The Clark-Cullen caretaker: If not the flag, then what will be John Key's legacy?

On the PM's curious inability to cash in any of his political capital.
Key: the flag referendum was the first time he tried to spend any of his political capital

In the end, it was probably lucky for John Key that the new flag didn't get sneak home in the referendum. If it had, National would have gone into next year's election with various conservative groups insisting on using the old flag. Awkward. 

But why did the prime minister fail to talk the RSA around? Or, more broadly, middle New Zealand? In the end, even most National electorates rejected the Kyle Lockwood design.

It remains a curiosity that John Key is one of our most successful politicians ever but has trouble spending any of that political capital. 

He has three election wins under his belt and under his leadership, National would be odds-on to win a fourth. In contrast to the Clark-Cullen years, a surplus has proved elusive, but voters have cut him some slack and indeed seen him as the safest pair of hands to deal with crises from the GFC to the Christchurch quakes to the collapse in dairy prices.

Debt has increased in dollar terms, making for exciting Twitter graphs, but a growing economy has seen it reduce as a percentage of GDP over the past three years. Opposition parties keep waiting for the electorate to tire of Mr Key and the next mini-scandal to finally puncture popularity, but he and his party's support has remained stubbornly high. His management skills of his caucus and cabinet have been exceptional. Non-performers have been turned over, and faction-fighting kept in check; an achievement unheard of for a third-term government. He still cleans up in preferred prime minister polls. Most see him as the best steward for NZ overall. 

But on individual issues, he has often been unable to persuade the great New Zealand public to see things his way.

Last year, he reversed course on whether foreign buyers of New Zealand homes should be tracked.

Earlier, Mr Key argued for the sale of Crafar Farms to Shanghai Pengxin and more overseas investment in general. But last September, his government over-ruled the Overseas Investment Office’s original decision and torpedoed the sale of Lochinver to a Chinese company, which on the face of things appeared to have all its investment and economic value-add ducks in a row. The decision was difficult to explain in anything but political terms.

Then there was the privatisation of power companies.

The 2013 Citizens-Initiated Referendum that saw people voted overwhelmingly against asset sales (67% to 33%). The referendum actually came partway through the asset sale process, but Mr Key (as ever) was keenly aware which way the wind was blowing, and his sensitivity to public sentiment coloured National’s policy as it pledged to sell minority stakes in power companies only, and made the politically-savvy but economically-mindless (in terms of getting the best price) decision to reserve some shares for small New Zealand investors (who could onsell them to anyone, including Johnny Foreigner but never mind). It seemed more as though Joe Public had persuaded the prime minister against real asset sales rather than the other way around.

Clark-Cullen caretaker
Mr Key is inspiring when he talks about the fact New Zealand is an export-led economy, and that the future of our exports is in Asia. A free-trade deal with China would have made a great legacy, but the Clark-Cullen government beat him to the punch with an FTA that now seems so far-sighted (even if recent Labour leaders have disowned it in a populist frenzy). Mr Key's government is left with the Trans-Pacific Partnership (intiated by Phil Goff from NZ's end), where stalemated talks delivered such a muted agreement (the PM and erstwhile trade minister Tim Groser can only dream the TPP has the sweeping powers ascribed to it by protestors. And even now, it may never be ratified). 

More generally, there’s a swag of Clark-Cullen policies that National cabinet ministers frequently bag in private – interest-free student loans, Working for Families, Kiwi Bank, the Super Fund, KiwiSaver – which this government has only tweaked around the edges. Mr Key has seemed loath to cash in any of his political capital to persuade the great New Zealand Public of more right-wing alternatives.

Employment law has been fine-tuned, from time to time there has been talk of RMA reform, the special housing area concept pioneered by Labour at Hobsonville Point has been extended, and there's been an increase in infrastructure spending, notably with the UFB and roading. It's something, but it's not the stuff of history books.

So far, this National government has followed its predecessors, sitting on and tweaking reforms passed by Labour (the welfare state in the 1930s, ACC in the 1970s, the Rogernomics reforms of the 1980s, the Clark-Cullen 2000s policies mentioned above). Beyond the hyper-interventionist Muldoon, big structural reforms have always been off the agenda for National governments. Mr Key thinks, correctly, that most Kiwis are middle-of-the-road politically, quite happy with the state playing a big role in many areas. And, in his pursuit of re-election, he hasn’t felt moved to persuade them otherwise.

The flag referendum was the first time the PM put himself out on a limb. 

The loss could well push him back to the hugging the centre. If it does, historians will be scratching around to record a legacy beyond "a pretty good manager."

Tune into NBR Radio’s Sunday Business with Andrew Patterson on Sunday morning, for analysis and feature-length interviews.

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