ACT PARTY'S DECLINE COULD SPELL NEAR-TERM END OF

UNCLAS WELLINGTON 000042 SIPDIS SIPDIS SENSITIVE STATE FOR EAP/ANP - DAN RICCI E.O. 12985: N/A TAGS: PGOV NZ SUBJECT: ACT PARTY'S DECLINE COULD SPELL NEAR-TERM END OF CENTER-RIGHT POLITICS IN NEW ZEALAND ¶1. (SBU) The expected resignation of the long-serving president of the ACT party could knock the center right out of New Zealand politics, at least over the short term. The president's recent statements suggesting her party should become a think tank instead illustrates the depths to which ACT has sunk since losing all but two of its MPs in September's general elections. ¶2. (SBU) The media is reporting that ACT's president, Catherine Judd, is set to resign. Party Leader Rodney Hide has refused to confirm or deny the resignation, telling reporters they should ask Judd herself. The controversy is yet another jolt to the already wounded party, which was dealt a near mortal blow at the 2005 general election, losing all but two of its nine MPs. Judd's likely resignation also makes clear the tension within the party, which existed well before the election. Members have been divided over whether the party should pursue Hide's populist, scandal-busting approach, or keep faith with the more principled ideological free-market liberal approach on which the party was originally founded. Judd favors the latter, and her impending departure is likely to raise more questions over Hide's leadership. ¶3. (SBU) In the months following the election, Judd has become more willing to openly brood about ACT's future. She has criticized what she regarded as Hide's unwieldy campaign strategy, which she said was focused solely on acquiring his own seat. Incredibly, Judd has floated the idea that the party should reorganize itself into a think tank in order to better achieve its principled objectives, rather than trying to work within the parliamentary system. Judd has enough sway and influence to drive a wedge between those who support the party's parliamentary ambitions and those who might follow her recommendations in order to promote center-right ideas in New Zealand society and cultivate a new generation of candidates and followers. ¶4. (SBU) If Judd's resignation precipitates a division of energies, support and resources for ACT, then center-right politics in New Zealand will be dealt a severe blow. This loss could be magnified if, as predicted, National Party leader Don Brash is replaced with someone who is more disposed to move his party to the center. Burnett