1996 - 1998

New Zealand First exacted many concessions from National, including the abolition of the superannuation surcharge, free medical care for children under six, and dropping the profit models of the public health system. Peters served as Deputy Prime Minister, and held the specially-created office of Treasurer (as in Australia, senior to the Minister of Finance).

Winston Peters served as Deputy Prime Minister

Initially, the coalition relationship worked smoothly although some National MPs resented the policy concessions. The coalition overcame the local effects of the 1997 Asian currency crisis, which seriously affected New Zealand’s Asian export markets. However, behind the scenes Jenny Shipley covertly promised to remove New Zealand First’s influence on National and to remove the policy concessions. She gained enough support to force Bolger’s resignation and replace him (8 December 1997). The tensions between the two parties increased as Peters sought to defend the coalition agreement.