Holding together while pulling apart - the changing coalition power dynamics of 2026

Saturday, 6 December 2025

Luke Malpass is politics, business and economics editor.

OPINION: As the parliamentary year edges into its final couple of weeks, Parliament is in a state of fatigue. The long grind of 2025 - politically messy, economically complicated, and internally fractious - has left MPs and ministers alike noticeably worn down.

The Government still has a hefty chunk of legislation it wants to push through before Parliament rises on December 17. Its new resource management system is still to be launched, and the Supreme Court ruling on Uber continues to hang over the Government’s collective head, a reminder that some of the most consequential issues remain unresolved.

The ruminations over leadership within the Government - especially within the National Party - have taken a toll. While those rumblings have died down for the moment, the underlying causes of dissatisfaction remain. National’s precarious polling position does not look like it will shift much in the short term, and the party is grappling with the uncomfortable reality that 2025 has not delivered the political momentum it hoped for.

Inside the Beehive, ministers across all three governing parties believe they have a good story to tell: economic stabilisation, tighter fiscal management, a return to discipline - and of course lower interest rates. But they also believe - often with Christopher Luxon pointed to as the culprit - that the Government simply hasn’t told its story well enough. The sense that the Government is under-communicating and over-complicating its own wins has become a recurring frustration.

Still, there are glimmers of optimism. The economy is beginning to show sustained signs of life, and the Reserve Bank has now signalled that interest rate hikes are likely done. That alone has lifted the mood across the Government. After a tough year of political turbulence and economic headwinds, even a slight shift in public sentiment feels meaningful.

This week - quickly dubbed “Swedish Week” - only added to the incremental sense of momentum. Anna Breman arrived to take up her role as the new Governor of the Reserve Bank, while the long-anticipated Swedish megastore, Ikea, opened its doors in Auckland.

And on Friday, Christopher Luxon broke ground on the new Waikato Medical School. That ceremony effectively locks in the project, ensuring it will move ahead regardless of political change. Labour’s Ayesha Verrall said last weekend Labour is not in the habit of cancelling contracts already under way, even though she remains sceptical of the new school. That suggests the project has likely escaped the pendulum of government. The school is, whatever one’s view, a good thing for doctor training, Hamilton, and the medical sector more broadly.

Add to that the improving weather and the fact that Christmas is now very much on the horizon, and the mood in Wellington feels a shade brighter - even if only imperceptibly. The economic data remains mixed. Early Black Friday sales figures looked underwhelming, but Westpac reports that spending on its credit and debit cards is up 8%. Something, at least, appears to be stirring.

But any sense of seasonal good cheer is tempered by the reality that next year looks even more complicated than this one. The coalition has so far been held together by the trio of signed agreements that guided the Government through 2024 and 2025. Those documents have been its anchor: a stabilising force that kept the legislative programme largely on track.

However, they have also contributed to a certain leaden-footedness in political management. Anything not explicitly set out in the coalition agreements must be negotiated on the fly. In a more traditional arrangement, the largest party - in this case National - would set the political tempo and adjust strategy as needed. But National is not a huge biggest party, and its ability to dominate the political direction of the Government has been constrained accordingly.

That hasn’t gone unnoticed. Much of the internal frustration has been directed toward Luxon, with critics arguing he has not asserted control strongly enough. His defenders counter that the Government is governing in the toughest environment since the 1980s, and that those who dismiss his negotiation skills fundamentally misunderstand how difficult forming and maintaining this coalition has been. Both things can be true at the same time.

If the story of 2025 has been one of coalition management and internal growing pains, the story of 2026 will be something different: intensifying electoral competition. All three governing parties are now competing for overlapping slices of the same voter pool. As the year progresses, that competition will sharpen. More policy differentiation, more public positioning, more carefully staged disagreements are all but inevitable.

Luxon was asked a few weeks ago about the likely increase in public tensions between the coalition partners. He played it down, saying all parties were professional, had signed binding agreements, and would continue to work within them. He is probably right. But a strange dichotomy may emerge: a Government that functions relatively smoothly behind the scenes while appearing increasingly fractious in public.

Luxon has said he plans to announce the election date sometime over summer, and barring any late rethink, most expect a November election. That means the stage will be set early in the new year for the long campaign ahead.

There was a significant development for ACT - and for the broader coalition - this week. Long-time David Seymour confidant and chief of staff Andrew Ketels announced his resignation. Ketels, often seen as inscrutable, with a dry, understated humour, is widely regarded as one of Parliament’s best operators. Alongside Seymour, he helped build ACT from a one-man band into a party of 11 MPs that actually grew its vote last election, despite a campaign many insiders described as disastrous. His departure follows that of another long-term staffer, Stu Wilson, earlier this year. Given ACT’s reputation for being the best-organised and most disciplined party since 2020, these staffing changes are notable.

National, for its part, harbours grumbles about ACT’s puritanism and its eagerness to portray itself as the true policy-driven force on the right while casting National as a blancmange of principle-free non-entities. But even within National there’s acknowledgement that a stable ACT Party is far better than a shaky one.

NZ First, meanwhile, is staying firmly in its own lane. It has multiple policy fronts primed for 2026: a big push on energy, the fast-track process, and revving up the resources sector. Its ongoing war on “woke” will continue unabated.

Both ACT and NZ First have clearly staked out their territory, aiming to hold their vote at a minimum and nibble away at National’s where possible.

The real question is what National plans to do about it. Polling in the low 30s, the party has lost voters to both Labour and its coalition partners. How it intends to expand its share of the centre-right vote remains unclear. If the coalition is returned after the 2026 election, the post-election negotiations would be significantly more complex under the polling patterns currently seen.

For now, the great jostling for position on the right is only beginning - and it will become louder, sharper, and more public in the months to come.