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New Zealand PM Key wins third term

Prime Minister John Key has won an emphatic victory in New Zealand's general election to return for a third term in office.

Labour Party leader David Cunliffe said in a concession speech that he called Mr Key to congratulate him on his victory.

The result will be seen as an endorsement of the way Mr Key's National Party has handed the economy.

With most votes counted, Mr Key's party had 48% of the vote. The Labour Party, its closest rival, had 25%.

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

Under New Zealand's proportional voting system, parties typically must form coalitions to govern for the three-year terms. Mr Key has several options for coalition partners.

If the results hold, however, it would mean the National Party could govern outright - something that has never happened since the proportional system was introduced in 1996.

"I'm ecstatic," Mr Key told Television New Zealand as he left to deliver a victory speech. "It's a great night."

Mr Key said that people could see the nation was moving in the right direction and that he was grateful to them.

"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," Mr Cunliffe said.

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

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

Supporters say the National Party has managed New Zealand's economy well, while unemployment has dropped to 5.6%. The government projects it will begin running budget surpluses this financial year following years of deficits.

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

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

Also contesting the election was a party funded by indicted internet entrepreneur Kim Dotcom, who founded the now-shuttered website Megaupload. Mr Dotcom is fighting attempts by US prosecutors to extradite him on racketeering charges over the site, which prosecutors say was used to illegally download enormous numbers of songs and movies. Mr Dotcom says he cannot be held responsible for those who chose to use his site for illegal downloads.

But Dotcom's Internet Mana Party was falling short of getting enough support to enter Parliament, and he conceded on Saturday.

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

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