Fran O'Sullivan: Injured English also hamstrung by PM

Labour's campaign to consign Bill English to the "walking dead" of the political world still has another round to go before the Opposition goes hunting for fresh political carrion.

Realpolitik dictated the Finance Minister had no option but to repay Ministerial Services the remainder of the housing allowance (some $32,000) that he had claimed since the November election.

It was a measure of English's public discomfort that he felt compelled to release an opinion by his lawyer Stephen Kos to back his assertion he had no pecuniary interest in the Endeavour Trust which owns the Wellington house in which he resides with his wife Mary and family and which was the recipient of the housing allowance payments.

The Auditor-General's office is probing these arrangements at the behest of Progressive MP Jim Anderton. English has taken a "mind your own business" approach to journalistic questions on the "personal and family" reasons that lay behind changes made to the trust in which he had previously declared a pecuniary interest.

The Auditor-General however does need to be assured on this point before this affair can be put to rest.

At this stage English is not mortally wounded. But his reputation as one of the Mr Cleans of New Zealand politics has been damaged.

And - more importantly for the Deputy Prime Minister's political future - some of the more ambitious among his Cabinet colleagues no longer believe he has the right to expect long-term purchase on either the number two position nor his plum finance portfolio.

Already there is behind scenes speculation that a second-term National could see the personable Gerry Brownlee elevated to the Deputy PM's role and business-friendly cabinet minister Steven Joyce taking on finance.

Though it has to be said nobody is jockeying for position right now.

Prime Minister John Key is also sticking by English. But the truce Key forged with English by persuading him to jettison his own ambitions to relead National in return for the deputy leader and finance roles is no longer regarded as inviolate.

Key now has the upper hand. But will he use it where it counts by enabling the Finance Minister to start driving some transformative policies that will put some ballast back into the New Zealand economy?

Just a week ago, English told a Wellington audience that "John Key's aspirational leadership is just what New Zealand needs right now after the public delivered a strong mandate for change and a desire for to see New Zealand fulfil its potential."

But the problem is that (so far) Key - whose personal poll ratings continue to mark him out as the poster boy for New Zealand politics - has not shown any real willingness to spend some of that easily earnt political capital on hard choices.

Increasingly the PM's own obdurate stance on hot-button issues like the proposed capital gains tax and the age for entitlement to state-paid superannuation is becoming a talking point in business and bureaucratic circles. He is seen as closing off options that his Finance Minister should be exploring as a means to either produce more government revenue or ease the welfare bill.

Some form of capital gains tax is likely to be on the table when the taxation reform group reports in December. But the PM has so far painted his Finance Minister into a corner by opposing the measure.

Unlike Australia which produces an inter-generational report every five years under its Charter of Budget Honesty Act, there is no compunction on New Zealand governments to examine the policy implications of changing demographics. In Australia, the Rudd Government has moved to raise the government pension age to 67 - with a phase-in period between 2017 and 2023.

The proposal has two fiscal benefits: It not only reduces the welfare burden but will keep more tax-paying Australians in the workforce contributing to government coffers for two more years beyond the current 65 years qualifying age. Other countries like Germany are following suit.

But Key has suggested such a step would be a resignation matter for him. If English is worth his salt he will push the Prime Minister hard on such issues. Key is not in politics for the long haul and surely must want to leave a legacy. Both should be thinking hard about their respective positions.

For Key there is another issue. Labour is in fact proving to be a dab hand at undermining his cabinet ministers. Labour leader Phil Goff went too far with his attacks on former cabinet minister Richard Worth when he could not back up his serious allegation that the National MP had endeavoured to trade government appointments for "romantic favours".

It has repeatedly tripped up Paula Bennett. And has become more deadly.

The party's current campaign - spearheaded by the redoubtable Pete Hodgson - has displayed all the forensic attention to detail worthy of English himself.

It was English whose painstaking probing of Labour over its shonky electoral finance legislation that did much to undermine the reputation of the Helen Clark administration.

This is one irony the Finance Minister will not have missed.