This was the week John Key was to have set the political agenda.

It was the Prime Minister's first full week back after the summer break, the first Cabinet meeting, the week of the state-of-the-nation speech, the first overseas visit - to Australia.

Instead of projecting strong leadership, Key has been on the defensive.

He began by defending the minister who was consulted over Kim Dotcom's residency application.


The internet posting of the private taped conversation between Key and Act candidate (now MP) John Banks at the height of the election campaign again forced him on to the back foot.

And he has been defending the sale of Crafar farms to the Chinese company Shanghai Pengxin all week, as well as yesterday after the approval was given.

Every party seeks to set the agenda but the past week has made it easy for new Opposition leader David Shearer and that old expert on opposition, Winston Peters. They will have no shortage of material with which to flay the Government when Parliament resumes on February 7.

The challenge for National this term is to make a better fist than it did last time of conveying that it is doing things to address problems such as poverty and inequality or income disparities with Australia, that it has a strong sense of direction.

It wants to be doing things rather than reacting to crises.

The teapot tape overshadowed Key's state-of-the-nation speech, which sounds grander than it actually was.

Like most of Key's speeches, it was prosaic, and in a large part just setting out again the Government's work programme, with one exception.

Key made it clear he wants to see results this term, and he has appointed his left- and right-hand men, Steven Joyce and Bill English, to be responsible for the 120-point action plan and to publish updates on its implementation.

That is almost like anointing them as the super-ministers they are. They will have operational oversight of other ministers.

It was Key's first serious speech of his second term but there was no hint of what he would like his legacy to be, other than being a good manager, if this turns out to be his last term.

It certainly won't be as a dramatic reformer. The constraints of MMP and the fiscal and economic pressures of the times make that impossible.

The news of the speech was the acknowledgment finally that it might be touch and go whether National's target for getting back into surplus will be met if the European debt crisis infects the global economy.

Yes, it was stating the obvious, but it was the obvious that Key refused to acknowledge during the election campaign despite endless questions about what he would do if Europe worsened.

Key expressed confidence that the Europeans would muddle through and avoid exacerbating the crisis because it is in their interests to do so.

Deputy Prime Minister and Finance Minister Bill English, the more cautious of the two, is more nervous about Europe, describing the situation this week like this: "It's like watching a band of your own teenagers walking along the edge of a cliff. They're on the path but at any moment, they could be really stupid and fall off."

There are plenty of other important fiscal indicators, but National has made returning to surplus the symbol of responsible management.

Labour reinforced its symbolic value by matching National's target of returning to surplus in the 2014-15 financial year.

The real question is what will give if conditions worsens.

And Key signalled that the Government would push out the target date for returning to surplus rather than slash expenditure to the point that it harmed rather than helped the economy.

Control of spending is still central to the Government and more savings are in the wind.

But focusing on "results" is going to be as important to National this term, the outcome of which may be more savings, especially in the social services sector.

National's establishment of a ministerial committee on poverty was a clear sign that it won't be leaving all the running to Labour and that it has its own plans.

In fact the appointment of the committee is not a starting point but a mid-point of a work stream.

The starting point was to find out where the money was being spent, which sounds basic enough.

But, astonishingly, no one knew until 13 months ago what was being spent across all social sectors in various parts of the country, agency by agency, provider by provider, area by area.

Now decision-makers, policymakers and the public can find out instantly where the $7.9 billion is going for social service contracts with the ministries of justice, or health, education or welfare, in Northland, Bay of Plenty, Auckland or Southland or any of 14 regions in New Zealand through contract mapping.

It will tell you how much is being spent per head for each region as well (Hawkes Bay/ East Coast is the highest at $2304, and Auckland North the lowest at $1698 per head).

Having worked out what the money is being spent on - and Kaitaia, for example, has more than 80 social service providers - the next step is to find out what sort of programmes get results.

Social sector trials to that end are under way in six areas - Kawerau, Tokoroa, Te Kuiti, Taumarunui, Levin and Gore - to find what works and what doesn't, be it in addressing truancy or drug addiction, or getting people into work.

The work will be overseen by the new ministerial poverty committee - set up under the confidence and supply agreement with the Maori Party.

The political friction will come when that work determines which funding should continue for which programmes - and that will be only for the programmes that get results.

But that is the sort of political friction the Government won't be afraid to have, so long as it is setting the agenda.