POLITICS : National’s Management Challenge: John Key

John Key will be lionised at the National Party Conference early next month. Don Brash picked the party off the floor. Key had it bouncing off the ceiling in the autumn.
Not since 1990 has the party felt so good about itself and so sure power is its for the taking. But it has work to do before it is ready to govern – not least in honing management at the top.
The first six months of Key’s leadership were clearing of obstacles to winning over urban liberals, who were wary of Brash and inclined to Labour. Hence softer line on Treaty of Waitangi issues, Damascene conversion to climate change and emissions reductions targets, focus on the ‘underclass’, gentler employment line and much else.
Key’s conciliatory line on smacking went against his party’s delighted desire to keep rubbing Labour’s nose in its unpopularity. He got wind of urban liberals baulking.
Otherwise in his first six months Key kept his speeches high-level, peppered with quick fixes (school breakfasts, for example) which gave him an action-man look and feel, while some senior MPs exploited departments’ and ministers’ mishaps and failures or dug holes in programmes such as ‘20 hours free’ early childhood education.
Prime among them was the corrections system’s sad weekly saga, which gave Simon Power prominence.
Power’s wins epitomised the first half of National’s 2007. His success or otherwise in the second half will tell much about National’s preparedness to govern, as distinct from win an election. He is charged with producing competition and regulation policy.
At high level that is easy. National stands for less regulation than Labour. But saying exactly what it will ease, abolish or change, leave unchanged or even toughen, requires complex balancing of party principle, international obligations, economic competitiveness and lobby group management.
Telecommunications is an example. Electricity is another. Just what should change in the Resource Management Act (RMA) is third. Should the sledgehammer Building Act be revisited? How far would National go in regulating the financial services industry and financial intermediaries? With the exception of the RMA – and even there climate change has introduced new factors – National’s message is murky.
And there will be no excuse to leave it murky, given National’s access to knowledgeable analysts here, in Australia and abroad.
Similarly, while specific promises on tax rates need to await the 2008 Budget, the underlying drivers of tax policy need to be clarified in depth long before that.
Bill English, like Power, needs to balance several factors, among them macro- economic impact, especially on the tax base, interest rates, saving and investment, the scope for effective spending cuts, long-term fiscal sustainability of revenue cuts and international, especially Australian, benchmarks.
So, does English repeal the research and development tax credit, which is significant departure from the ‘broad-based, low-rate’ principle? Does he de-index Working for Families to reduce churn? Does he remove or modify distortionary tax credits for KiwiSaver and compulsory employer subsidies? Does he just lift personal tax thresholds or cut rates as well? How fast does he move?
Even if National is not relentlessly specific in policy statements, it will sensibly have sharpened the options pre-election so that in government its policy initiatives are sustainable – unlike some of the ambitious measures of 1991, when last it was new in office.
Which brings us to Key himself. He is at ease as Opposition leader. He markets well. He picks his moments and his one-liners like pro.
His strength is that of the money market trader: absorb information, assess competing risks, take position and back himself. It made him fair fortune. It made him fine poll rating and party darling. But would it make him durable and capable Prime Minister?
Managing cabinet is not just call on the balance of risks. cabinet needs consistency across portfolios and ministers working with each other, not in silos.
Just as market collectively gets the call right but an individual trader cannot always do so, cabinet working well in concert will get the calls right more often than wilful Prime Minister, as National found with Sir Robert Muldoon.
Relying on the deputy to stitch it together doesn’t work either, as Labour found in the 1980s. Cabinet collegiality, consistency and competence is the Prime Minister’s job. That requires sharp instincts – but also blunt bothering about basics. Key has yet to demonstrate the second.

Colin James is Management’s regular political writer. [email protected]

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