Outright majority gives Key an unprecedented opportunity to pursue much needed reforms if he can ignore thoughts of a fourth term

By Oliver Hartwich*

The 2014 general election delivered some remarkable results. Strengthening support for a government after two terms is almost unheard of; and despite allegations of scandal on numerous fronts, the opposition failed to capitalise on any of them. There can be no doubt that it was an unmitigated triumph for the government and Prime Minister John Key personally.

Straight after winning his third election, it was telling to hear the Prime Minister already muse about the possibility of a fourth term. To be fair to John Key, he said “Fourth term sounds great, but you’ve got to earn it.”

He is absolutely right.

Winning elections is not an end in itself. Once in power, the goal has to be to do what is right for the country. It is not sufficient to protect the government’s enduring popularity and secure another election victory in three years’ time, even though that is what the electoral cycle forces our politicians to do.

This election had offered New Zealanders a real choice, not least thanks to the policies proposed by Labour and the Greens. Had they been elected, we would have seen higher tax and spend, government interventions across a number of markets and areas, and a departure from established monetary policy practices. As many commentators (and also Labour MPs like David Shearer) correctly observed, the platforms the main opposition parties presented were the most left-leaning package in at least two generations.

New Zealanders have overwhelmingly rejected this retro-style, semi-socialist agenda. But in doing so, voters have not only punished Labour and the Greens. They have also given National and its support partners a mandate to pursue very different policies.

Over its first two terms, John Key has turned the necessity to work with coalition partners into the virtue of political incrementalism. One might even say that Mr Key and his Minister of Finance Bill English have turned this incrementalism into an art form.

By doing what was arithmetically possible in Parliament, they have successfully kept a check on government spending, started promising reforms on social welfare and social housing, and introduced new initiatives for school education. These are by no means negligible achievements under the circumstances Key and English faced in their first two terms.

Key’s third term should be different, nevertheless. He should feel emboldened both by the electorate’s rejection of the opposition plans and inspired by the first ever absolute majority under MMP.

Absolute majorities under MMP are a rarity. In Germany, it has happened only once over 65 years. It is highly doubtful that Key or any of his successors in the next decades will again have the luxury of getting their agendas implemented without taking minor coalition partners into account.

It is also worth recognising the enormous political capital John Key has accumulated. He is the kind of political leader countries only get every few generations: someone who can easily connect with people from different backgrounds and who can also effectively manage both his party and his cabinet. As far as political leadership goes, there is currently no-one in the developed world who even comes close to these leadership qualities displayed by John Key.

The Prime Minister should see that now is the time to go about those reforms which he may have wanted to implement in the past which he could not do. Now he has the political mandate, the parliamentary majority and political capital to achieve whatever he sets his eyes on. The question is, will he go for it? Or will winning his fourth term hold him back from becoming a bolder reformer than he has been so far?

Where bold reforms are needed is obvious. There is the pay-as-you-go superannuation system with its unsustainable retirement age of 65. There are interest-free student loans, elements of middle class welfare, and the dominance of government provision in health and education. There is the overly complex Resource Management Act, which stifles both residential construction and the exploration of natural resources. There is the complex issue of local government, both its functions and its funding. And finally, especially after this election it should have become clear that the way MMP currently operates does not make New Zealand’s political landscape more stable.

In all of these areas, Prime Minister John Key could make a massive difference if he wanted. It is highly unlikely he would be able to tackle all of them simultaneously but Key and his government should now come up with a list of at least three big ticket items that should be dealt with before the 2017 election. My personal preference for this list would include a radical rethink of the RMA, further education reforms alongside the government’s super-teacher policies, and indeed changes to MMP.

There is a difference between being electorally popular and doing what is right for the country in the long term. Since Key has been likened to Konrad Adenauer, the Chancellor who won Germany’s only absolute majority under MMP back in 1957, Adenauer should also serve as a warning. Adenauer only secured his absolute majority thanks to introducing a pay-as-you-go pension snowball system which all of his advisors told him was financially ruinous. Adenauer ignored all such warnings and governed comfortably but Germany is still paying the price for this policy choice.

Key has proved himself to be an exceptionally skilled politician, especially when operating with slim majorities. This term will show whether history will also judge him as one of New Zealand’s great Prime Ministers. If he is bold enough in his third term, it might even secure him a fourth term.

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*Dr Oliver Hartwich is the executive director of the New Zealand Initiative. The NZ Initiative writes a regular weekly column for interest.co.nz. This is the first article in the series.