<i>Can John Key find his compass? </i>

01:43, Jan 31 2009

"A friend in the money sector says the popular consensus among the traders and bankers is that John Key has a superb set of antennae but no compass."

The new prime minister is demonstrating in spades the first part of this insight into his character quoted by David Slack, the blogger, during the 2005 election campaign.

His antenna picked up voters' desire for a change of leadership but not much change of policy. So he shed many traditional National policies and turned his party into Labour Lite while promising to run things better.

He also picked up voters' desire for a change in political culture. So he rejected Winston Peters and embraced Act, United Future and the Maori Party. To do so, he moved with an unprecedented speed he might yet regret. He reached support agreements with three minor parties in eight days while Helen Clark took 32 days after the 2005 election.

To achieve that, he kept pacts simple. The Maori Party pact is about relationships and sweeping reviews of constitutional and contentious issues such as Maori seats and foreshore and seabed legislation rather than about hard, measurable goals.

He also kept it simple with Act. He slapped down the silly stuff such as the party's push for Roger Douglas to be finance minister. Then he said "yes" to much of the rest of Act's agenda.

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Through all this, the new prime minister has demonstrated a highly unusual political strategy. During the election campaign, he and his party under-promised. Their policy offerings were skimpy with no hint of the bigger ambitions that lay behind them. Key seemed affable rather than driven.

But since winning the election, he and his colleagues have demonstrated far greater energy, boldness and confidence than they ever did in opposition or on the campaign trail.

As a result, they have raised expectations of a truly transformative government enormously. This is very odd. Normally, politicians over-promise to get themselves elected then back-pedal as subtly as they can to more realistic positions. It's doubly odd because these economic times should be making new leaders more cautious, not less, in their stated goals.

Optimists will hope National achieves most it says it wants to do. Who would not want these promises made this week:

* A co-operative political environment in which Act lays down with the Maori Party and mutual respect and enlightened constitutional reform bloom, all brokered by National.

* An ambitious economic transformation through which New Zealand achieves wage parity with Australia by 2025. When such a welcome day comes, we will recruit police officers from Western Australia, rather than vice versa as happened this past week. And expats will return at the rate of at least one jumbo jet load per week.

* An effective climate change policy backed by a rock-solid consensus of farmers, industrialists, consumers and environmentalists.

Realists will worry, though, that such a desirable remaking of the centre of New Zealand politics will take a government and support parties of extraordinary talent, vision, co-operation and perseverance. More importantly, they will take a prime minister with an unwavering compass that will lead him and the nation through the political thickets he has chosen to enter.

Many, many issues over the next three years will test those qualities of prime minister and government. The first week alone has thrown up a raft of them. Here are three of the big ones:

* Rodney Hide: The new minister of local government has radical views. He and his party want to reduce the range of council activities massively, privatise many services and drastically cut rates. But that's not what National wants, at least according to campaign promises. Nor is it what most National supporters voted for.

In the same vein, Hide will bring to his other roles in government a fierce determination to slash spending and regulation.

Yet, so far in his political career he has demonstrated only a talent for headline grabbing activities such as perk busting. He has yet to show he can buckle down to the tedious, thoughtful and often publicly unrewarding work of government.

Hide has refused to comment on how he will reconcile these conflicts. But he is a loser either way: reneging on his cherished campaign principles or picking fights with National.

It is unfortunate that National has put Act and itself in this position. And it didn't need to. It got 45.5% of the party vote and Act 3.7%.

* Wage parity with Australia by 2025: Achieving it would give us a similar GDP per capita as Australia. Australia is 10th in the OECD on that measure and we're 24th. So if National reaches its goal it will have vaulted New Zealand into the top half of the OECD. That's the same commitment Labour rashly made and then National hounded them unmercifully for failing to make much progress.

Of course wage parity is a very laudable goal. But this is how big the challenge is. The wage gap now is about 35%. While we're catching up, Australia will be growing its wages at say 4% a year, leading to a near-doubling of their wages by 2025. So we'll need to grow our wages by, say 135%. What strategy does your company have for more than doubling your employees' pay over that period? Will more roads, less regulation, lower taxes, fibre optic cable to the home and all the other elements of the new government's economic strategy do the job for you? Or do you sense the government's strategy and yours are missing something?

* Climate change: Thanks to Act, National has shelved the Emissions Trading Scheme pending a select committee review. Potentially, the MPs could go right back to first principles on climate change science. At a minimum, all carbon reduction mechanisms are back on the table including a carbon tax.

This is not what National promised in the campaign. It said the ETS would start but be quickly amended. This would have allowed forest owners to start developing and selling credits. No wonder they are furious about the U-turn and about the cancellation of imminent new investment in forests. They and the rest of the economy now have to live with massive uncertainty created by the government.

The government says it still hopes to complete the review and get amended mechanisms in place by September so carbon can be priced into electricity generation from January 2010, as planned. But this is optimistic. The government will be besieged by lobbyists seeking to relitigate every single aspect of the legislation.

So once again short-term politics have killed a sensible response to climate change. No wonder our greenhouse gas emissions rose 25.7% from 1990 to 2006, the sixth biggest increase among developed countries, the UN reported last week. Meanwhile, the EU's fell 2.2% and the UK's 15%.

The negative implications for New Zealand's reputation, brand and credibility are deeply serious.

Take just tourism. As the sector's new minister, the prime minister should have joined up the dots: our tourist numbers are falling fast; aversion to the environmental impact of long-haul air travel is a turn-off to some; the sector has responded by putting environmental sustainability at the heart of its recovery; but the longer the government delays climate change legislation, the bigger an environmental joke we become.

So, on these and many more issues to come, let's hope the prime minister has acquired an unerring compass in the three short years since his former colleagues judged he lacked one.

If he hasn't, he'll be pushed around by every vested interest in the country. He'll fail at the laudable goals he's set.

Sunday Star Times