By Roger Partridge*
Key came into office in late 2008 in the midst of the worst financial crisis since the Great Depression. By that time, the New Zealand economy was already in recession, with Treasury projecting sharply rising unemployment and persistent budget deficits.
In response to the GFC, governments around the world embarked on Keynesian-style stimuli, of epic proportions. Whether it was Obama’s cash for clunkers, or Rudd’s pink batts programme, the preferred prescription was to spend and, when finished, to spend more. It has left many with mountains of debt that will take generations to repay.
The aftermath of the GFC has been gruesome; littered with nations divided by inequality, rising populism, and dysfunctional governments.
During this period New Zealand faced not just one crisis, but two, with the devastating Christchurch earthquakes. Quite apart from the human costs, forecasters at the time predicted they would cause a decade of deficits.
Against this background, the Key years have been remarkable. Stable government itself has been an achievement. A simple comparison with Australia will suffice: during Key’s time as prime minster he has witnessed four leadership changes across the Tasman. Steady-as-she-goes may have been bad for our media, but it undoubtedly contributed to New Zealand’s rising business confidence, and to long term investment and growth.
The government’s fiscal discipline has also been impressive: not just by resisting the spending affliction that gripped others, but by quickly returning the government’s accounts to surplus – and healthy ones too. Again, the contrast with Australia is stark. While Bill English can take much of the credit for this achievement, it is Key who granted him the licence to be prudent.
Key’s was also a reforming government. After the Fourth Labour government, it was perhaps New Zealand’s most radical in the post-war era. The GST for income tax swap, welfare reforms (the likes of which might have brought down another government), the investment approach to social services; labour market reform, partial-privatisation, reforms in education, including national standards and charter schools: these may have occurred incrementally, but together they comprise a prodigious package of reform.
Of course, there is much more Key could have attempted. And he left many feeling he should have done so – in housing, infrastructure, education and health (not to mention superannuation).
But that he achieved as much as he did under MMP, while maintaining popular support at unprecedented levels, is truly remarkable. Along the way, his resilience and endless self-confidence proved infectious. And perhaps that will be his greatest legacy.
For a slightly different perspective, see Eric Crampton's piece here.
Roger Partridge is the Chairman of the New Zealand Initiative. This article is used here with permission.
27 Comments
"the investment approach to social services"
That approach has nearly universally led to poorer outcomes, so much so that the next National government is in essence proposing the opposite. All the front-line workers have been speaking out, many critical services are either shutting down or on the verge of doing so. No one took the bait: investors saw better investments elsewhere and saw themselves without the need to temper social consciences; those with a social conscience did not have nearly enough capital to match the required values for the incentives.
Just a complete and utter farce.
Silly comment - as a link to Eric Crampton's (also from the NZ Initiative) alternate view is provided at the bottom of this article - and vice versa - Eric links to this piece.
Both folks from the same think tank - which to me suggests the think tank actually lets its executive think for themselves.
There is nothing wrong with opposing values-based positions in society - the more we understand and accept that not everyone thinks like we might, the sooner we are likely to make progress.
I agree with Kate -I have no problems with this article being published -although I disagree with it entirely. I much more favour Eric's article which I think very aptly describes what has happened -especially from a Cantabrian perspective. Interest.co.nz have published two very different views on John Key's legacy from the NZ Initiative. It is up to the readers to come to their own opinion of the merit each case. This seems fair and responsible to me.
John Key and the fifth National Government of New Zealand have presided over the greatest increase in inequality in New Zealand’s history. The adverse consequences of inequality seen in this TED talk will be felt for decades.
Inequality was achieved in multiple ways through regressive taxation policy (lowering income tax and raising GST & taxes on tobacco) and flooding the country with third world unskilled immigrants. Latest count about 70,000 per year. Also allowing unrestricted foreign purchasing of homes.
Foreign purchasing of homes is absolutely endemic. John Key continues to lie about this. Just one example here! This has happened literally tens of thousands of times all over Auckland. Each purchase represents a New Zealander who’s been turned into a tenant in their own country. The result is sky high house prices, and a generation of people in the 30s to 40’s now don’t own a house at a critical period in their lives when they should be getting ahead.
If you’re a baby boomer imagine what would have happened if you never purchased a house back in the 1970’s. Imagine how that would have affected your financial well-being. To my mind the level of foreign buying and government inaction is nothing short of inter generational financial genocide. There’s even a name for the victims “generation rent”.
By all the above measures, and many more, John Key is the worst Prime minister in New Zealand’s history. The fifth National government is the worst government in New Zealand’s short history.
Not everyone is a financial genius or has the talent to earn vast sums of money, we are all different, that does not mean we should accept that if you don't fit into certain categories you don't "deserve" to have somewhere to live you can afford. When I was young even the guy driving the rubbish truck had his own home.
Yes, they should have chosen to go into the methamphetamine industry. That's where the big bucks are now, and this government will bend over backwards to pander to wealthy money launderers. Have to shake your head at the foolishness of anybody who passed up those opportunities to become a nurse or police officer instead.
Here are some other points of view, both well written:
http://www.thepoliticalscientist.org/is-that-all-there-is/
https://croakingcassandra.com/2016/12/06/
"John Key has no doubt won at the game he was playing. He became Prime Minister, stayed Prime Minister and departed from the role of Prime Minister all on his own timetable.
Sadly, that’s not a game whose outcome any of us should be particularly interested in. It has turned out to be far too personal a game of individual ambition and achievement."
Well stated. A legacy of nothing, but personal ambition achieved.
Key borrowed more, and facilitated the sale of NZ ( what he called much needed investment) , Key didn't like criticism ( we saw the watering down of the NZ press under his reign). He has ruled in an era of politics where corporates and lobby groups have made the rules through healthy donations to political parties. I don't rate him as a good prime minister, mainly because along with the other globalist leaders he has lead us sideways out of the GFC, a time of no economic growth but only living off other countries monetary and fiscal stimulus, and the creation of asset bubbles and regulatory rule changes.
Some people have short memories. At worst, Key is guilty of carrying on the same nonchalent approach to problems in the same way Labour did. To pretend NZ suddenly got worse under his watch is to rewrite history; the issues National have been slammed about in the last week retrospectively were ALL issues that Labour did very little about. Housing, foreign investment, trust reform, a lack of capital gains taxes, welfare et al. Little substantive action as a PM, absolutely, but far more dependable than the unthinkable alternatives.
JK does have a positive legacy, what frustrates me is that someone from his non wealthy upbringing would do so little to advance progressive and economically sound social and economic policy. The housing crisis exploded, homelessness shot up, generation rent got locked out of the market permanently.
John Keys failure was his laissez-faire attitude, trust in the market and lack of interventionist progressive policy...he governed for the wealthy few and not in the interests of the many. This combination of factors contributed significantly to the housing market crisis, very little if anything was done about homelessness. They couldn't be bothered to measure poverty let alone take actions to reduce this poverty- the working poor on unliveable wages was par for the course. The banks yet again made enormous profits - 90% of which go offshore - of course JK was a banking man, no coincidence though. Obesity - very little done to protect the health of NZ; 3rd worse in the world, 60% obesity in Polynesian population, maori not far behind and childhood rates upto 1/3. No progressive action there but this suited there mates in the grocery industry as theres some big profit to be made. Immigration - is there actually a policy here apart from open the gates and allow poor quality growth at the expense of AKL. Rivers polluted, water not protected, carbon emissions 40% above Kyoto levels combined with alleged use of fraudulent carbon credits etc etc.
Paula Bennett, Judith Collins or Nathan Bridges inspire no confidence, Bill English - way ahead of the pack. Ultimately JK just didn't care about the other half and he may have believed the neo-liberal theories he sprang from. Did alright, could have been a real leader.
To solve the obesity epidemic and its associated problems we could massively tax sugary and starchy products much like we do cigarettes. Imagine if it was twenty bucks for a loaf of bread or a litre of Coke? The tax money could then be used to provide the population with practically free meat and vegetables.
I feel sure this plan would work.
Of course I am being a bit tongue in cheek here.
Free stomach stapling? Bring back litters as a mode of transport for the rich landowners of Auckland?
Comedy gold...well national could try some progressive policy measures and sugar tax would provide useful revenue to recycle into health initiatives. Coz govt ain't doing sod all about the problem..If you can cut obesity you'll also cut the $500million health bill from said obesity. Litters for the rich, as long as they're not overweight
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.