So, just days after denouncing a potential Labour-led coalition as a "five-headed monster", National's John Key has got an extra head of his own in the form of Peter Dunne. It's not unexpected - Dunne has always swung to the right, and last election was busy cosying up to the radical and racist Don Brash, before ultimately siding with Labour in order to shaft the Greens - but it does somewhat undermine Key's scare-talk. It's a fact under MMP that no party gets to govern alone; some form of coalition arrangement will be necessary no matter who is in government, and given the increasingly loose nature of those arrangements, there will also be constant negotiations over legislation in order to secure a majority. The question of coalitions then is not "will there be one" but "what agenda will it pursue" and "will it work". And whichever way you look at it, those questions favour Labour.
National does not like the idea of coalitions. It does not like the idea of compromise. While Jim Bolger was able to maintain a deal with Winston Peters over a bottle of whiskey, and Jenny Shipley displayed remarkable coalition management skills in holding her government together at the end of its term, in opposition they have returned to the arrogant born-to-rule prick attitude of yesteryear. National thinks it should be government, and that it should be allowed to do what it wants. The role of minor parties in such an arrangement is to shut up and vote the way they are told, regardless of their own policies or objections. In opposition, particularly in the last Parliamentary term, this attitude has seen opportunities to form temporary coalitions to defeat or amend government legislation go begging, as National has arrogantly demanded other parties obey them while offering nothing in return.
National's preferred coalition partners are United Future and ACT. On current polling, they may need to add the Maori Party to that mix to gain a majority on confidence and supply. While Peter Dunne isn't scary, ACT certainly are, particularly with Roger Douglas at number three on their list, so that arrangement might not look so good to the public. More importantly, it is difficult to see how National will be able to accommodate the desires of ACT (and its own internal neoliberal faction) when it needs the votes of the Maori Party to do so. The Maori Party are unlikely to promise blanket support to government legislation - they are not going to sign up to be a doormat - instead deciding issue by issue as they do now. And as many of National's policies fail the Maori Party's test of "is it good for Maori", National would not be able to enact much of its policy programme. The same applies in reverse to ACT: policies likely to meet the approval of the Maori Party are unlikely to be approved by them.
Labour would likely need a broader coalition of the Progressives, Greens, Maori Party and perhaps NZ First (if they get in) to govern. But while its a larger number of parties, there is also a far greater level of policy agreement among them. All oppose privatisation. All support a higher minimum wage. All generally favour public services over private enterprise. All take the side of the many against the few. In short, those heads are all generally looking in the same direction. There are a few areas of strong policy disagreement - NZ First on law and order, the Greens on GE - but none of these is a dealbreaker. And Helen Clark has already shown that she can manage differences and find common ground between disparate partners in order to advance her policy agenda.
Under MMP, we elect a Parliament rather than a government, so we don't get to directly choose which of these arrangements we want. But of the two, the latter is likely to be both more agreeable to the NZ public, and more stable. The most likely outcome of a National-led coalition will be a (very) early election, either due to a failure to manage coalition differences, or as part of a deliberate two-election strategy to dispense with its partners and rule with an absolute majority. You might want to consider that when voting.