We would probably have seen National do much the same if Labour had been brave enough to go to next year's election with a capital gains tax contingent on the result.
Asset sales proved not to be electorally fatal. National was returned with an increased share of the vote, not because voters liked privatisation but because they liked Key.
I think we might have seen a similar result if Labour had held its nerve on a capital gains tax. Its Prime Minister is enjoying worldwide acclaim for her response to Christchurch and her popularity is being compared to Key's after a different calamity in that city.
The 2011 earthquake came just three weeks after the announcement of asset sales and this year the mosque massacre happened three weeks after the release of the Tax Working Group proposals. Those weeks were rough for Jacinda Ardern but since March 15 she has been walking on water.
If last Wednesday she had announced a capital gains tax limited to investment property, excluding farms, business, shares, all productive investment, it would have been greeted with relief.
Public misgivings with the Working Group's proposals had mostly to do with sympathy for small business owners who had built their business from scratch, taking little income out of it at times, and stood to be taxed when they came to sell it.
I did not hear the same anguish for multiple house buyers who have built up a portfolio on untaxed capital gains tax and sent the price of houses way beyond the reach of average incomes in New Zealand.
The property investors' lobby was running a self-defeating argument that a CGT would diminish the supply of rental housing, which would mean more houses were for sale and investors would not be in the market. Prices would come down, more tenants could buy.
Ardern says she backed down on a policy she still believes in — because there was not enough public support for it. How weak is that?
As weak as were warned coalitions could be under MMP. Ardern is so dependent on Winston Peters that she has now forsworn a capital gains tax for as long as she is Prime Minister, reminiscent of Key on superannuation.
But Key made that regrettable commitment when he was coming to office and had still to build the political capital Ardern has acquired. Her weakness has deprived this country of a rare opportunity to tax residential property investment as most other jurisdictions do.
This is not a peripheral policy issue for the Labour Party. From here on, every time its ministers claim to be concerned about poverty, inequality, homelessness and fair taxation they will be reminded they did not tackle multiple property ownership when they had the chance.
Like most timid decisions, this one will not achieve what it intends. Peters will still find points of difference at the next election, Labour has just strengthened his appeal as a restraint on its propensity to tax.
And the backdown will not help Labour at the election. As Key proved, voters give popular leaders credit for taking a political risk. Ardern might have polled well enough to rid her Government of the cantankerous old pest who has been a dead weight on New Zealand's progress for so long.
Instead she is probably saddled with him now, and Labour has shown us this will always be a timid government. If it could not do a capital gains tax with all the stars well aligned, it will not do much at all.
