The first MMP election

In 1993 New Zealanders voted in a binding referendum, held alongside that year's general election, to replace first past the post with mixed-member proportional representation (MMP). MMP won 54% of the vote. NZHistory describes the three years before the first MMP election as 'ones of transition and uncertainty'. The main parties tried to reposition themselves for the new system, and new parties emerged. New Zealand First, set up and led by Winston Peters, had broken away from National before the 1993 election, and ACT, formed in 1993 by the former Labour minister Roger Douglas and the former National minister Derek Quigley, began as a party proper in 1994. Electoral rules were overhauled, the boundaries of 60 general and five Māori electorates were finalised in 1995, and the newly established Electoral Commission ran a large publicity campaign to explain the new system.

The election was held on 12 October 1996. Each voter had two votes, one for a local electorate candidate and one for a party, and the 120 seats in Parliament were filled from 65 electorates and 55 party lists. The election-night result was inconclusive. The governing National Party won 34% of the party vote and 44 seats, followed by Labour with 28% and 37 seats, New Zealand First with 13% and 17, the Alliance with 13 seats and ACT with 6% and 8. No other party crossed the 5% threshold for list seats, but United won a single electorate seat. New Zealand First won every Māori electorate, all of which had been dominated by Labour since the Second World War, and its five Māori electorate MPs became known as the 'Tight Five'. With 17 seats, it held what Te Ara calls a 'kingmaker' role: whichever major party it joined would form the government.

In NZHistory's assessment the new Parliament was more diverse and more representative than any before it. NZHistory counts 16 Māori MPs elected, Te Ara 17, and three MPs from Pacific communities were elected, together with New Zealand's first Asian MP and its first openly homosexual MP. The number of women rose from 21 in 1993, 22% of MPs, to 35, or 29%. The jump in Māori representation produced a joke that MMP stood for 'More Māori in Parliament'. As NZHistory notes, this was what the Royal Commission on the Electoral System and pro-MMP campaigners had predicted.

Forming a government took two months of tense negotiation. Many had expected New Zealand First to go with Labour, but on 10 December 1996 Peters chose a coalition with National, keeping Jim Bolger as Prime Minister. The choice surprised many, because Peters had repeatedly attacked National and Bolger during the campaign. It was New Zealand's first coalition government since the early 1930s, and the arrangement took some getting used to. The coalition did not last. National replaced Bolger with Jenny Shipley in 1997, and the coalition collapsed in 1998 when Peters was sacked from Cabinet. A spate of defections followed, known as 'party-hopping', or 'waka-jumping' in the case of Māori MPs, and by 1999 the six-party Parliament elected in 1996 had fractured into 10 parties plus three independent MPs. In the late 1990s opinion polls suggested many people wanted to return to first past the post or try another system.

Over the longer run, coalitions or support arrangements between large and small parties became the normal way of forming a government, with a period of negotiation after each election. In the first eight MMP elections, to 2017, no party won more than half the seats in Parliament, though every government was led by National or Labour. The gap between parties' shares of the votes and of the seats narrowed sharply: Te Ara puts it at 11% under first past the post after the Second World War, and below 3% on average in the six MMP elections to 2011. In NZHistory's reading, MMP did not trigger any significant realignment of the two-party system, and it showed that a new voting system cannot by itself radically alter a nation's political culture.