Politics 2009: Key, Goff and the recession

Prime Minister John Key. Photo / Jane Ussher

The recession hit New Zealand, unemployment increased, the budget was bleak and John Key walked on water.

It would have been a brave prediction, this time last year, that the Government would end 2009 with more voters backing it than the 44.9 per cent who put it into power last November.

That was a bad election to win. Economic forecasts were catastrophic, revenue was plunging, companies were closing and the buck stopped in the Beehive.

Key had never been there before, he had no experience as a minister and not much as leader of the opposition.

It was soon apparent he didn't need it, which put paid to beliefs that decades on the benches were an essential part of a leader's CV.

Key formed a Government in record time, signing up ACT and the Maori Party for a comfortable 68-vote hold on power in the 122-member Parliament. He didn't need the Maori Party for a majority but he called them in, and was later to add the Greens under a cooperation agreement which set up the most broad-based government since MMP was introduced in 1996.

During those early months the Government's focus on dealing with the recession eclipsed everything else. Going against the international trend, it decided not to pour money into big bang rescue missions. Key's "rolling maul" of relatively small measures to help businesses and get the economy going began with the Jobs Summit in February.

The impact was less than sensational. Out of it came the nine-day fortnight and the cycleway, but it pulled together politicians, big business, employers and unions in an unprecedented common front against grave economic danger that was threatening the nation's social fabric.

Job-creating and job-retaining initiatives were launched and big infrastructure projects were brought forward as a cautious prime minister promised only to protect New Zealand from the sharpest edges of the recession.

Treasury's downside scenarios were horrific. Unemployment was forecast at more than 80,000 by year end, reality was less than 60,000. That was bad, but it could have been devastatingly worse.

It isn't over yet but New Zealand came through 2009 in much better shape than most developed countries. The banks survived and didn't stop lending, which had more to do with New Zealand getting through the recession than any of the Government's ideas.

Finance Minister Bill English wrote the May budget against a gloomy background, and he let everyone know it. He figured $50 billion had been ripped out the economy and it was going to take 10 years and $40b borrowing to come right. His mind, and Key's, was fixed on avoiding an international credit rating downgrade which would have made it more difficult and expensive to get the money.

English managed to stay on the tightrope. Core spending was maintained while "poor quality" programmes were cut across the board. Many of the previous government's pet projects were canned and payments into the superannuation fund were frozen. There was no ratings downgrade.

Domestic issues started to exercise Key's mind. Richard Worth resigned as a minister and then quit Parliament after a scandal involving two women. The Government's relationship with the Maori Party hit some bumps, the blighted Foreshore and Seabed Act was reviewed and is heading for repeal as Attorney-General Chris Finlayson seeks an alternative, Education Minister Anne Tolley struggled with difficult policies and Rodney Hide set about restructuring Auckland's local government structure.

Simon Power began reforming the justice system, Judith `Crusher' Collins took on organised crime and boy racers, Steven Joyce started building roads and Phil Heatley was fixing state house slums. Tony Ryall changed health administration with hardly a murmur of protest and managed to get hospitals to lift their game. Swine flu came and went,

Gerry Brownlee redesigned the electricity market and started looking for gold in national parks, Nick Smith wrote the emissions trading scheme bill, which hardly anyone understood, and managed to look good when he raised ACC levies because the hikes weren't as bad as he had said they could be. Labour saw through that but no one took much notice.

Tim Groser toiled quietly on free trade agreements, Finlayson signed Treaty settlements, John Carter's civil defence systems didn't come out of the tsunami scare with anything to boast about and Maurice Williamson mulled over the H in W(h)anganui.

Hide crashed off his perks pedestal because he took his girlfriend on a taxpayer-funded holiday and English was mired in a row about his housing allowance. They both paid the money back and vowed they wouldn't take any more.

Key jetted around the world, starting with the Apec (Asia-Pacific Economic Cooperation) summit right after he was sworn in and ending up as a witness to the divisive Copenhagen conference on climate change. In between he visited New York and met President Barack Obama, chatted with Commonwealth leaders in Trinidad and toured several Asian countries.

Sometimes he took Bronagh with him, and even their son and daughter, but he stayed squeaky clean and paid for them himself. He doesn't even have a self-drive car on the taxpayer, or "lots of other things" as he pointed out when he was asked.

In the middle of it, Labour scored a big win in the Mt Albert by-election. It was always a safe seat, vacated by Helen Clark who had taken a top job at the United Nations, but National and Melissa Lee made a hash of it.

By year end one thing was becoming clear - Key isn't leading a reformist government. There's no agenda for the sort of changes the business sector thought they were going to get. It might be more business-friendly than Labour but it's well short of an embrace. It is, as he said it would be, a pragmatic centre-right government.

In opposition after nine years, Labour had a new leader who was having a hard time getting noticed. Recession traumas blotted out the sort of policies Labour traditionally attacked, and anyway Key had made election promises not to change most of those the previous government put in place.

Phil Goff says he knew it was going to be hard, the first year after losing an election always is. But Labour held a surprisingly upbeat annual conference and its caucus worked well with new backbenchers hitting their straps in Parliament.

Commentators wrote death notices as Goff's popularity stayed in single figures but there were no challengers this year and there aren't likely to be any next year. Labour's support base didn't erode by much, staying around 30 per cent against its election night 33.9 per cent.

To shake things up before the summer recess, Goff ventured where Clark wouldn't have gone with his "nationhood" race relations speech. Goff positioned Labour to fight the Government over the Foreshore and Seabed Act and its cosy relationship with the Maori Party. The Government pretended not to care and probably didn't but it infuriated the Maori Party.

But voters at last took notice of Labour and its leader, with polls showing a modest bounceback. Mission accomplished.

Minor parties suffered as they usually do in year one after an election. No traction for the Greens, although they pushed through a landmark home insulation scheme which the Government got most of the credit for. Losing Sue Bradford didn't help and when Jeanette Fitzsimons goes that won't either.

ACT and United Future were barely visible while Jim Anderton started merging his Progressive Party members with Labour ahead of his expected retirement.

The Maori Party made more waves than the others put together, although it could have done without the backwash from Hone Harawira's misdemeanours. His unauthorised jaunt to Paris while he was on a taxpayer-funded parliamentary visit to Europe, and his infamous "white motherf...ers" email in defence of it raised a storm of protest and severely tested his party.

But it had some trophies to parade, holding up the impending repeal of the Foreshore and Seabed Act and the controversial emissions trading scheme (ETS) deal, which favours forest-owning iwi, as evidence of its successful partnership with National. Key and Sharples established a bond that could endure past the next election.

At year end, Treasury delivered a slightly improved economic scenario, but the Government didn't loosen its tight rein on spending. Budget 2010 will be every bit as hard as this year's was and if Key can maintain National's support in the 50 per cent range he will be well set for a second term in 2011.

- NZPA