Actually, Howard belongs to the Liberal Party. National is a seperate party that they are colalitioned with (since they are in a multiparty parlimentary system, and since one party rarely has a majority, they join up with a 'minor party' to have control over the government [unlike here where we pretty much only have two parties due to our winner take all system, Democrats and Republicans).
As for why it is called Liberal, it is because they were named for 'classical liberalism'. Before our current bred of idiots stole the term and twisted it, classical liberalism is the belief of more freedom, period. Specifically, in terms of capitalism (the original liberals were capitalist). This is also why Japan's conservative party is also, the Liberal party (I think they call themselves Liberal Democrats).
Thanks for the information, it was better to get it from right-minded thinkers than socialist encyclopedia.