Minister Helen Clark has started negotiations with five minor
political parties to form a new government after her Labour Party's
wafer-thin election victory.
The centre-left Labour Party won 50 seats in the 121-seat parliament in the September 17 election.
Don Brash's centre-right National Party followed with 48 seats and six minor parties shared 23 seats between them.
Clark is planning talks with all of the minor parties, except for the right wing Act Party which has just two seats. She said she was optimistic about being able to form an effective government, her third since she first led the Labour Party to power in 1999.
"I've said previously we will be looking for as inclusive a government as possible.
"I have to put the premium on stability because I think it is in no small part due to the political stability we have had over the last six years that the economy has been able to do much better," she added.
Jim Anderton, the centre-left Progressive Party's sole member of parliament, is certain to join the government in coalition as in the two previous governments. But arrangements with the four other parties could be looser, especially as they span the political spectrum.
On the left are six Green Party MPs and four indigenous Maori Party MPs and from the centre there are seven New Zealand First and three United Future MPs.
One of the main sticking points could be whether the Green Party enters a formal coalition, a move opposed by New Zealand First and United Future.
But Clark said her government had formed effective working relationships previously with the Greens, United Future, New Zealand First and the Progressives.
"What the shape of the governmental and support arrangements will be, I can't say at this time but I think all the parties we are talking with are talking in a good spirit," she said.
Parties that agree to support Labour in crucial parliamentary votes are likely to have some of their policies supported by the government.
Clark said she would be looking to form relationships with minor parties to ensure a stable and durable government.