Key brushes aside talk National could govern alone; says coalition partners needed; McCully rejects talk he would let Craig win East Coast Bays

By Lynn Grieveson

Despite recent polls suggesting National could govern alone, Prime Minister John Key has reiterated National was unlikely to achieve an outright majority in this year's election and would still need coalition partners, even those that National supporters may consider "wacky", such as Conservative Party leader Colin Craig.

Asked by reporters outside the National caucus meeting if Craig's defamation case against Green Party leader Russel Norman left National open to criticism about "wacky coalition partners", Key said: "Unfortunately we live under a thing called MMP. That's the system we have and in the end, while it is always technically possible that we could form an outright majority at the next election, I think most New Zealanders know that is at the very least an outside chance."

"So in the end I have got to do what I have got to do, which is try and form a government that at least would head in the most part in the direction we would want to take the country," Key said.

"It's just a reflection of the system. We haven't had an outright government since we have had MMP and I think Germany, in the better part of 50 or 60 years, had had one, so I am not saying it's not possible. And if 51% of New Zealanders want to vote for us in the next election we would be immensely grateful, but I have to get up in the morning and work on the principle I have to form a coalition government."

Key said if Craig was going to be part of the parliamentary process "to be honest he's going to have to get used to a lot more rough and tumble than he is currently demonstrating," but said leaders of smaller parties could expouse views on "slightly way out topics."

McCully keen to stay

Meanwhile, East Coast Bays MP Murray McCully, who holds the electorate in which Craig lives, told reporters he intended to stand as its electorate MP again. He said any suggestion he might campaign "half-heartedly" in order to deliver the seat he has held for over 25 years to Craig was "silly" and would not go down well with his constituents.

Some have suggested National could gift the North Shore electorate to Craig to ensure his Conservative Party entered Parliament, potentially with an extra one or two MPs to give National a coalition partner.

Asked what would happen if Craig ran against him, McCully said "then I hope I would win and he would come third or fourth" and insisted falling on his sword had never been on his agenda. Although he replied "I always listen to the Prime Minister" when asked what he would do if Key specifically asked him not to campaign against Craig, he later said that to answer otherwise would not be in the interests of his political career.

McCully did not seem to place much weight on the suggestion he might hand the seat to Craig, joking: "I spend most of my time on planes trying as best I can to represent New Zealand overseas and it's always amusing to read these tales. It's very interesting to wake up in some tough place on the other side of the world and find in newspapers that people are trying to give your seat to Colin Craig and your portfolio to Winston Peters. I wonder what I am doing wrong some days."

Cunliffe's 'lapse of judgement'

Meanwhile, Labour leader David Cunliffe has admitted to "a lapse of judgement" of his own and said he would apologise to his caucus at its regular Tuesday morning meeting.

Facing reporters outside the caucus meeting he read a prepared statement saying a trust set up last year to fund his Labour leadership campaign complied with party rules and the parliamentary pecuniary interest register but "did not fully represent" the values he would like to bring to the leadership. He denied that the trust was set up to avoid disclosing donations to the Register of Pecuniary Interests, saying "it was to give donors a higher level of confidentiality and also to keep me removed from the detail (of who had donated)."

Cunliffe has gone back to the five anonymous donors who contributed to the fund, asking them to waive confidentiality in the interests of transparency. Two donors, who contributed NZ$8,300 between them, wanted to remain anonymous. Their donations would be returned and, if this left the trust in deficit, Cunliffe said he would make up any shortfall from his own pocket.

"We have all learned from this experience," said Cunliffe." For a start the Labour party's internal rules do not align well with the pecuniary interest rules and I think there is a general sense that the use of trusts is now not meeting the requirements of transparency".

He said spending on his leadership campaign "would have been in the order of $20,000 odd.

"If we are rescinding donations the trust may be in deficit and I will be making that good because the buck stops with me."

Three donors, businessman Selwyn Pellett, longtime friend Perry Keenan and Labour party supporter Tony Gibbs, contributed NZ$9,500 between them and were prepared to be identified.

Questioned about his connection to other trusts, Cunliffe said he was beneficiary of the Bozzie Family Trust "and a bare trust called ICSL which does savings and investments."

The Bozzie Family Trust (which he said was named after a family pet), owned his family home and had been declared to the pecuniary interests register.

"It's standard," he said. "My wife is a lawyer and most lawyers have their houses in trust as a matter of protection from liability."