Nov 10, 2014 Politics
John Key’s mandate gives him a chance to be a truly great prime minister.
First published in Metro, October 2014.
Just before the election, I did four interviews with two Sunday newspapers. One was in case John Key lost. The reporter asked what his legacy would be. Instinctively I replied: “Protecting the welfare state.” I think I was right.
There are two stories, equally true, about the government’s books when Key replaced Helen Clark. The first is Michael Cullen paying off almost all the country’s debt, rejecting calls — including from Key — for tax cuts. The second is Cullen leaving Key and Bill English massive forecast deficits every year into the future.
In such circumstances, a centre-right government would usually slash social spending. Key, a child of the welfare state, and English, an old-school conservative, didn’t. They held that position even when the Christchurch earthquakes blew out the deficit to levels worse than under Muldoon. In some areas, they were prepared to increase spending if they believed it would deliver longer-term social and fiscal gains.
These decisions over 15 years mean net government debt is now a quarter of GDP but nothing like what confronted Ruth Richardson in the early 1990s. The Treasury now forecasts surpluses every year into the future. And, as measured by the Gini coefficient, there has been no further widening of income inequality since the early 1990s. Beneficiary and prisoner numbers are falling.
Key’s triumph was historic to an extent not yet fully grasped. Yes, his is the first government under MMP able to govern alone (although he is choosing not to). Yes, at 48 per cent, Key has matched David Lange in 1987 and Jim Bolger in 1990. But you have to go back to 1922, to William Massey, to find a government increasing its support when winning a third term. And you have to go back as far as 1899, to Richard Seddon, to find a prime minister winning a greater share of the vote going into their third term.
Key enters his third term stronger than most prime ministers entering their first. His fourth already feels assured. He now has an opportunity to surpass Seddon as New Zealand’s longest-serving prime minister. Beyond protecting the welfare state, what would his legacy then be?
Bolger launched the Treaty settlement process and Key has pushed it against the objections of many in their party. The fiscal cost, over 30 years, will be under $2 billion. The benefits are incalculable.
As a child, I was taught that Steve (now Tipene) O’Regan was a radical. Privileged Pakeha a decade younger no doubt thought the same of Tame Iti. We now know we were wrong, and that their claims were just. After the Ngai Tahu settlement, criticism of O’Regan was that he became a business leader. This year, Iti stood for a party in government with National. This has been a wonderfully transformational process for our country. For Key to complete it would mark him as truly historic.
Similarly, Key’s ability to promote social liberalism — from smacking to gay marriage — without appearing politically correct, has made New Zealand kinder and gentler. Key could now apply those same political skills to higher environmental standards, including in dairying.
In foreign policy, Key has personally established relations with the presidents of the United States and China that go well beyond the usual diplomatic “friendships”.
Key’s further legacy if he governs broadly and cleans up the muck revealed in recent weeks will be to restore public confidence in government.
The handling of New Zealand’s economic reforms in the 1980s and 1990s battered social cohesion and public confidence in the political process. Clark and Key have shared an objective of governing with a public mandate, gently pushing the median voter their way and securing very long-term government for their party. Clark nearly pulled it off. Key may do. People might not like, say, 49 per cent of shares in power companies being publicly traded, but Key said he would sell them, won a mandate and did exactly as he promised, neither more nor less.
Ironically, Key’s weakest area is economic transformation and it’s true that we remain too much a commodity economy. Although the best thing the so-called Ministry of Business, Innovation and Employment could do for New Zealand would be to disestablish itself and distribute the savings as corporate tax cuts, Act made that argument and won just 0.7 per cent of the vote. Government intervention and corporate welfare appear part of the new consensus.
Ultimately, strong, sustained growth is the only way to sustainably address issues like child poverty.
It might all sound like an awful lot for Key to do. But, then again, it should take an awful lot to displace Seddon from his plinth in front of Parliament.