New Zealand's election hangs in the balance as upstart party clears 5% bar

New Zealand woke up to a genuine nail-biter. With about half of all votes counted, the electoral commission has Christopher Luxon's National Party and Chris Hipkins' Labour running neck-in-neck, and neither is expected to win enough seats to govern alone.

That hands the night to the small players. The upstart centrist Opportunity Party has cleared 5%, the threshold needed to enter parliament without winning an electorate seat. Its leader, former KPMG consultant Qiulae Wong, told a room of supporters that they had voted for unity over division and pledged a kinder, gentler brand of politics, saying she could work with whichever side ends up with the most seats.

The campaign was fought almost entirely on money in people's pockets. The price of basic goods has stayed stubbornly high and unemployment sits at its highest level in more than a decade, with the war in the Middle East and the global fuel shock widely blamed for hammering New Zealand's trade-dependent economy. Luxon bet on three years of no new taxes, while Hipkins promised free doctor's visits and prescriptions and a cap on public transport fares.

Inside the party functions, the mood split neatly in two. Police minister and National MP Mark Mitchell told journalists it was very close and argued his side had governed through a stretch of global geopolitical uncertainty and was doing quite well, while Labour's red-balloon gathering in Upper Hutt near Wellington buzzed with quiet confidence over the seat count. In Auckland, National's crowd cheered as its candidates came out ahead.

David Capie, a professor at Victoria University of Wellington, said fatigue with the two establishment parties is driving Wong's rise, describing the moment as a bit of a blank slate where voters project what they would like to see. Hipkins said on Friday he was sure Labour would exceed expectations.

New Zealand's mixed-member proportional system means voters tick two boxes — a party list and a local electorate MP — which is why the minor parties suddenly matter enormously. A final poll released on Friday put Labour at 30%, just ahead of National, though Luxon said he'd given up on polls and urged voters not to risk a Labour government. Labour would likely need the left-wing Green Party, which has surged to record support on the cost-of-living message, to govern.