17 Nov 2008

Pragmatism makes swift coalition deal possible

5:30 pm on 17 November 2008

After a week of frenetic activity, National Party leader John Key stitched up his government on Sunday, writes Radio New Zealand's political editor, Brent Edwards.

It was a dramatic and fast turnaround from election night when it was clear that National would need only the support of the ACT Party to govern. However, Mr Key met UnitedFuture's Peter Dunne and the Maori Party as he sought to build a more broad-based government.

Those who wondered why National dumped former leader Don Brash in favour of Mr Key got their answer not just during the election campaign, but also on Sunday. Could Mr Brash - who delivered the infamous Orewa speech - have managed to draw the Maori Party into a confidence and supply arrangement?

Mr Key was able to do so mainly because of his pragmatism. He is not trapped by National's past, nor does he appeared trapped by any of its policies. Just months ago the party repeated its intention to start the process of scrapping the Maori seats from 2014. It was - for National - an issue of principle.

On Sunday principle was pushed aside. The policy has been dropped, not just for this parliamentary term, but for good. Mr Key made the decision with little reference to his colleagues and with no reference to party members.

He says he expects National Party members to understand his reasons for reaching a deal with the Maori Party. Aside from abandoning its policy on the Maori seats, National also agreed to review the foreshore and seabed legislation. There are, however, no guarantees any changes will emerge from the review.

In a final concession, Maori Party co-leaders Pita Sharples and Tariana Turia were appointed ministers outside Cabinet. Mr Sharples is the new Maori affairs minister and Ms Turia the minister for the community and voluntary sector.

They will expect to have control of their budgets and this is where Mr Key might face problems. Under National's agreement with ACT, the two parties have decided to run a series of reviews of government spending.

Ms Turia is adamant, however, that no one from either the private sector or any other political party will be looking at her budget. Will Mr Key be prepared to allocate her money and allow her to spend it at her whim? Or will he expect accountability and control over all public spending, including spending by the two Maori Party ministers? If so, does that conflict with the agreement with the Maori Party, which says both parties "recognise the importance of mana maintenance and enhancement for both parties".

Inevitably, tensions will arise. Just how Mr Key manages those tensions will determine whether this unlikely partnership is a success or not.

On the other side of politics, Mr Key also faces big challenges. How long will ACT rein in its reforming zeal?

In its agreement with National, ACT has been satisfied by the decision to set up a range of committees and reviews. There are no promises about what might be done. Equally though, there is plenty of scope for radical reform emerging from a series of reviews.

Take, for instance, the decision to set up taskforces - chaired by people from the private sector - to run a ruler over public spending. None of the areas has yet been identified, but if this government is serious about constraining its own spending, the reviews will have to look at education, health and welfare.

Mr Key acknowledges it is likely those reviews will identify areas of public provision of services which could be better carried out by the private sector. He says it will be up to the Cabinet expenditure control committee, though, to decide whether to act on any of the recommendations these taskforces make.

If it does, National might face the accusation it does have a hidden right-wing agenda. If it does not, National is likely to disappoint its business backers who expect this government to do things differently.

Lack of action would also disappoint ACT. It clearly wants to promote greater private provision of services currently provided by the public sector. Opening up accident compensation to private competition is on the agenda, but ACT has much more ambitious plans.

Will ACT leader Rodney Hide - with Sir Roger Douglas prodding him from the back benches - remain tolerant for long if National does not act decisively?

Mr Key has a tough job balancing those demands with the demands the Maori Party will inevitably place on him. He has done a remarkable job in bringing these two sides of politics together within a week, but for him this is just the beginning.

He finished the job of forming a new government on Monday by announcing his Cabinet. That, too, represented a balancing act, although, boldly, he named Paula Bennet minister of social development and employment and made new MP Steven Joyce minister of transport. Many of the other new Cabinet ministers have no previous ministerial experience.

Not everyone made it into Cabinet and the casualties include long-serving MPs Lockwood Smith and Maurice Williamson. Both had embarrassed National during the campaign and paid the price. Mr Williamson is a minister but outside Cabinet. Dr Smith did not make it at all but as a consolation has been offered the role as Parliament's Speaker.

In his first week since the election Mr Key has proven organised and decisive. He is clearly not afraid to make bold and tough decisions. Nor will he automatically reward time-servers. Nevertheless, questions remain about his leadership. His pragmatism has allowed him to make the deals necessary to form a government with broad support. How pragmatic will he have to be to sustain that support?