Cunliffe had been wrong-footed by National's unexpected incursion into family policy territory.
Labour will now have to regroup. This will be a difficult task because of the numbers who believe New Zealand is on the right track - despite the housing issue which remains a problem.
In Parliament, Cunliffe was in preacher mode at a time when Key was upbeat.
His poll ratings are dreadful. As are Labour's.
At the post-Budget luncheon Key once again held out the tantalising hint of a tax cut for middle New Zealand sometime well into a third National term.
It wasn't lost on the audience (although it is geared to middle New Zealand and will be tiny) or the reporters who were there to hear his "on record" address.
But there was a great deal more to Key's performance than covering the areas that make the National Government a superstar compared to its Labour predecessor.
These post-Budget lunches are a marquee event on the business calendar. They are where Key not only explains the Budget but also charts the future in a compelling way designed to engender confidence so business people keep on investing, venturing out into the world to tackle tough markets - and employing staff.
The protesters outside the Sky City Convention Centre didn't get this.
The people who slagged off the guests (for instance - the business organisation leader accused of being a "bloated capitalist") don't seem to get it that business success ultimately underwrites jobs.
The protesters disregard the fact that many New Zealand businesses were put through the wringer by the Global Financial Crisis. People have worked hard to get their firms on to a sufficiently sound footing that they are now confident enough to take a few risks and grow their businesses.
It's a good space for New Zealand to be in.
The protesters were so dumb that they hadn't worked out that the business guests who openly walked past them to take another route into the centre were doing so for a purpose.
Instead they charged a door that was never going to be opened to them or anyone else.
This misjudgment is not confined to protesters.
Many of Key's opponents are sucked in by the Mr Average persona. The lazy speech patterns on display in Parliament where Key makes that loud slurping noise as he audibly sucks in his breath before launching into an "Aackshully ... ".
That leads them to underrate Key. They don't see the amount of time he spends studying political leaders (George Bush junior with his decision points; tapes of Bill Clinton in the presidential years and even Xi Jinping).
He has disarmingly drilled Xi and is confident China's growth will continue to underpin New Zealand's - that's because with US$4 trillion ($4.6 trillion) in cash reserves, the Chinese Government can work its way through difficulties with its banking sector or SOEs.
Fundamentally the Prime Minister is a man of calculation. He works the odds.
The odds are that Key will continue to drive for the centre-ground, do even more to make families the centre of National's election strategies - and particularly ensure that Act is a viable party to National's right (maybe getting 3 per cent of the vote).
Cunliffe (and the Greens) will have to do much much more if they are to defeat Key in September.
Debate on this article is now closed.
