New Zealand premier wins 3rd term

WELLINGTON, New Zealand -- Prime Minister John Key won an emphatic victory Saturday in New Zealand's general election to return for a third term, a result that will be seen as an endorsement of the way his National Party has handled the economy.

"This is a great night. This is a victory for those who kept the faith," Key told a cheering crowd in Auckland. "This is a victory for those who refused to be distracted and who knew that a vote for National was a vote for a brighter future for all New Zealanders."

Key gave credit to his deputy prime minister, Bill English, whom he described as "the best finance minister in the developed world."

With just a small number of special votes remaining to be counted, Key's party ended election night with 48 percent of the vote.

It was a disastrous night for the National Party's closest rival, the Labour Party, which won just 25 percent.

"The truth is, the party vote has returned a National government, and over the coming days and weeks we will need to reflect upon why," Labour Party leader David Cunliffe said in his concession speech. He said he called Key to congratulate him on his victory.

"It is rare for any government to be defeated while surfing an economic rebound with around a 4 percent growth rate, even though the longer-term problems remain to be addressed," Cunliffe said.

Cunliffe didn't address his future plans, but many expect him to resign as Labour leader in the coming months following the defeat.

The election result showed a swing to conservative parties, with the liberal Labour and Green parties losing ground.

Under New Zealand's proportional voting system, parties typically must form coalitions to govern for the three-year terms.

If the results hold, however, it would mean the National Party could govern outright -- something that has not happened for any party since the proportional system was introduced in 1996.

But Key said during his victory speech that his party still intended to form a coalition with other smaller parties, to gain a broader majority and form a stronger government.

Still, the numbers would mean the National Party could pass legislation that doesn't have the support of any other parties.

In the last election three years ago, the National Party won 47 percent of the vote.

Supporters praise how the party has managed New Zealand's economy, which has been growing at a 4 percent clip, with unemployment dropping to 5.6 percent. The government projects it will begin running budget surpluses this financial year, following years of deficits.

Cunliffe had pledged to build tens of thousands of inexpensive homes for first-time buyers to combat a pricey housing market, as well as to raise the minimum wage.

The campaign was marked by a scandal after investigative journalist and liberal activist Nicky Hager published "Dirty Politics," a book that exposed the extent of the National Party's links with a conservative blogger. Justice Minister Judith Collins resigned from her ministerial portfolios after Key said she colluded with the blogger to try to undermine the director of the Serious Fraud Office, whom Collins oversaw.

Meanwhile, a party funded by indicted Internet entrepreneur Kim Dotcom failed to win a parliamentary seat, despite Dotcom pouring more than 3 million New Zealand dollars ($2.44 million) into the campaign. The Internet Mana Party polled strongly initially, but support appeared to evaporate in the lead-up to the election.

"I take full responsibility for this loss tonight, because the brand Kim Dotcom was poison for what we were trying to achieve," Dotcom said in his concession speech. "And I did not see that before, and it only became apparent to me in the last couple of weeks."

Dotcom is fighting attempts by U.S. prosecutors to extradite him on racketeering charges over his now-shuttered website Megaupload, which prosecutors say was used to illegally download enormous numbers of songs and movies. Dotcom says he can't be held responsible for those who chose to use his site for illegal downloads.

German-born Dotcom was not a candidate himself because he's not a New Zealand citizen and therefore not eligible to run.

Should the election night results hold, the National Party would win 61 of Parliament's 121 seats. The Labour Party would win 32, the Green Party 13 and the New Zealand First Party 11. Three other small parties would win the remaining four seats.

The Conservative Party won 4 percent of the vote, but failed to win a seat. That's because it didn't win a single electorate outright or meet the required threshold of 5 percent of the total party vote.