WELLINGTON (Reuters) - Former central bank governor Don Brash appeared on course to upset New Zealand Prime Minister Helen Clark's Labor-led government on Saturday after a hard-fought election campaign. The promise of personal income tax cuts appeared to have swayed New Zealand's 2.9 million voters despite Clark's track record of strong economic growth during her two terms in power stretching back to 1999. With 20 percent of the vote counted, official election figures showed conservative National ahead with 45 percent compared with 36 percent for Labor. Those figures would translate into 57 seats for National in an expanded 122-seat parliament, short of an overall majority but with sufficient center-right minor party partners to form a coalition. Labor was on course for 46 seats. Party officials from both sides said it was still too early to call a definitive result. "It will be a nose-to-nose, head-to-head result between the two major parties," Deputy Prime Minister and Finance Minister Michael Cullen told National Radio.
Volatile opinion polls in the final week of campaigning had pointed to a race that was too close to call. A victory would mark a stunning turnaround for 64-year-old Brash, a political novice who had trailed Clark by as much as 10 percentage points in opinion polls before the budget in May. Clark had warned voters the election was a choice between stable government and the economic gains of the past six years, and the likelihood of increased debt and cuts in social spending under National. But she looked set to lose power even though New Zealand has averaged 4 percent growth over the past five years — the longest period of economic growth in half a century — and unemployment at a near 19-year low. Clark disappointed many voters after the May budget with her promise for only small tax cuts to begin in three years. Brash in contrast campaigned strongly on the promise of tax cuts worth more than NZ$9 billion over three years.