NEW Zealand's new prime minster is planning to take the country on a more liberal path after nine years of rule by conservatives.
Jacinda Ardern, 37, will be the country's youngest prime minister for 150 years after the small New Zealand First party decided to back Ms Ardern's liberal Labour Party.
The outcome of a national election nearly a month ago only became clear yesterday following 26 days of tense negotiations.
Ms Ardern, whose relaxed, personal manner has been compared to other young, charismatic leaders such as President Emmanuel Macron in France and Prime Minister Justin Trudeau in Canada, only heard the news of Mr Peters' support while watching his press conference on television.
Speaking to reporters after the coalition deal was announced, Ms Ardern said: "I feel extraordinarily honoured and privileged to be in the position to form a government with Labour at the lead.
“This is an exciting day. We aspire to be a government for all New Zealanders and one that will seize the opportunity to build a fairer, better New Zealand.
“We will work hard to ensure New Zealand is once again a world leader, a country we can all be proud of. We said we could do this, we will do this.”
She said the government would work hard to deliver on its campaign promises, including looking after the environment and the country's most vulnerable people.
She said New Zealand First would have four cabinet positions and one parliamentary under-secretary post but full details of the cabinet would be revealed in the coming days.
New Zealand First leader Winston Peters, 72, announced at a press conference which party he was backing.
He had not told the leaders of the Labour party or the National party beforehand, adding that his party's choice was between "a modified status quo" with the incumbent conservatives or an option for change.
The liberal Green Party will support the coalition but will not be a part of the government's policy-setting cabinet. The Green Party still has to ratify the deal but its leader, James Shaw, said he is confident that will happen.
Outgoing prime minister Bill English, who appeared emotional, said he was disappointed but felt he had left New Zealand in good shape and that the country has plenty of opportunities ahead.
Asked how he rated Ms Ardern, he noted her rapid rise.
"That's a fairly remarkable performance given that just 10 or 12 weeks ago she was the deputy leader of a failing opposition."
New Zealanders have been waiting since the September 23 election to find out who will govern after the voting ended without a clear winner.
New Zealand's currency fell by about 2 per cent as the result became clear.
The policies of New Zealand First are nationalistic and eclectic. Mr Peters wants to drastically reduce immigration and stop foreigners from buying farms. He opposed plans by Mr English's National Party to increase the pension age and plans by Labour to tax certain water users.
New Zealand First is expected to extract policy concessions and win some ministerial posts by joining the Labour coalition.
Ms Ardern said Mr Peters was considering whether to accept the role of deputy prime minister, which she had offered him.
Mr Peters said in his announcement that his party's perception of how capitalism needs to change influenced its decision.
"Far too many New Zealanders have come to view today's capitalism not as their friend but as their foe, and they are not all wrong," he said. "That is why we believe that capitalism must regain its responsible, human face."
In his election campaign, Mr English, who became prime minister in 2016 when his predecessor John Key unexpectedly resigned, said his party had grown the economy and produced increasing budget surpluses which benefited the nation.
Ms Ardern said she wants to build thousands of affordable homes to combat runaway house prices, spend more on health care and education, and clean up polluted waterways.
The new prime minister, the third woman in the post, has been involved in left-wing politics since her teens - including spending time in the UK as policy adviser to Tony Blair.
She first entered parliament in 2008, at the age of 28 and only took over the Labour leadership on July 31 this year.
Brought up a Mormon, she left the faith over its opposition to same-sex marriage and she has been outspoken on feminism and mental health issues.
Under New Zealand's proportional voting system, larger parties must typically form alliances with smaller parties to govern.
A government needs at least 61 seats to hold a majority in the 120-seat parliament. National won 56 seats, Labour won 46, New Zealand First won nine and the Green Party won eight.
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