Working For National - Key's latest U-turn

Zap! Pow! Kazoom! Araaag! National leader John Key has inoculated another troublesome policy difference with Labour - this time Working for Families.

Following hard on the heels of the 20 Hours Free scheme, which National now fully supports although is boldly changing its name, well, after a while, the U-turn on WFF must be just about the last big-ticket item on Key's long list of Tory lite policy concessions.

There's still the finer detail of Kiwi Saver, I suppose, although National has pretty much signed up to this, too, apart from the exact structure of the employer contributions. Don't expect much change here either though.

National has long said it wouldn't change the basic structure of WFF, of course, but it had dropped hints that it was considering alterations to stop this middle-class welfare creeping quite so far up the income scale. Key has said many times that he considers this to be a disincentive to work, that middle-income families should be paying less tax in the first place rather than getting a handout, and that the "one size fits all'' approach of WFF wouldn't work.

In fact, back in 2004, Key called it "communism by stealth'' and opined that "it didn't work very well in Eastern Europe and it won't work very well here''. 

So what's changed? Has Key had an ideological change of heart? Unlikely. I suspect his deputy Bill English and National's Treasury secondee have been wrestling with the numbers and concluded that it's just too hard to unpick the scheme and replace it with tax cuts that favour the upper end of the income scale without chucking out the whole model and starting again.

And this wasn't an option, given the current state of household budgets and rising costs. Going into an election campaign promising to take money off people, even if it was being replaced with a tax cut, was never going to be a good look. Key has decided, once again, that it's better to swallow the short-term embarrassment of another me-too National policy than suffer a hit in the polls.

Yes, it's opportunistic, pragmatic, realpolitik. It may make the purer bluebloods within National gnash their teeth and shake their heads. After all, isn't WFF exactly the kind of anti-aspirational, low productivity handout that the party has always railed against?

Middle New Zealand, however, will simply be reassured that, once again, they will get Labour policies with a new face if they vote National, and it increasingly seems that this is both what they want and what they will get - in the short term, at least.

Personally I can't imagine that National won't tinker with WFF further down the track. Once it's in office the temptation to dismantle it may well prove too great, particularly if the economy improves and average incomes rise. The drier sorts in National's caucus will put up with it for now, but I'd bet there will be some heated arguments about it at some point.

In the short term, however, the political strategy behind Key's move can't be denied. It's annoyed Michael Cullen, and that usually means it was a good move strategically. Labour is claiming that the move means National now can't afford further tax cuts without more borrowing.

This is nonsense. The higher end of WFF is not where most of the money goes. National still has the option of tweaking its tax cuts package so that those on over $70,000-plus may now get less than they previously would have if WFF had been dismantled. Of course, that means higher income-earners without kids will do worse from this policy, and they may well be annoyed about it. But where else are these voters going to go?

The overall cost of National's tax package need not change as a result of this announcement, but even if it does, it's a bit rich for Labour to criticise it given the way the economy is currently swinging. The numbers Cullen based his October tax cuts on have already been blown out of the water by the current recession and the falloff in government revenue. Given that Cullen announced in May he had effectively spent the surplus, it must follow that Labour's tax cuts package must also now require additional borrowing.

There is one danger for National in all of this, though, and that's that it inoculates so many policies that voters begin to wonder whether there really is any point in changing governments at all. If the policy differences disappear then it really does become a straight horse-race between Helen Clark and John Key. If Key is shown up by Clark during the campaign, National has absolutely nothing else to offer besides slightly bigger tax cuts.

I've got an idea. Perhaps National could follow the lead of Paula Bennett and change the names of the other Labour policies it supports. Kiwi Saver could become Saver Kiwi, 20 Hours Free could be 20 Nearly Free Hours, Kiwi Rail could be Kiwi-for-now Rail, and WFF could be Working for Hard Working Families, or even Working for National Families.

As an ultimate end-game, National could change its name. How about New Labour? Hasn't that been tried before?