Game theory and NZ Coalition Politics : Agenda Setters, Co-operation, Triumph and Suckers


This week’s allocation of up to $30million of the Provincial Development Fund for the creation of all-weather horse racing tracks, gave effect to coalition agreement between Labour and New Zealand First and tripled funding initially announced earlier this year. This adds to the Budget’s tax breaks of about $4.8million to horse breeders.

This funding to the ‘sport of kings’, an elitist, gambling based industry, which exploits animals, is unjust on many counts. There are conflicts of interest in every corner – Winston Peters and NZ First received electoral donations from the racing industry which they are now rewarding with tax breaks and subsidies for facilities. The head of the Provincial Development Fund (PDF) advisory committee is Rodger Finlay who is also a director of the Thoroughbred Racing Industry. Teachers and nurses struggle for decent wages but horse racing gets largesse through an obscure process without having to justify costs and returns on investment. It’s obvious the money for horse racing could be better spent elsewhere. As Frank Macskasy said in The Daily Blog in January when $10 million for this sector was first announced, the money should be going into putting roofs over peoples’ heads, not over race tracks.

But the allocation of these funds shows again the disproportionate money and power accorded to New Zealand First (NZF), especially relative to the Greens, arising from the Labour / NZF coalition deal. New Zealand First got only 25,000 or 1% more of the vote than the Greens, in last year’s election. But in the budget alone, NZF gained concessions of about $3billion compared with the Greens’ $610million.

James Shaw, co-leader of the Greens says they’re not disappointed to get a much smaller share than NZF. “It’s about power too”. There’s the proposed check-out bag ban, the Climate Change Committee, public transport and walking and cycling gains. But the Greens are definitely poorer in the power stakes than NZ First – not just in what has been given, but in what’s been withheld. NZ First appear to have a veto on matters of significance and symbolics. NZ First has won on matters of principle: $2.3 billion for new military planes shows a victory for the hawks over the doves. The Kermadec Ocean Sanctuary has stalled in favour of NZ First’s desire to maintain fishing there – meaning it would be no real sanctuary at all. Labour’s apparent commitment to no new mining on Conservation land, a policy shared with the Greens, has been undermined by Shane Jones’ claim that mining is essential to the West Coast economy and won’t be supported by his party. The 90 day hire and fire employment provisions still apply for small businesses because of NZ First vetoes. The waka jumping bill is another dead rat for the Greens to swallow in the interests of ‘Government stability’.

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There’s no doubt, despite the marginal difference in votes, NZ First hold much more power than the Greens, and also exert disproportionate influence on the government agenda, with coalition agreement specifics, budget demands and seats at the Cabinet table allowing NZ First to call many shots.
None of that should be surprising though, when you use Game theory to look at NZ coalition politics. Game theory applies mathematical calculations to strategic decision making between theoretically rational participants. In zero-sum games, one ‘player’s’ gains come at the cost to other participants. ‘Nested games’ and ‘the Prisoner’s Dilemma’ are other ways of understanding the permutations, benefits, losses and trade-offs of players strategic decision making. These theories are often applied to coalition politics because of the clear strategic ‘game playing’ involved in forming and maintaining a coalition and in striking subsequent agreements.

In Game theory, participants have choice to co-operate or betray (or defect), and often, co-operation is the best strategy. In a classic description, participants can increase their power by forming a coalition, but in the Prisoner’s Dilemma, a subset of players (voters, represented by a party) can increase their own power while decreasing the average voting power of the electorate as a whole. Note the power given to NZF through this Government’s coalition agreement; the relative decrease in power given the similar vote of the Greens, and decreased power of the simple majority of voters for National.
Most coalition governments will form with the minimum number of parties required. After the last election, Labour and NZF were able to get over the line but required the Green Party votes on Confidence and Supply. In unstable coalitions (which could include our own where NZ First and the Greens are at opposite ends of the political spectrum) where party interests are disparate, the agenda setter has a key role in limiting alternatives available to the group. And this is a role that’s being well exercised by NZ First, both in specifying expectations in the formal Coalition Agreement, and in its veto on a policy by policy basis. What NZ First doesn’t like, seems unlikely to go ahead. Noting though that the ban on new marine oil and gas exploration may be the exception.

In ‘Nested games’, payoffs vary according to the specific forces operating between coalition partners. But each party still has options to co-operate or defect. A party benefits most when it follows its own partisan interests (theoretical triumph) while the other parties follow the interests of the coalition (the theoretical sucker). Indeed NZF successfully keeps its own interests to the fore, which, in the long game, the Greens fail to do – disappointing its voters and at risk of becoming redundant (the theoretical penalty) as has befallen small parties in NZ in similar conditions before it.

By applying Game theory, Nested games and the Prisoner’s Dilemma to current NZ politics, we can see that NZ First is playing the sharpest game; it’s triumphant in many policy and funding allocations. Meanwhile the Greens celebrate relatively small wins, with no real incentive to defect, playing the sucker in Labour and New Zealand First’s game.


  1. Well, it has the appearance of a game. But the nature of, or true essence of a monolithic agenda which is only viewed one side at a time.

  2. Christine;

    I follow your posts that are usually of the highest order.

    Let me declare my hand now, that I did vote NZF at last election.

    But please let me put some balance to some of your points.

    First and foremost, Labour would never have been the Government if
    not for NZF. The Greens are not in Government, ie in Cabinet.

    “This funding to the ‘sport of kings’, an elitist, gambling based industry, which exploits animals, is unjust on many counts.”

    – NZ breeds some of the top thoroughbreds in the world earning many $ millions for NZ.
    Hence tax breaks for breeders because…….

    – NZ is the very poor cousin to the industry in Australia and both major parties have always neglected this area.
    Even newspaper coverage compared to other sports now.

    – Thoroughbreds are highly strung animals and most just love to race.
    Ask any trainer, they love it and those that don’t will not make it to the racetrack,
    or not for very long.

    – Because of heavy rains now, many racing clubs are in further trouble due to
    numerous cancellations of events. All weather tracks are the norm overseas.

    – Electoral donations from different industry has always been the norm world wide.

    “$2.3 billion for new military planes shows a victory for the hawks over the doves.”

    -I think you would find any Government would be pressured to update the military
    due to our ‘partners’ overseas.

    “The Kermadec Ocean Sanctuary has stalled in favour of NZ First’s desire to maintain fishing there – meaning it would be no real sanctuary at all.”

    – It’s my understanding that this is to do with Maori fishing rights under the Treaty.

    “Shane Jones’ claim that mining is essential to the West Coast economy and won’t be supported by his party.”

    – Again, we see the problems of Provincial NZ have been ignored by both major parties.
    Have a look at “Agenda 21” (Now Agenda 30) NZ has signed up to through the UN.

    In it you will find a desire to clear all populous from the countryside and force the
    move to what would become Mega-cities. Thank God for NZF.!

    “The 90 day hire and fire employment provisions still apply for small businesses because of NZ First vetoes.”

    – To me, this is an overblown issue. I worked for many years in the Public Service.
    First in Broadcasting and 2nd Department of Agriculture.
    Both and all Public Service have what is called a 3 month Probationary Period.
    This is for the benefit of both yourself and the employer.
    Ie, you might not like the job or you may be deemed not suitable.
    (Reason given of course)
    Or for significant misbehavior like a criminal conviction.

    In other words, I believe, ALL employment should have a Trial Period of 3 months.

    “The waka jumping bill is another dead rat for the Greens to swallow in the interests of ‘Government stability’.

    Surely Christine, this is just plain common sense.
    You vote for the party not the person don’t you?

    And finally;

    “Indeed NZF successfully keeps its own interests to the fore,”
    Should read NZ’s interests to the fore,”

    Over the last 35-40ys BOTH MAJOR PARTIES have NOT governed
    in the peoples interest. Most agree – look at the state of things.

    We should all thank our ‘lucky stars’ that NZF is in Government.
    It’s what their name implies.

    AND we should ALL be thankful that the Greens are NOT.!!

    They would have us all ‘Carbon Taxed into bankruptcy’ and
    living in rabbit hutches in the blink of an eye.!!

    In regards to the above, I sincerely believe that we all should be
    voting NZF to break the monopoly of the major parties and the
    STATUS QUO. Both controlled by the same offshore masters.

    Labour and Jacinda Adern?

    A “Wolf in Sheeps Clothing” if I have ever seen one.!!

    Read this in full to understand;


    • Hi Iain,
      Thanks for your feedback and for reading my blogs.
      Some responses to your comments:
      I note, naturally, that NZF is outside cabinet, and that we wouldn’t have had the (nominally left) Government we have, without NZF’s agreement. It’s commendable that they made the choice to go with Labour into coalition, but the trade offs and benefits in this are what makes Game theory so interesting.
      Re: horse racing – despite your explanations, it seems like picking business winners to me (a gamble to continue the racing pun), but a classic case of socialising the costs and privatising the benefits. I can’t see any reason why horse racing should have its own Minister or be a special case for tax breaks or PDF funding over any other sector.
      Spending billions on military planes to please our overseas (masters?) sounds like an erosion of sovereignty, but whatever the reason doesn’t change the fact that the hawks have won in policy decisions, over the doves.
      I think saying the west coast is impoverished is a simplification and still doesn’t justify mining on conservation land. I remember through the years, west coasters saying felling native forests would cripple them economically, yet tourism seems to do more for the buoyancy of the area than felling ever did. And even if mining is required to prop up the region, that doesn’t mean it should be on conservation land. Population loss of provinces to the cities has many causes – both push and pull – opportunities and pressures, not just (alleged) relative joblessness.
      Re: the waka jumping bill – no, I vote not for the party nor for the politician necessarily, but for the ideology and policies and if the party goes against these reasons I voted for them, then good on any MP who maintains their integrity and leaves. I think of course about Jim Anderton when Labour betrayed its left wing MPs and its voters. And also Winston himself, leaving the National Party, or Tariana Turia leaving Labour. I’d expect them to do so – and to be able to. Bryce Edwards has written well on this.
      I guess we differ on what is in NZF’s interests and in what is in NZ’s interests.
      But none of that challenges the use of Game theory to understand the political dynamics and benefits of strategic negotiating, which Winston has shown he’s a master at.
      Thanks again for the feedback.

  3. ‘Game Theory’ is for Bitcoin. I’m more concerned with good governance for my fellow citizens .. I’m giving Labour, NZFirst and the Greens a chance.

    So far they’re doing alright for a government finding its feet. I don’t want to be overly critical – they’re doing better than National did in 9 years .. though I suggest they legalize cannabis ASAP, or they’ll come unstuck at the next general election.

    They were foolish by not preparing more for government while in opposition, but hey, they’re better than National~!!

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