In October 1990, the National Party again formed the government, for the first of three 3-year terms. In 1996, New Zealand inaugurated a mixed-member proportional (MMP) system to elect its parliament. The system was designed to increase representation of smaller parties in parliament and appears to have done so in the MMP elections to date. Since 1996, neither the National nor the Labour Party has had an absolute majority in parliament, and for all but one of those years, the government has been a minority one. The Labour Party won elections in November 1999 and again in July 2002. In 2002 Labour formed a coalition, minority government with the Progressive Coalition, a left-wing party holding two seats in parliament. The government relied on support from the centrist United Future Party to pass legislation.

Following September 2005 elections, the government has been operating in a caretaker role while awaiting official results due October 1. In preliminary results, Labour narrowly outpolled National 40.7% to 39.6%. With 10% of the vote still outstanding, Labourís victory and the election outcomes of its coalition allies remain unclear. The 2005 elections saw the emergence of the Maori Party, which won four out of the seven reserved Maori seats.