Rainbow Labour is part of the New Zealand Labour Party. It started as a branch in Chris Carter's Auckland Waipareira electorate in 1997, just after Chris Carter had been narrowly defeated in the election the previous year. At about the same time, Tim Barnett, newly elected to Parliament as an openly gay man, started a Rainbow branch in Christchurch. During the next few years the branches expanded in size, with the Auckland branch becoming one of the largest in the Labour Party. This led to the formation of a Rainbow "Sector Council" within the Labour Party, which gave the branches a nationwide focus and co-ordinating body. In 2004, at a vote at the Party's Annual Conference, Rainbow Labour was invited to nominate candidates for a representative position on the Party's controlling body, the New Zealand Council.

"Rainbow" Members of Parliament (MPs) work closely with the Rainbow Labour Sector Council, and include gay men Chris Carter, Tim Barnett, and lesbian MP Maryan Street, and until she resigned in 2007, transsexual MP Georgina Beyer. During 2006 Charles Chauvel became an MP when a vacancy arose; similarly Louisa Wall entered Parliament in 2008 following a resignation.

Issues Rainbow Labour has advanced within the Labour Party have included relationship property reform, human rights reforms, and the Civil Union Act, which was passed in 2004. In the 1999, 2002, and 2005 elections, the Labour Party published pamphlets advertising "Labour's Gay Lesbian and Transgender candidates". This is thought to be a world first by a mainstream national political party.

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