POLITICS : How To Spend Political Capital

John Key knows thing or two about capital. Or does he? He seems to think political capital travels one-way street – down. But didn’t his financial capital travel one-way street – up – when he was in business?
Key is not alone among his cabinet colleagues in this one-way-street thinking. Many ministers, if they are to be bold, would like to manage by stealth, preventing political capital from eroding too much too fast.
The spectre older hands see is of polls plunging after Ruth Richardson’s 1991 mother-of-all-budgets. Bill English, then new backbencher, was seared by the experience. He is determined not to repeat it.
Hence, he let spending rise in his 2009 budget to offset the recession. The total fiscal stimulus in the 2008 and 2009 budgets was similar to Australia’s big-hit stimulus.
English used to be characterised as “new conservative”. Not, of course, the kind of American hard line free-market conservatism, so often laced with old-style religion. English accepts the 1980s-1990s market reforms as given. He assumes greater flexibility and choice in government service delivery in response to his generation’s expectation of customised goods and services. But his type of conservative also rejects radical policies of all shades.
Some read this as English holding back more adventurous Key. But that interpretation miscasts the relationship.
As one insider puts it: when Key gets involved and interested in an idea for action, he can be “quite lateral” and go “quite hard”. Witness the billing in his prime-ministerial statement last month of his drive for ministers to find ways to grow their sectors faster. That sort of practical action fits the instincts of one-time, go-getter still relatively new to the National party’s traditions and leanings. English is then, at times, the “hey; but” voice.
It was, on the other hand, English who told his tax working group to undertake root-and-branch thinking and Key who was cool in public when the group started publishing papers last winter. It was also English who, year ago, tough-talked public sector chief executives into finding ways to “do more for less”. He pushed the Treasury for new thinking. His departmental secretary John Whitehead then made controversial speeches and, in December, replaced the Treasury’s whole second tier of managers.
Key and English sometimes look different because they have been the lead operators in different (if complementary) spheres: English on the institutional side, getting the budget, tax and (in cahoots with ACT’s Rodney Hide) regulation nearer best practice. Then Key, at times, becomes the “hey; but” poll-watcher. Witness Key on the “revenue”, or action, side of the economy – teaming with cabinet colleague Gerry Brownlee to identify ways to get higher performance, sector-by-sector, and English cast as the necessarily wary finance minister.
These are not typecast roles. Both Key and English want to promote productivity growth and rebalance the economy from consumption and imports to savings and exports. In January they agreed broad direction on tax reform, which they took to the Cabinet and then to the nation. There are the usual tensions, especially on big decisions. Government, after all, is not picnic. But, so far, they are not cabinet breakers.
When, however, it comes to selling big decisions to voters, Key is No 1 and it is long way back to No 2.
Firstly, that’s because Key is prime minister and the public takes his pronouncements to be gospel, and certainly more than other ministers, right up to No 2.
Secondly, it’s because Key has oodles more selling power than English who in 2002 led National to 100-year voter-rating low for main opposition party.
Key is accessible, approachable, likeable and agreeable. He has huge stock of political capital. The polls say so. But he worries that if he takes policy risks his political capital will be eroded too fast and so shorten his government’s life. It is the 1991 syndrome.
There is, I’d suggest, an alternative way to view political capital. Think of it as something to be invested for return. Just like in business.
That invites government to make strategic decisions with long payback times, rather than tactical decisions made with an eye on polls. government that gets such decisions right can earn political dividends, such as third and fourth terms in power. Examples include the reign of the 1890s’ Liberal Party and the successive National governments of the 1960s.
Key is focused on the 2014 election and has yet to show whether he will be an adventurous or conservative political investor. If he needs guide, he might turn to the Parable of the Talents: Matthew 25: 14-30 and Luke 19: 12-28.

Colin James is New Zealand’s leading political commentator and NZ Management’s regular political columnist. [email protected]

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