Key gives signals on coalition partners Dunne, Craig favoured; Peters bluffing

Prime Minister John Key gave crucial hints today to his thinking on coalition arrangements after the 2014 election, including no interest in discussing New Zealand First leader Winston Peters's "bottom line" requirements on nationalising KiwiSaver.

Speaking at his post-Cabinet press conference, Key signalled that United Future party leader and sole Member of Parliament, Peter Dunne, could return as a Minister outside Cabinet after being forced to resign in June when he refused to cooperate with an investigation into leaked government documents.

That would depend partly on the imminent report of Parliament's Privileges Committee, but a return to the ministry was a possibility in the current parliamentary term, Key said.

He also indicated he could work with the Conservative Party, led by fundamental Christian businessman Colin Craig.

"Might do. Might do," said Key in response to questions about whether he could work with Craig. Asked whether such a tie-up could alienate liberal National Party voters, Key said it was the nature of MMP politics that junior coalition partners "will have pluses and minuses."

"In the end, all I know is that MMP is a coalition-driven system."

Recent census results suggest a new electorate seat on Auckland's North Shore will be required - an area where Craig has shown some electoral popularity.

Key was dismissive of Peters's announcement at the New Zealand First party conference last weekend to make it a "bottom line" condition of the party's membership of a coalition that KiwiSaver funds be placed under government control and management.

"You guys have spent your careers trying to analyse what he says and you've got more sense out of the Mad Hatter's Tea Party. He talks in riddles, he doesn't stick to what he says, it's a waste of time having discussions that are about a bottom line.

"There are no bottom lines with Winston Peters. He will do a deal with who he feels like doing a deal with."

Peters claimed current KiwiSaver providers are making excessive fees for managing some $16 billion of New Zealanders' retirement savings and that a government provider would both charge lower fees and use the funds to "buy back New Zealand", including farmland sold to foreign investors and privatised state-owned enterprises.

Peters was proposing a "risky" strategy of "putting all your eggs in one basket" when the current system ensured competition among different investment services. Peters's suggestion the government-run fund should also carry a government guarantee was also "a massive problem".

"If it's capital protection, it's saying to that group there is only upside potential and no downside risk and as we know from financial markets, that's never a strategy that a smart government will underwrite because there are times when markets will go up and down."

He faced no questions on the government's other coalition partner, the Act Party, whose sole MP, John Banks, was committed for trial on electoral fraud charges last week, relating to contributions to his Auckland mayoral election campaign in 2010.

(BusinessDesk)