New government confirmed

Today National Party Leader John Key announced the signing of a formal agreement with the neoconservative ACT Party to allow Key to form a government. Similar deals are expected with the Maori Party and one-man-party United Future. All parties will have ministers outside of cabinet and pledge support on confidence and supply.

So, it looks at this point like National may for the first time lead a stable minority government, after it’s first attempt at a coalition in 1996 spectacularly disintegrated. If so, it’ll be three years before the next election.

The news media continually refer to Key’s arrangement as a “coalition”; technically it’s not, but rather a minority government with support agreements. The difference between the two is that under a coalition, the minor parties are subordinated to the major partner, whereas in this arrangement, as was the case with the departing Labour-led government, the largest party leads government and the minor parties in the agreement pledge to support it, keeping their own identity and their right to disagree with the party leading government, and even to vote against it, except on confidence and supply motions.

To appease ACT, Key will set up “an advisory group to look at ways of closing the income gap with Australia by 2025” and will review government spending. ACT wanted drastic slashing of government spending, even though the country has entered a recession, but will have to settle for reviews instead. Nevertheless, expect to see cuts to government spending in the new budget.

Meanwhile, National is moving to make good on enacting their long-desired 90-day probationary period for new employees, during which an employer can sack a worker without cause (provided they don’t violate the Human Rights Act or engage in breach of contract). This would deny workers the right to allege unfair dismissal. Predictably, business interests strongly back this and unions oppose it. Unions argue that low-skill workers in particular will be vulnerable. However, the bigger concern is that business lobbyists are already arguing for a longer probationary period. No doubt I’ll be commenting more on this when the legislation is actually introduced in Parliament.

So far, Key appears to be maintaining his more moderate centre-right course. But after nine years out of power, conservatives in his own party will be wanting more. We’ll see which side wins.