Fran O' Sullivan: Winners are grinners and Key's smiling

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John Key missed out on a comprehensive election victory but he retains the confidence of New Zealanders. Photo / Janna Dixon
John Key missed out on a comprehensive election victory but he retains the confidence of New Zealanders. Photo / Janna Dixon

The National Party's post-election victory roll begins in Auckland today but it will be a more subdued affair.

John Key won't be metaphorically walking on water when he turns up to Auckland's SkyCity Convention Centre for the National Party's annual conference today.

National Party members forgive their leaders a great deal - as long as they are winners. But inept political management during the "teapot" affair arguably robbed National of its chance for a comprehensive election victory.

The traditional post-election victory roll will be more subdued than if Key had romped home with a clear-cut result. But he is still a winner. And that counts for a great deal in National Party circles.

The Prime Minister's own political management has been slightly askew in the first six months of this year.

Partially that is a result of inept performance by Cabinet colleagues (such as Education Minister Hekia Parata, who got offside with middle New Zealanders on class sizes) and fumbled regime change at the Ministry of Foreign Affairs and Trade, where normally loyal diplomats were so incensed with their boss' lack of change management prowess that they leaked confidential information to Labour's Phil Goff.

ACC's slowly unfolding train wreck and the SkyCity tradeoff (more pokies for a convention centre) also took the gloss off.

Despite this, New Zealanders retain confidence in Key.

The big game changers Finance Minister Bill English's Zero Budget and Paula Bennett's welfare reforms are being bedded down.

In the long run these are far more important.

Where things may come unstuck is with the Government's partial privatisation agenda.

The Mixed Ownership Model - or partial privatisation of four state-owned energy companies and the further selldown of the Government's Air New Zealand stake - has been poorly communicated.

It was always going to be difficult for the Government to "put lipstick on this particular political pig". But it has become more complex since the Maori Council set out to delay the float of Mighty River Power until its claim works through the courts.

These are tough issues for any Prime Minister to handle. He has $7 billion reasons to stay on course as the Government's fiscal projections rely on the asset sales revenue to smooth the path back to Budget surplus. There is no sign that he is "for turning".

Nor should he be. It is important for New Zealand's future that Key prevents the Maori Council's try-on expanding to cover other fronts like geothermal energy and ironsands resources. These are potential wealth generators for all of New Zealand.

Focus polls show widespread support for the Prime Minister's position. But there could be added complexities if/when the claim hits the courts.

Key's second term as Prime Minister was never going to be plain sailing.

The National Party's top echelon had not expected the 2012 election to be a near-run thing.

Key went into the campaign supremely confident that he would easily be returned to power with the backing of the Maori Party, Act and United Future.

But his over-reaction to the "teapot" affair opened the way for NZ First's Winston Peters to get media oxygen (and valuable votes) by revealing that Key and Act's John Banks had been dismissive of elderly voters during their supposedly confidential conversation at an Auckland cafe.

The upshot is that Key's ability to play the numbers has been reduced.

Now he faces intergenerational timebombs.

The Government is exposed on the housing affordability issue. But it is working through a process as it forms its response to a Productivity Commission report on this matter. The response is still some time away.

But expectations are the Government will move to address this on three fronts: making more urban land available by pushing councils to expand city limits; clearing the way for the private sector to embark on mass housing programmes and pushing councils to reduce the cost of regulatory consents.

English welcomes the public debate on housing as it will sharpen the official response.

The weeping sore is superannuation.

The National Party knows it has to deal to this issue - but feels compromised by Key's pledge not to change things.

Key keeps reinforcing this position. But in a perverse way, his intransigence has resulted in broad support building for raising the age of eligibility for national super to 67. Other parties want to deal.

There are options.

He could ask for a mandate at the next election to enter discussions on changing the super environment. Not just the age of eligibility but also the conditions around KiwiSaver (such as should it be compulsory) and means testing NZ Superannuation.

Another avenue is to have a royal commission.

The Prime Minister knows his generation cannot burden young New Zealanders with punishing costs. Problem is, he has to find a way to get off the hook he has fashioned for himself - and take the country with him.

- NZ Herald

Fran O'Sullivan

A columnist for the NZ Herald

Fran O'Sullivan has written a weekly column for the Business Herald since its inception in April 1997. In her early journalistic career she was a political journalist in Wellington and subsequently an investigative journalist who broke many major business stories including the first articles that led to the Winebox Inquiry in both NBR and the Sydney Morning Herald. She has specific expertise in relation to China where she has been a frequent visitor since the late 1990s. She is a former Editor of the National Business Review; has twice been awarded Qantas Journalist of the Year and is a multiple winner of the Westpac Financial Journalism Supreme Award.

Read more by Fran O'Sullivan

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