Ardern creates history with thumping poll win

New Zealand's Prime Minister Jacinda Ardern did not seek the office three years ago. Today, the job is the choice of hers as well as voters, following a resounding reelection victory on Saturday.

Ardern, 40, came to power in 2017, having inherited the Labour Party leadership just two months before the election. Following an unexpected win, the young party leader has since proven herself to be a politician who can connect with the grassroots.

"She didn't want the job-(then Labour leader) Andrew Little had to twist her arm," said James Shaw, co-leader of the Green Party, which supports her administration, in an interview earlier.

Her talent for connecting with others is grounded in her humility, Shaw said. "If you look at some of these other world leaders, it's all about them. For her, it's all about everybody else."

The connection with people and her success in handling the COVID-19 pandemic, including postponing the poll by four weeks after an outbreak in Auckland, won her popular support.

Ardern's return to power on the weekend came after an overwhelming vote of confidence in her leadership. On Sunday morning, Ardern and her Labour Party had won 64 seats in the 120 seat Parliament, with 96 percent of the votes counted.

This means Labour can govern in its own right without having to form a coalition with the minor parties, although some analysts say Ardern may seek a compact with the Greens and the Maori Party.

Outright majority

In New Zealand, a party needs to win 61 parliamentary seats to form a government alone. No party has won an outright majority since the country introduced the electoral system of mixed-member proportional representation in 1996.

Stephen Jacobi, executive director of NZ International Business Forum, described the fact that Ardern has won an outright majority as surprising given the mixed-member proportional representation was designed to deliver coalitions.

Speaking to supporters in Auckland on Saturday night, Ardern said she would seek to govern for all New Zealanders with a focus on rebuilding the post-pandemic economy.

Jacobi said he did not think the result will "unduly" affect New Zealand's relations with China.

"We can expect the incoming government to wish to reestablish connections with the Chinese leadership, including through high level visits when this is possible."

"We can expect the government to continue to seek areas to cooperate with China, including through trade and actions to address climate change."

Jacobi said he expected an upgrade of the New Zealand-China Free Trade Agreement "should proceed as planned".

"We hope the incoming government will look to find ways to work with China where it makes sense to do so, including through Belt and Road and the Southern Link," he said. "We can also expect the government to deal with any differences with China in a diplomatic way but making clear that New Zealand positions are informed by its values and its independent foreign policy."

Rajiv Biswas, Asia Pacific chief economist for the global consultancy IHS Markit, said Ardern's landslide victory reflects the success her center-left government has had in tackling the pandemic.

With the Labour government having been reelected, there will be "broad continuity" of economic policy settings put in place this year to tackle the pandemic, he said.

A key part of these policies is the NZ$50 billion ($33 billion) COVID-19 Response and Recovery Fund, which provides fiscal funding for a broad range of measures in the medium-term.

A significant boost to public spending on infrastructure and a significant boost to infrastructure-related jobs was a key policy pledge by the Labour Party for the election.

"Consequently a major challenge for the Labour government in its second term will be to stabilize the large increase in government debt as a share of GDP caused by the COVID-19 pandemic fiscal stimulus measures," he said.

The New Zealand economy is expected to contract by 5.7 percent year-on-year in 2020, according to the most recent IHS Markit global economic forecast, with only a gradual GDP growth recovery to 2.4 percent next year.