Labour hacks are already blaming the Greens and Te Pāti Māori, both of whom had a very good night, which just shows that the relic status quo party still doesn't understand MMP. As a reminder, electorates don't matter - all that counts is the party vote. And the equation for the left there is that the Greens need to deliver 10%, and Labour 40% (TPM and the wasted vote can fudge these numbers a bit, but that's the basic shape of it). The Greens kept up their end. Labour didn't. This is their loss, and they need to own it, recognise why (I'd start with being a bunch of useless, uninspiring, status quo hacks), and most of all, fix it. But this being the Labour Party, I doubt that will happen. Instead, we'll have three years of them deciding they need to be more centrist and promise even less - and then they'll whine "why does nobody like us?" again.
(That equation above also explains why the Greens are happy: whether they're in government or not is largely up to Labour, so all they can do is deliver their end. They did, plus won a bunch of electorates to build their party's long-term base, and are on-track to have their highest vote ever after the specials. And all after having been in government, breaking the minor-partner curse for the second time. They're also very much playing a long game, but for policy, not power. Its never a good time for a party to be in opposition (and now is a very bad time for the right to be dismantling climate policy) - but its going to happen in a democracy, so its a time to advocate and build. Success or failure will be measured in how far the political consensus shifts towards core green policies in the next three years, not in how many people get ministerial salaries).
I expect the next three years to be vicious, cruel, and stupid - and that's before even considering the divisive effects of ACT's proposed Treaty referendum (which is an invite for social unrest). My hope is that National is forced into the arms of Winston, and then suffers his curse (two out of three governments forced to work with Winston have lost the next election - the exception being Ardern, who was saved by covid). My big worry is that Labour has fucked things up so badly they won't be able to present a credible alternative against even that low bar in three years, and so we'll all suffer the consequences of their uselessness.