An investment opportunity for trader Key

John Key is the face of the government but he has yet to put his stamp on it. That is a challenge before him as he bids for a second term. Part of the answer may be whether he trades Key the trader for Key the investor.

First, some numbers. If ACT right now had only three seats (the most, on present indications, it will have after this year’s election), it could not on its own give National a majority, as now. And if National had two fewer seats, the Maori party’s five would not do on their own either.

Throw in two post-election wild cards: no Peter Dunne; Winston Peters (plus Michael Laws) with six seats. Key would definitely need both ACT and the Maori party for a majority and/or have to do ad hoc trades (or more) with Peters — even if he trounces Labour again.

One way out is to drive National’s vote share up. That would be unusual for a party in office. But Labour did in 1938, 1987 and 2002 and Key might this year, given Labour’s lack of bite and the paucity of centrist alternatives. But these are uncertain times and in other countries of our sorts governments have been going down, not up. Key would improve the odds if he were to add authority to likeability, put his stamp on the government as well as be its face.

Authority would require that when he says something it is the government speaking, not John Key musing. It would require that when a minister does something, it is the action of an unmistakably John Key minister, not of someone who happens to be in the ministry.

That Key doesn’t yet exude that authority in part stems from his having dropped into politics only seven years, and Parliament only six years, before reaching the ninth floor. He lacks depth in his party and in reading and navigating politics. There are gaps in his knowledge of this country from his time abroad. He is not yet fully Prime Minister, in the mould, say, of Sir Keith Holyoake or Jim Bolger.

Late in 2010 he gave some glimpses of that sort of Prime Minister in press conferences and some events at home and abroad. But what are we to make of his Christmas message in his December 16 weekly “Key notes”, when he said the three “challenges and opportunities of 2011” he would be thinking about on holiday were “how we can lift the performance of the economy”, the rugby world cup and the election?

The first is the work of Bill English, who more than any minister has put his stamp on this government, though that is not widely visible because he is not the face of the government.

The second could be generously interpreted as boosting tourism and lifting morale. The third might, in the hands of a man about to put his stamp on the government, be about distilling from new thinking here and abroad long-range, far-sighted and game-changing policies to promise voters for a second term.

But (a tiny few aside) traders don’t change the game; they play it. Key has talked “step-change” but has stuck to “what works”. That implies small steps.

What if the trader turned investor? English last month gave him a cue.

Attached to the half-yearly economic and fiscal update was an “investment statement”, believed to be a world first for a government, as were accrual accounting in the 1980s and the Fiscal Responsibility Act in 1994.

This little-reported innovation details all the government’s property, plant and equipment assets, financial assets and liabilities. It includes schools, defence installations, state-owned enterprises, investment funds (like ACC, the Earthquake Commission and national superannuation) and debts and other liabilities. It scans the next five years investment plans. (Local councils go out 10 years, which has sharpened their financial planning.)

It gives English and the Treasury tools to rationalise underutilised assets, ensure assets are where they are needed, identify low returns and explore if alternative mechanisms to 100 per cent government ownership would work better. These are in effect tools for more effective spending.

Spending now is thought of as “cost”, a drag on taxpayers. The investment statement challenges politicians and public service managers to rethink government activity as “investment”, from which to extract a measurable return.

The Conservation Department is an ahead-of-the-game example. Chief executive Al Morrison has appointed a chief operating officer and a business adviser to highlight the economic value, not just the intrinsic value, of the conservation estate — and thereby to enhance it.

Investment in innovation could be another example. Key says innovation is at the heart of the “lift in economic performance” he wants. He could require all new policy to be assessed as positive or negative for innovation investment — a new box to tick for new policy alongside the fiscal and regulatory boxes.

But when Business New Zealand’s Phil O’Reilly put this to him at a symposium last month Key skirted round it. Key the trader is still the face of the government. Key the investor has yet to arrive.