Business-friendly, with a twist

Of course, John Key is business-friendly. But he brings to National’s leadership an agenda that already goes far beyond business and will widen as he heads to the top Beehive job. He is pro-business but not a business lapdog.

Key comes from business. But he also left business. Business made him rich. But he wants more than money. It is that “more” that business will have to come to grips with. He is no Roundtable clone, even though the business was in is one of the most open-market of all business sectors.

In one sense Key has already made National more business-friendly. That is because his elevation (in the absence of some extraordinary event) to the party leadership today (Monday 27 November) makes it more likely National will lead the post-2008 government.

He is young and attractive. He has charm without smarm. He connects. He draws people to him. He will win back liberal non-voters in 2005 and win votes off Labour whom Don Brash could not reach. Don’t be surprised if National goes into Christmas with a bounce in the polls.

Labour would have preferred gaffer Brash to hang on. Failing that, Labour wanted an early transition so they could have longer to undermine Key.

For a couple of years Labour strategists have talked of dark secrets in Key’s past. So far they have produced none for public consumption and those they have privately trialled have not stuck. One which a senior minister floated to a senior National MP recently was effortlessly falsified.

That doesn’t mean there aren’t dark secrets in Key’s $40 million (this was written without having seen the Hager book). But neither is there anything in his demeanour — or in the comments of people in his past to whom I have spoken — that suggests there are. So the Beehive’s ninth floor beckons.

What will he do when — perhaps we should also add “if” — he gets to the ninth floor?

Factor in these points:

* Key listens. And he takes on board what he hears. That is good news for business but it is also good news for other pressure groups.

* Key learns. He makes mistakes and as leader he will make more because he doesn’t know his party well enough, he is too soon into the job, he hurries and sometimes reaches premature conclusions. But he doesn’t make the same mistake twice.

* Key spent time in a state house as a child. This doesn’t make him automatically the friend of the poor — he had a resourceful mother who got the family upwardly mobile out of the state house — but he does seem genuinely to bother, and not just for economic reasons, that his New Zealand has large numbers of rootless children and young people in South Auckland and similar places. And he says fixing that will be resource-intensive and costly on the Budget, which is not what tax-shy business wants to hear.

* Key advocates corporate social responsibility — companies engaging with and doing good works in their communities. That puts him at odds with the Business Roundtable.

* Key wants a long-run government. That implies taking reform in stages and taking the public with the government — notably, for example, on selldowns of minority shareholdings in state-owned enterprises. But it also requires a degree of selective boldness in policy, not just waiting for the government to biodegrade and leave the Treasury benches vacant.

* Key does not fear to take positions. This is a plus and a minus. The plus would be an inclination as Prime Minister to take decisions and not procrastinate. The minus is that he might short-circuit the consensus-building that makes a strong and durable government and the building of wider public constituencies that make policies strong and durable.

So what sort of policies could business expect?

First, they would lean in a pro-business direction, reducing regulation (particularly labour market regulation), taxes and state ownership of businesses such as SOEs and loosening government agencies’ dominance of social and environmental services by increasing backing for and partnership with non-government and privately owned ventures.

Second, the tone would be moderate but over time — say, three terms — the policy landscape would change significantly. Bill English is a prime advocate of this incremental approach and cites John Howard’s success in Australia.

Third, spending on some social services and education would increase, not decrease. This would limit fiscal room for tax cuts. However, a stronger emphasis on work in place of, or in return for, welfare benefits might offset that somewhat.

Fourth, the state would continue to be active in supporting research and development — probably more active than now — and export development and some other business development. That too, would limit room for tax cuts.

Fifth, Key is a convert to climate change. So preserving the carbon status quo is not an option, whatever the colour of the next government.

In short, a Key government would be more “centre” than “right” but with a penchant for occasional bold strikes.

But there can be no such thing as a “Key government” pure and simple. Much would depend on which colleagues hold the cornerstone portfolios of finance (for which Key in the past has wanted English), education, economic development, health and environment and on who commands the back bench.

An indication of the first will be known shortly when the shadow portfolios are allocated. The answer to the second will emerge over the next year as the pecking order settles in the wake of the change.

So, more business-friendly under Key, sure. But how quickly and how deeply business-friendly is not yet precisely measurable.