Days ahead of New Zealand’s election, polls show the governing centre-right National Party and the opposition centre-left Labour Party neck and neck, with neither on course to win enough seats to govern alone.

The outcome of the November 7 election could be decided by smaller parties under the country’s unique electoral system. Here is what you need to know: How does the election work?

New Zealand holds a general election every three years under a mixed-member proportional (MMP) system. Voters cast two ballots: one for a candidate in their local electorate and one for a party.

Winning candidates in each of the country’s 71 electorates take their seats automatically. There are seven electorates reserved for Maori, New Zealand’s Indigenous people. Maori voters can choose to enrol on either the Maori electoral roll or the general roll.

The party vote decides how many seats each party gets overall. About 49 more seats are filled from party lists so that each party’s share of parliament matches its proportional share of the vote.

A party needs either 5 percent of the party vote, or one electorate win, to get a seat. In New Zealand’s 120-seat parliament, a majority usually means 61.

If a party wins more electorates than its share of the party vote entitles it to, it keeps them and extra seats are added to parliament. That happened in 2023, when Te Pati Maori won six of the seven Maori electorates, but had only 3.1 percent of the overall party vote. Because seats in parliament closely track with the party vote, one party rarely wins a majority.

Every government since the MMP system was instituted in 1996 has been a coalition headed by Labour or National, except in 2020, when Labour under then-Prime Minister Jacinda Ardern won big and governed alone.

New Zealand Te Pati Maori co-leader Rawiri Waititi [File: Charlotte Graham-McLay] Who are the two main candidates? Incumbent Prime Minister Christopher Luxon is seeking a second term.

A former Air New Zealand chief executive, he entered parliament in 2020 as the MP for the Auckland seat of Botany and became leader of the National Party a year later.

He led National back to power in 2023, promising better economic management and ending six years of Labour-led government. He now governs in a three-party coalition with New Zealand First and ACT.

But his leadership has come under pressure. He survived two attempted no-confidence votes by National MPs in April and August, the second orchestrated by his own defence minister at the time.

The challenges came as his popularity declined, with rising economic pressure and political tensions within the governing coalition. Labour leader Chris Hipkins, 48, is bidding to return to the top job.

First elected to parliament in 2008, he became prime minister in January 2023 after his predecessor, Ardern, resigned. lost power in an election that October but stayed on to lead Labour in opposition.

Labour Party leader Chris Hipkins poses at his desk in Parliament in Wellington, New Zealand, September 9, 2026 [Hagen Hopkins/Reuters] What are the key issues? Most parties are campaigning on the economy, but their suggested remedies differ widely.

National is pledging to return the budget to surplus through fiscal discipline while expanding the national pension scheme.

Labour is focusing on the cost of living, promising cheaper healthcare and transport. It also plans to invest in jobs, housing and infrastructure, and to strengthen public services.

Smaller parties on both sides are taking aim at power companies and supermarkets. The right-wing populist New Zealand First party wants to break up major electricity companies and split one of the largest supermarket operators in two.

The Greens want a state-owned power company, a publicly owned supermarket chain and tougher rules against excessive grocery prices. They are also calling for a wealth tax and higher taxes on big companies and banks, while cutting income tax for most people. Opportunity, a centrist party, wants a land value tax.

Immigration and voting rights are on the agenda too. ACT wants to deport serious offenders regardless of how long they have lived in New Zealand. New Zealand First is seeking to restrict voting to citizens. Currently, the right to vote also extends to legal residents who have lived in New Zealand for more than 12 months continuously.

New Zealand Green Party co-leader Chloe Swarbrick [File: Charlotte Graham-McLay/AP] Why is there no clear winner?

The real contest is between two rival blocs. National would need both its current coalition partners again, while Labour would depend on the Greens and possibly Opportunity.

Recent polls show no clear winner. A handful of seats either way could decide who governs.

That makes the 5 percent threshold for party participation in parliament crucial. If a smaller party narrowly misses it and also wins no electorate, its votes produce no seats, which could cost its bloc the majority.

Opportunity, for example, must either clear the 5 percent threshold of party votes or win an electorate for its votes to help Labour secure a majority coalition.

The final size of parliament is another unknown. Polls suggest Te Pati Maori may again win more electorates than its share of the party vote entitles it to, adding extra seats.

Each extra seat raises the bar for a majority. If parliament grows to 122 seats, a bloc would need 62 to govern instead of 61.

Opportunity Party leader Qiulae Wong speaks to a member of the public during a campaign event in Auckland, New Zealand, October 17, 2026 [Fiona Goodall/Reuters] Who are the smaller parties?

New Zealand First is led by Winston Peters, who has said he wants the country to leave the Paris climate agreement and the central bank to target employment and inflation.

ACT, led by David Seymour, describes itself as a classical liberal, right-libertarian party. It holds 11 of parliament’s 123 seats.

The Greens, a left-leaning environmental party led jointly by Chloe Swarbrick and Marama Davidson, have made social justice living costs, nature and political funding reform their central themes.

They also want to expand home insulation and offer zero-interest loans for household solar panels and batteries.

Te Pati Maori is co-led by Rawiri Waititi and Debbie Ngarewa-Packer. Its campaign has centred on enrolling more voters on the Maori electoral roll, housing, health, education, environmental protection and constitutional transformation.

Opportunity, founded by economist Gareth Morgan in 2016, has never won a seat in parliament, peaking at 2.6 percent of the vote in 2017.

Its leader, Auckland businesswoman Qiulae Wong, says the party is neither left nor right and is focused on boosting economic growth. Who will be the kingmakers? Smaller parties often end up deciding which of the two main parties governs.

In 2017, although National won 56 seats to Labour’s 46, it could not form a majority. Labour took power instead by forming a coalition with New Zealand First, supported by the Greens.

New Zealand First has played kingmaker for both sides, having also backed National after the 1996 election, the first held under MMP.

Te Pati Maori, now in opposition, has helped the two main parties govern too, supporting National-led governments after the 2008, 2011 and 2014 elections.

The role can secure senior posts in government for the junior parties. Winston Peters secured the role of deputy prime minister in Luxon’s government until May 2025, and ACT’s David Seymour has held the job since mid-2025.

This time, the newest potential kingmaker is Opportunity. If Labour needs its seats to govern, the party would play the role for the first time, a decade after it was founded.