If Bill English is not already thinking about his opening post-election gambit with Winston Peters, he should be.

John Key's resignation was the key to National's volte face.

The Prime Minister's successor as National Leader was free to make a "pact with the devil" to retain power at the September election and jettison some of Key's absurd policy red lines in the long-term interest of New Zealand.

But the most important step was Key clearing the obvious roadblock (himself) so National had a chance of reaching an accommodation with Peters if it needed one to secure a third term.


Their mutual dislike was visceral.

This week's Roy Morgan Poll confirmed that NZ First is on course to again be a kingmaker at the September 23 election, with National just a couple of percentage points ahead of the Labour-Greens alliance.

This should not surprise.

Despite the expected political fob offs from the Prime Minister and Finance Minister Steven Joyce, National find themselves in the difficult place where - after three terms in office - their political capital will inevitably begin to run out.

They will take some comfort from the fact that 58 per cent of respondents to the Roy Morgan poll still feel New Zealand is heading in the right direction.

What they have to watch out for and guard against is a tendency to arrogance and hubris. The Government has become dangerously close to having developed a tin ear to growing concerns; policy shifts have underwhelmed and their relationship with Auckland's power brokers is now unnecessarily intransigent when it comes to deciding how vital infrastructure should be funded.

Peters has been adept at reading the trends.

But what may surprise some is that the NZ First leader is also on song with many of the concerns that worry a growing number of New Zealand business leaders: the lack of affordable housing for young New Zealanders, immigration levels and our polluted waterways - to name just three.


And - although it is frequently difficult to have an open debate on this subject in our overly politically correct environment - there is the question of whether this country has swung too swiftly into the Asian Century and failed to do enough to define and project a set of values for what it has meant and should mean to be a New Zealander.

As National's chief strategist, Joyce is alert to some of the rumblings among the party's conservative wing. It's coming particularly from Auckland businesspeople - including "blue bloods" - and members in heartland New Zealand.

There is a sense that the party has left its policy inoculations (which stop short of outright U-turns) far too late in the election cycle. And there is anger over the plight of a generation locked out of the property market.

This disquiet with National's direction first spilled over in the middle of 2016, when expat businessman Stephen Jennings used an address to the NZ Initiative to confront the business and political elites with some unpalatable truths: rising house prices and immigration-fuelled economic growth were masking an underlying "iceberg that lies ahead".

"We are sleepwalking into an economically ugly place," warned Jennings.

Unprecedented immigration, low interest rates and a trend for the well-off and those nearing retirement to return to invest in the Auckland housing market had resulted in Auckland being one of the world's most expensive housing markets, agreed Mainfreight's founder chairman Bruce Plested.

"There is no reason that New Zealand should be different from Australia, the UK or the US in taxing capital gains on housing. If this tax needs to be introduced progressively over, say, a two-year period, it will alter buyers' and sellers' behaviour and perhaps pave the way to solving New Zealand's housing problems."

Others like ANZ chief executive David Hisco and the Reserve Bank deputy governor Grant Spencer also weighed in.

Since becoming PM, English has flagged raising the qualifying age for superannuation, tightened immigration and is now set to boost infrastructure spending at the forthcoming Budget. But they are tentative moves.

Joyce is lifting the infrastructure spend by $2 billion net over the next four years, with $1b for the year ahead to come in the May 25 Budget.

The so-called tax cuts are expected to be shifts in the income thresholds at which the various progressive rates kick in.

There will be some fat left over to fund some election policies. It is on that score that Joyce as Finance Minister will find himself under growing pressure from his own party, business and potential coalition partners.