Fran O'Sullivan on business

Business analysis and comment from Herald columnist Fran O'Sullivan

Fran O'Sullivan: Key gets serious over NZ's major issues

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Prime Minister John Key is making some tough moves. Photo / Mark Mitchell
Prime Minister John Key is making some tough moves. Photo / Mark Mitchell

John Key has made a strategic decision to burn some political capital and front-foot major Government decisions as he tries to wrest control of the national agenda. It's a strategy that is bearing fruit.

Finally, the PM is putting a stamp on his Government as he lifts its tempo and gets some serious purchase on major issues.

So far Key is making reasonable headway as he stands shoulder-to-shoulder with Cabinet ministers while they unveil pre-Budget announcements on hot issues, such as Paula Bennett's on welfare reform.

He has yet to tackle other long-term inter-generational time bombs, such as raising the age of eligibility for national superannuation. But if he takes a "step by step" approach it should be possible to have a "national conversation" on the issue by tasking a working group with addressing inter-generational policies.

His reversion to "CEO mode" is well-timed. Key has long been his Government's chief cheerleader - deploying his "smiley" face and engaging persona to keep Kiwis relatively optimistic during the difficult times caused by the Global Financial Crisis and Christchurch earthquakes.

It is easy to underplay the impact of the Prime Minister's cheery influence in keeping New Zealand business sufficiently confident in his Government's management of the NZ economy so the vast majority of firms stay focused on the medium-term prospects and don't simply shut up shop and move to Australia.

Political journalists and Beltway denizens don't see much of this side of Key as, outside of the general election campaign, few venture forth on a consistent basis to watch the PM intersecting with the business community.

His polished persona was demonstrated in spades at last week's New Zealand United States Council conference on the Trans Pacific-Partnership (TPP) talks. Key gave an articulate performance as he staked out New Zealand's position on TPP. There were no notes. No fluffs. Few jokes.

It was a serious speech where he canvassed the trade-offs that international negotiators were considering as they endeavoured to broaden the P4 agreement to include some major economies.

Problem is - as US Ambassador David Huebner pointed out - America has long moved past 19th century-style trade agreements which were focused on market access and tariff reduction.

What is on the TPP table from the US perspective is a "gold standard 21st century deal" which is more focused on complex economic integration issues which impact on national sovereignty.

There will be much more water under the TPP bridge before a deal is cemented. And Key will have to deploy considerable salesmanship to make those tradeoffs (if the deal is done) palatable to New Zealanders.

Meantime the Key Government is treading a political and economic tightrope with international markets more jittery as a result of the European financial crisis and China's decreased demand for commodities.

This jitteriness is underlined by the fact that two weeks ago the NZ Debt Management Office got about $2.9 billion of bids for $900 million of government bonds. This week's DMO tender was undersubscribed.

The PM's decision to front-foot the mini-scandals - instead of relying on his press minders to trot out the spin - is also a change from default mode.

He didn't need the SkyCity convention centre wrangle, or the ACC and John Banks mini-scandals. But Key has more than held his own on television programmes such as Campbell Live or on Radio NZ's Morning Report against critical news presenters trying to expose chinks in his political spin.

It's now doubtful that Act MP John Banks' political career will come to a premature end courtesy of Kim Dotcom. By mid-week the Dotcom revelations appeared to have run out of steam after the momentary sport caused by the release of the Amnesia rap video lampooning the MP.

It has to be said the video wasn't one of the Black Eyed Peas' producer's more stellar creations (such as the raunchy I Gotta Feeling which dominated charts). It will disappear into the ether relatively quickly unless new revelations - such as a tape proving that Banks did thank Dotcom for making the two anonymous $25,000 donations.

Key's own officials are also "managing from behind" after the botched MFAT restructuring.

But with the Budget pending Opposition MPs have moved on to more important political targets.

The coming fortnight is critical for the Key Government's standing.

Bill English's fourth Budget will be a "Zero Budget". It will test the promotion skills of any PM - even those blessed with a naturally sunny disposition. But English's caution needs to be balanced with an increased risk appetite. There needs to be a much stronger emphasis on making the economy grow faster. Watch for Key and Steven Joyce to push the envelope with policies (including the convention centre) that test the public but will produce economic dividends.

- NZ Herald

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