John Key's make-or-break Budget

Prime Minister John Key announced funding for new schools and research and development yesterday - nothing to write home about. Photo / Mark Mitchell

Key will be eager to change the message but preamble so far is bereft of fresh ideas.

Yesterday's pre-Budget speech by the Prime Minister was the speech John Key needed to make. Most of its content fitted that prescription. But not all of it. And that is where the problems begin.

Following National's heavy defeat in the Northland byelection, the address to a Business New Zealand audience was Key's strongest pitch yet to regain control of the political agenda.

The speech sought to eradicate any perception that when it comes to fresh thinking and new ideas, his Government is in deficit. Unfortunately for Key, the two Budget-related announcements contained in the speech risked giving every impression that National is running on empty.

The first announcement was an $80 million boost in funding over four years for research and development; the second was the promise of $244 million over four years for building new schools and additional classrooms for existing ones.

In the first case, given New Zealand's woeful spending on research and development, it is foolhardy to crow about an injection of funds which fails to compensate for earlier cuts.

As for new schools, National is trying to make a virtue out of a necessity. Population pressures drive the building of new schools.

Governments have to provide. It is not a matter of choice.

It is also disturbing that the money to fund this construction programme is coming out of the Future Investment Fund -- the money received by the Government from its partial privatisations of state-owned companies.

When the fund was established, National gave the distinct impression this cash would be used to provide extra teaching materials and new technologies to lift education standards -- not basic bricks and mortar which should be funded out of Government's spending on capital projects.

Such cynicism on National's part will be grist to the mill for the party's opponents trying to paint National as an administration which is drifting, lacking direction and becoming increasingly arrogant and out of touch.

That is not the case (yet). But there are signs in the behaviour of one or two ministers that the rot has set in.

The byelection underlined just how hard and how constantly a third-term prime minister has to battle to avoid his or her administration being typecast as being past its use-by-date.

Key's answer is to go back to economic fundamentals. His speech makes no mention of Winston Peters or Andrew Little.

But in comparing a host of current settings of a series of economic indicators to their state on National taking office in 2008, Key's message is clear: stick with National and New Zealand could once again be one of the world's best performing economies -- just like it was in the 1950s and 1960s.

Much hangs on this year's Budget, however. That Key is already revealing its contents with five weeks still to go until Budget Day is an indication of how important the document is for National in succeeding in being a circuit-breaker which ends the party's byelection-instigated malaise.

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