Developing: New Zealand Election Deadlocked

New Zealand's general election is heading for a deadlocked finish, with the ruling National Party and opposition Labour separated by less than a percentage point and a new centrist party poised to decide who forms the next government.

With about 40 per cent of votes counted on Saturday night, Labour led the party vote on 29.88 per cent against National's 29.35 per cent — a gap of roughly 8,000 votes out of more than 1.5 million counted, according to the Electoral Commission's results feed. The Greens were on 14.06 per cent, ACT on 10.54 per cent, New Zealand First on 9.35 per cent, and the centrist Opportunity Party on 5.42 per cent, just above the 5 per cent threshold it needs to enter parliament.

But the seat count tells a different story from the party vote. Because National is leading in 42 of the country's 71 electorates — more seats than its share of the party vote would normally earn it — the incumbent three-party coalition would hold the narrowest possible majority: 66 seats in what is shaping up to be a 131-seat parliament, the largest since New Zealand adopted proportional representation. Labour, the Greens and Te Pāti Māori would hold 58 seats between them, with the Opportunity Party on seven.

Nothing is settled. Three in five votes were still to be counted when those figures were published, the order of the two big parties could change several times before the night is out, and more than 172,000 special votes — cast by overseas voters, late enrolees and people who voted outside their electorate — will not be counted until the official result on November 27.

A one-seat margin built on an overhang

New Zealand elects its parliament under the mixed-member proportional (MMP) system: every voter casts one vote for a local electorate candidate and one for a political party, and the party vote broadly decides how many seats each party gets. When a party wins more electorate seats than its party vote entitles it to, the extra seats are kept as "overhang" seats, and parliament grows beyond its usual 120 seats.

That quirk is doing heavy work tonight. National's 42 electorate leads mean it would take no list MPs at all — every electorate win above its proportional share becomes an overhang seat. Te Pāti Māori, leading in five of the seven Māori electorates while winning only 0.60 per cent of the party vote, adds a second large overhang. Together they push parliament out to 131 seats, so 66 seats are needed to govern.

On the numbers at 9.05pm local time, the governing coalition — National on 42 seats, ACT on 13 and New Zealand First on 11 — would hold exactly 66. Labour would hold 36 seats, the Greens 17 and Te Pāti Māori five, a combined 58. Even with the Opportunity Party's seven seats, a Labour-led bloc would reach only 65.

That is a one-seat margin with most votes still to count, and a single electorate changing hands could tip it either way. Several races are close enough to move the seat maths on their own: in Hutt South, Labour's Ginny Andersen led National's Chris Bishop by 828 votes; in Mt Roskill, National's Carlos Cheung led Labour's Michael Wood by 147; in Hamilton East, National's Ryan Hamilton was 104 votes ahead of Labour's Georgie Dansey.

The kingmaker nobody planned for

The night's biggest story may be the Opportunity Party. At 5.42 per cent it is in parliament — but not by much. If it slips under 5 per cent in the final count, its votes are wasted and its seven seats are shared among the other parties, changing the arithmetic for both blocs.

Opportunity leader Qiulae Wong arrived at the party's election-night headquarters in Auckland to a guard of honour and loud cheering. "It's looking very likely that after a decade, the Opportunity Party is going to make history tonight!" she told supporters.

The party's rise puts National leader Christopher Luxon in an awkward position. He has repeatedly ruled out working with the Opportunity Party, and Wong said on Saturday night that she had not heard from him. But with neither bloc holding enough seats to govern alone, senior National MP Mark Mitchell refused to repeat his leader's pledge on live television, saying only: "We are operating in an MMP environment."

Pollster David Farrar told the NZ Herald's election-night programme that a hung parliament could be the "perfect excuse" for Luxon to talk to the Opportunity Party. "If it's a hung parliament, that's the perfect excuse to say, well, of course we have to talk to them, because no one will thank us for forcing [a hung parliament]."

The Opportunity Party's breakthrough is also a verdict on the two big parties. Both finished the campaign well short of 30 per cent, and voters rallied instead behind the smaller parties — the Greens on 14 per cent, ACT above 10 per cent and New Zealand First above 9 per cent.

A cost-of-living election

The campaign was dominated by a struggling economy and voter disillusionment with the two biggest parties. The election has at times been dubbed the "supermarket election", with grocery prices and supermarket competition a key battleground.

Peter Dunne, a former member of parliament who served as a minister under both National- and Labour-led governments, told Al Jazeera the election was "much more of a cost-of-living election", with voters essentially asking "which of the main blocs is better placed to ease the cost of living burden on New Zealanders".

National pledged to return the budget to surplus through fiscal discipline while expanding the national pension scheme. Labour promised cheaper healthcare and transport. Dunne said both main parties were practically "carbon copies of the other", leaving "a whole rising generation of voters, who want to see a bit more adventure in politics" — and that, he said, was why support had rallied behind the smaller parties.

Nearly 1.67 million people voted before election day, and the early figures are dominated by those advance votes. Polling stations opened at 9am on Saturday and closed at 7pm. The Electoral Commission aims to release preliminary results from 95 per cent of polling stations by the end of election night, with the final result — including special votes — expected by November 27.

What happens next

There is no timeframe for when a government must be formed. If neither bloc can command a majority, weeks of interparty negotiations will follow — and the Opportunity Party, which has said it will talk to the largest party first, will be at the centre of them.

"We could face weeks of interparty negotiations to form a government," Dunne told Al Jazeera. "Parliament has to sit by early January, so there's a real prospect that we could go into Christmas with no clear government in New Zealand."

The count continues through the night, and the preliminary result is expected to firm up by the early hours of Sunday morning local time. The shape of the next government — and whether the incumbent coalition survives by a single seat — will depend on the votes still to be counted, and on the special votes that follow.

Frequently asked questions

What we know

Who is leading? Labour leads the party vote, 29.88 per cent to National's 29.35 per cent, with about 40 per cent of votes counted. But the incumbent coalition would hold a one-seat majority in parliament because of overhang seats.

What is the Opportunity Party? A centrist party polling at 5.42 per cent — just above the threshold to enter parliament. With seven seats, it looks likely to hold the balance of power between the two blocs.

When will the final result be known? The official result, including special votes, is expected by November 27. The preliminary result from 95 per cent of polling stations is due by the end of election night.

What we don't know yet

Who will form the next government? Neither bloc currently has a clear majority, and the final count — plus special votes — could change the seat maths. Coalition talks have not begun.

Will the Opportunity Party survive the final count? It is only 0.42 points above the 5 per cent threshold. If it falls below it, its seats are redistributed and the balance of power changes entirely.

BreakingHour will update this story as the count progresses and the preliminary result firms up.