National's decision to potentially work with Winston Peters and New Zealand First after the next election is not without risk.

John Key's kitchen cabinet mulled over the issue late last week at his St Stephen's Ave home soon after the Prime Minister returned from his Hawaii holiday.

But it decided the potential benefits of getting a third term outweighed the risks.

The first risk is that Key could look like a hypocrite for ruling out Peters in 2008 and 2011 which he did so as "a matter of principle."

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Key took pre-emptive action last night took to the drive-time airwaves straight after his post cabinet press conference in an attempt to set the terms of the debate, to make it more an issue about Peters than himself.

The Glenn donation scandal happened six long years ago, he says, and if Peters were in a position to talk to National after this year's election, he would have been returned twice with a public mandate.

It makes Key sound more forgiving than hypocritical.

The greater risk for National in allowing itself to work with Peters is that may encourage some of its supporters give their votes to Peters and help him return him to Parliament, only for him to go with Labour.

It's a risk National will take because it wants as many options as possible after the election.

Power, after all, is what every party wants and there has to be a compelling reason to deny yourself that power.

It was easy for Key in 2008 to dismiss Peters who at the time was mired in issues of honesty.

It was easy in 2011 to dismiss Peters because he had been voted out of Parliament already.

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It has proved too hard in 2014 to dismiss him when he is a political reality, when your other partners are disappearing, and when he is sounding more grounded than he has in many years.

While New Zealand First is polling well below the five per cent threshold, Peters himself polled 7.3 per cent as preferred Prime Minister in the December Herald-DigiPoll survey.

Having both New Zealand First in the mix could also dilute the Conservatives bargaining power, were it to make it over the five per cent as well.

The power-plays have changed rapidly: in October last year, Key talked up Conservative leader Colin Craig and likened Peters to riddles of the Mad Hatter.

Within two months, Craig's utterances on moon landings, chem-trails and Sarah Palin had National questioning Craig's judgment - and its own - and wondering whether the Mad Hatter analogy was misplaced.

National wants insurance. It will reserve its decision until much closer to the election on whether to replace Murray McCully in East Coast Bays with a low profile candidate in order to help Colin Craig.

National will dispense with symbolic cups of tea and just say more directly if it wants its supporters to vote strategically.

Key is talking down New Zealand First's chances of actually making the five per cent threshold. A lot of Peters' votes last time were Labour supporters who wanted to provide its party with a coalition partner and who may not have been impressed with former leader Phil Goff.

Key argues plausibly that with a new risk for them that New Zealand First could go with National, and with stronger Labour leadership, they will return to Labour.

But Key doesn't have a strong track record in predicting the fortunes of New Zealand First.

In the tape-recroded conversation with John Banks last election over a cup of tea, he wrote off New Zealand First saying they would have "no chance" of getting back.

In less than three years, Key has anointed Peters as potential king-maker of the next Government.

• Key's kitchen cabinet is Bill English, Gerry Brownlee, Steven Joyce, Judith Collins and Murray McCully. Those who couldn't make the meeting were consulted by phone.