The Governor-General can exercise the Crown's prerogative powers, such as reviewing cases of injustice and making appointments of ministers, ambassadors and other key public officials, and in rare situations, the reserve powers (e.g. the power to dissolve Parliament or refuse the Royal Assent of a bill into law). The powers of the Queen and the Governor-General are limited by constitutional constraints and they cannot normally be exercised without the advice of Cabinet.

The New Zealand Parliament holds legislative power and consists of the Queen and the House of Representatives.It also included an upper house, the Legislative Council, until this was abolished in 1950.

 The supremacy of Parliament, over the Crown and other government institutions, was established in England by the Bill of Rights 1689 and has been ratified as law in New Zealand.The House of Representatives is democratically elected and a Government is formed from the party or coalition with the majority of seats.

 If no majority is formed a minority government can be formed if support from other parties during confidence and supply votes is assured. The Governor-General appoints ministers under advice from the Prime Minister, who is by convention the Parliamentary leader of the governing party or coalition. 

Cabinet, formed by ministers and led by the Prime Minister, is the highest policy-making body in government and responsible for deciding significant government actions. By convention, members of cabinet are bound by collective responsibility to decisions made by cabinet.

Judges and judicial officers are appointed non-politically and under strict rules regarding tenure to help maintain constitutional independence from the government.

 This theoretically allows the judiciary to interpret the law based solely on the legislation enacted by Parliament without other influences on their decisions. The Privy Council in London was the country's final court of appeal until 2004, when it was replaced with the newly established Supreme Court of New Zealand. The judiciary, headed by the Chief Justice, includes the Court of Appeal, the High Court, and subordinate courts.

New Zealand government "Beehive" and the Parliament Buildings (right), in Wellington

Almost all parliamentary general elections between 1853 and 1993 were held under the first-past-the-post voting system.

 The elections since 1930 have been dominated by two political parties, National and Labour.

Since the 1996 election, a form of proportional representation called Mixed Member Proportional (MMP) has been used. Under the MMP system each person has two votes; one is for electoral seats (including some reserved for Māori), and the other is for a party.

 Since the 2005 election, there have been 70 electorate seats (which includes, since the 1996 election, 7 Māori electorates), and the remaining fifty seats are assigned so that representation in parliament reflects the party vote, although a party has to win one electoral seat or 5 percent of the total party vote before it is eligible for these seats.

 Between March 2005 and August 2006 New Zealand became the only country in the world in which all the highest offices in the land (Head of State, Governor-General, Prime Minister, Speaker and Chief Justice) were occupied simultaneously by women.

New Zealand is identified as one of the world's most stable and well-governed nations. As of 2011, the country was ranked fifth in the strength of its democratic institutions and first in government transparency and lack of corruption.

 New Zealand has a high level of civic participation, with 79% voter turnout during the most recent elections, compared to an OECD average of 72%. Furthermore, 67% of New Zealanders say they trust their political institutions, far higher than the OECD average of 56%.