Ahead of New Zealand’s 2017 election, I floated the idea of a grand coalition between National and Labour in a few columns. The circumstances back then made it appealing. The two main parties commanded more than 80 per cent of the vote. A temporary partnership, I argued, could deliver the difficult reforms that no smaller coalition would attempt.
With polls pointing to a very tight outcome in November’s general election, several commentators have now begun making the same case. But the circumstances that made the argument reasonable in 2017 no longer exist today.
National and NZ Labour, for all their partisan theatre, have more in common with each other than either has with its potential smaller partners. So yes, a large majority would free the government from minor-party vetoes and force through the hard changes the country needs. But before accepting that logic, it is worth looking at where the same argument has already been tested.
New Zealand borrowed its electoral system from Germany in the 1990s. The country that exported MMP, its mixed-member proportional system, has also run the grand coalition experiment, three times under Angela Merkel: 2005 to 2009, 2013 to 2017, and 2018 to 2021. Each was presented as a temporary necessity. None proved easy to escape.
The first grand coalition abandoned the market-liberal programme on which Merkel had campaigned. Tax simplification was shelved. Labour market liberalisation stalled. The coalition raised VAT and tinkered with healthcare financing, but the modernisation agenda that had won Merkel the chancellorship was quietly dropped.
Neither partner dared to propose what the other could block, because in a grand coalition a blocked reform reads as shared failure rather than one side’s stand. Why take the risk when your coalition partner shares the blame for doing nothing?
In 2009, voters hungry for real reform handed the Free Democrats, Germany’s liberal party, their best result in history. After four years outside government, they were the only party untainted by the grand coalition’s caution, and that vote bought Germany a four-year reprieve from grand-coalition government.
Merkel drew the wrong conclusion from the Free Democrats’ surge. Rather than reading it as proof that voters wanted a genuine liberal alternative, she took the FDP into coalition and ground down its reformist edge. The tax cuts never came, the reforms stalled, and in 2013 voters punished the FDP rather than the Christian Democrats. The liberals fell out of parliament, and the grand coalition returned. The same logic would soon work on a larger scale.
Germany’s Social Democrats paid a price for the grand coalition first. Squeezed between a chancellor who kept absorbing their ground and a new populist party that accused them of betraying workers, they lost more than a third of their vote between 2005 and 2017. The Christian Democrats held their ground longer, sustained by Merkel’s personal popularity, but when she left their bill came due.
The populist Alternative for Germany, or AfD, founded only in 2013, now leads national polls at around 26 per cent. Their rise was fed by the euro crisis, migration and eastern German alienation. But these factors were compounded by the grand coalitions, which blurred the line between government and opposition. The Christian Democrats and Social Democrats now sit at 24 and 13 per cent, a combined share no longer enough for a majority.
Chancellor Friedrich Merz’s current coalition of the same two parties is weaker still. Merz was the first post-war chancellor to fail the initial parliamentary vote for his own appointment, despite holding a theoretical majority. A grand coalition that once spoke for 70 per cent of the electorate now represents barely a third.
Each grand coalition thus narrows the combined vote of the two major parties by driving the disaffected toward the fringes, and each narrowing makes the next grand coalition appear more necessary, because neither major party can form a majority with anyone else.
Play this game enough times and you arrive in Saxony-Anhalt, an eastern German state where the AfD is polling at 41 per cent ahead of September’s state election. To keep the AfD from governing, the establishment parties may need to assemble a coalition of Christian Democrats, Social Democrats and ex-communists: three parties that agree on almost nothing, united by the sole purpose of excluding the AfD.
Such a coalition would hand the AfD exactly the campaign line it wants for the election after that – and probably an absolute majority in the future.
Now, New Zealand is not Germany. But since 2017, the two major parties’ combined share of the vote has fallen from more than 80 per cent to roughly 65 per cent.
At the 2023 election, parties other than National and Labour, including New Zealand First, the Greens, ACT and Te Pāti Māori, took roughly a third of the vote. A grand coalition formed from this starting point would not begin from 2017’s broad two-party dominance. It would begin with a centre that has already narrowed.
The strongest argument for a grand coalition remains that it would give New Zealand the majority to push through unpopular reforms, from tax design to infrastructure funding to housing. But Germany tested that proposition across three grand coalition terms and a succession of vast parliamentary majorities. The result? Angela Merkel undertook no significant structural reform in any of them.
Australia’s electoral system rules out a grand coalition, but the centrifugal pressures are familiar. The teal movement and the resurgence of Pauline Hanson’s One Nation show what happens when major parties converge on the centre and leave their flanks unguarded. Preferential voting contains the damage in ways MMP does not, but the pattern of neglected constituencies finding new vehicles is the same.
I would not oppose grand coalitions as a matter of principle. On rare occasions, where a specific reform demands a temporary bipartisan majority, they can work.
But the occasion must genuinely be rare, the reform specified in advance, and both parties must commit to returning to normal competition afterward. In Germany, that did not happen.
Having imported its electoral system from Germany, New Zealand has spent three decades learning to live with the consequences.
The temptation now is to import the grand coalition as well, but it only requires a cursory look across the German political landscape to understand the dangers of such a move.
To read the article on The Australian website, click here.