more than 5% party support in the polls.
(NB: Under NZ's MMP voting system, parties need to gain one
electorate seat or 5% of the party vote in order to get seats
in Parliament in proportion to the total party votes they
gain.) National and NZ First's coalition in the 1990s ended
up collapsing, and National does not want to remind voters of
this. National's eschewing of a coalition partner is not a
surprise to us, as a senior party strategist told us that a
key objective would be to educate voters at the grass roots
about the importance of the party vote under MMP. The Nat's
goal is clearly to win an overall majority. But MMP was
designed to limit the ability of any one party to dominate
Parliament, and Kiwis seem to like this. It is not at all
clear that voters will give National the majority it would
need to avoid a coalition.

--------------
LABOUR'S MISTAKES
--------------


6. (C) Labour appears to have misjudged -- badly -- the
number of Kiwis who feel they are less well off than they
should be. Ironically, it's the Government's past fiscal
prudence that has created its problems, and its recent moves
to increase spending may have made things worse. The
government's ills first began when its May budget failed to
return any of its large surplus to taxpayers until 2008: the
public was not impressed by Finance Minister Cullen's remarks
that, "Too much jam now is likely to lead to only crumbs
later." When it became apparent that voters were being lured
by National's arguments that the country could well afford to
"spend" some of the surplus on tax cuts, Labour responded
over July and August with a number of new programs. The
first -- to forgive all interest on student loans for those
who remain in New Zealand -- gained the Government the
support of younger voters, but these were most likely to vote
for Labour or their allies the Greens, if they vote at all.
The initiative at the same time may have alienated some of
the lower middle-class supporters who Labour needs to
maintain as its core in order to win next week. One National
party candidate in a Wellington suburb told the Charge that
working class voters in the district were really angered that
their tax money was to go to support "spoiled" students, who
are to get the benefit whether they need it or not.
Similarly, Labour's biggest gambit -- to greatly expand its
"Working for Families" assistance and repackage it as "tax
relief" appears to have missed the mark. Although Kiwis tend
to view anyone with money as "greedy," just who has enough
money is of course open to interpretation. In this case,
Labour's initiative would for example do nothing for a couple
with two children earning NZD 90,000 (about USD 64,000),who,
facing rising housing costs and a relatively high cost of
living, are unlikely to feel wealthy. The plan also ignores
single people and the childless.


7. (C) Labour has also undermined its credibility since,
having insisted just a few months ago that the cupboard was
bare, it is resorting to relative profligacy today. The
Government's claims that it "found" more money in the form of
increased tax revenues does not seem convincing. Those who
had accepted that sacrifices were necessary for the greater
good are left scratching their heads, although at least some
of these continue to believe that Government spending is best
directed to the "neediest." Still others we have spoken to
wonder why the Government did not propose these and other new
programs now on offer before being faced with a close
election.


8. (C) Confronted with National's successes on domestic
policy, Labour has attempted to
a) undermine Don Brash's credibility, and 2) raise fears that
National has a secret, rightist agenda that includes ending
the country's cherished nuclear policies. Neither has proved
very successful to date. Brash is anything but slick, and
has an odd formality about him. Labour's attempts to portray
him as dishonest have backfired. When, for example, Brash
said he had done badly in his most recent debate with PM
Clark because he was a gentleman and didn't like to be too
harsh with women, Labour assumed voters would take umbrage.
Many did, but others wrote approvingly to the papers, noting
that total gender equality is a bad idea. In a strange way,
Brash's inept response showed the man is no liar: anyone good
at hiding the truth would have done a better job of
explaining himself. National has proven more vulnerable on
the nuclear issue, but has stuck to its mantra that it would
not initiate a change absent a national referendum, and only
then if most New Zealanders want such a vote. Some voters
have said that this proves National wants to scrap the policy
-- how else would the issue of having a referendum come to
the fore? But National's firm position, coupled with a
recent foreign policy paper on its website that promises
little change, has not given the opposition much new to draw
on. We also suspect that in elections, New Zealanders are
like most others in the world and will vote on domestic, not
foreign, policy issues.


9. (C) Helen Clark has herself borne some responsibility for
her party's decline in the polls. Always perceived as
somewhat arrogant, she won no favors when she last week
dressed down an Air New Zealand pilot who announced over the
intercom (wrongly, it turns out) that the flight she was to
board was being delayed because she was trying to hire a
charter plane instead. The media gave wide coverage to the
fact it was the pilot's error, but those inclined to think of
Clark as wanting special treatment because of her status
found new grist for the mill. (The incident came on the
heels of the trial of police officers accused of excessive
speeding to get an allegedly unaware Clark to a flight last
summer.) And while some may not care about Clark's demeanor
per se, they may view her arrogance as a reminder of her
party's tendency to back causes such as legalized
prostitution and civil unions, which are favored by fringe
groups and not "mainstream" Kiwis.

--------------
WHAT HAPPENS NOW
--------------


10. (C) It's still anyone's race, though. In addition to
the wide disparity in the polls, as many as 20% of voters
remain undecided on their party vote. Many may make their
decision on election day, or shortly before, and some may not
vote at all. We predict that during this time the race will
begin to look more Presidential, focusing more on Brash and
National vs. Clark and Labour. Clark will continue efforts
to raise doubts about Brash and National's agenda, including
through sideswipes at the United States. This has already
started: the PM said yesterday that U.S. tax cuts were to
blame for Hurricane Katrina, and that cuts were bad for a
nation's ability to maintain its infrastructure. (In
general, since we reported Labour's anti-American tactics and
our response (Wellington 566),the attacks have become less
directed at us and more against National.) But we doubt the
anti-American card will be enough to return Labour to a
comfortable position, as voters will continue to look at
domestic issues to make their decisions. Clark's swipes
about Katrina, for example, are unlikely to be effective
given that her government was widely criticized for its
response to heavy flooding on the North Island last year.
Labour may also try to court the Maori vote, as it will need
all seven Maori seats to win. The Maori Party's incompetence
(Ref B) may help Labour here.


11. (C) The real question will be whether National can
continue to appear dominant in the polls without raising
questions about its ability to form a government. So far,
the role of smaller parties has appeared greatly diminished
this year. This is the first year in recent memory where
Labour and National have differed so much in their policies,
giving voters a clear choice between them. The race between
the majors is also close enough that voters may be more
reluctant to "waste" votes on smaller parties this year. In
addition, the majors have successfully co-opted many of the
issues that traditional belonged to the smaller parties. The
National Party has successfully used the law and order, tax,
and immigration policies of ACT and New Zealand First, and
garnered significant numbers of their constituencies. Labour
has successfully made in-roads on the Greens' student
constituency (notably with its student loan policy),and the
leftist Alliance party has fragmented to near oblivion.


12. (C) Nevertheless, in the past most undecided voters have
ended up voting for smaller parties, and if that remains the
case this time National may lose out. During the campaign,
ACT has been courting National, but the latter has come out
more strongly against helping ACT leader Rodney Hide win an
electorate seat, without which his party is unlikely to
survive. National is wary that aligning itself with ACT's
libertarian platform will cast National as the rightist party
Labour claims it is, and is also reportedly angry at ACT's
campaign tricks to gain National's support. (ACT Leader
Rodney Hide almost literally backed Don Brash into a corner
the other day to secure a handshake, captured by the media.)
Meanwhile, United Future's Peter Dunne has indicated,
following a widely-reported meeting he had with Brash
yesterday, that United and National might campaign together.
But he has also said he will talk about a coalition with
either of the major parties, depending on who gets the most
votes. Although Dunne's electorate seat is safe, assuring
his Party's return to Parliament, United Future is currently
only polling at 2%, which would probably not give National
enough support to form a government without help from at
least one other minor party. National has distance itself
from NZ First, largely in an attempt to avoid reminding
voters about the failure of the 1990s National-NZ Coalition
government. National may, however, benefit from today's
announcement that NZ First will vote on major issues with
whichever major party gains the most votes. Stay tuned.



Burnett