Key's smile shows full set of shark's teeth

This was classic attack politics. You get in first with your version of events. In a sound-bite democracy no-one remembers your opponent's rebuttal.

To watch John Key have Parliament eating out of his hand is to catch glimpses of Helen Clark in her heyday and, dare one say it, even David Lange in his. Just glimpses, mind you.

He's not shy of using sarcasm, though it has less impact than Miss Clark's acid rain. He falls well short of replicating what was her brooding and intimidating authority. While he has learned much from observing Miss Clark, her style is not really his. Still, there is good reason for placing him alongside such exalted company.

During one question time this month, Phil Goff asked Mr Key what responsibility he took as Prime Minister for the forecast deficit ballooning out from the original estimate of $2.4 billion to a whopping $16 billion.

For once, Mr Key's guard dropped.

The House got some rare, undiluted passion from the Prime Minister.

Yes, he took full responsibility. He took full responsibility for helping the people of Christchurch. He took full responsibility for preserving social programmes that helped people get through the economic recession. And he took full responsibility for keeping unemployment low, unlike in other countries hit by the global downturn.

What was apparent was that Mr Key had instantly and effortlessly shifted up a gear - one rarely witnessed in public and which left Mr Goff trailing like flotsam in his wake.

Labour should be afraid, very afraid. Behind Mr Key's affable facade lurks a politician as utterly single-minded, focused and merciless as Miss Clark was and Mr Lange wasn't. Any other leader enjoying the seemingly invincible poll advantage over his opponents that Mr Key does may well have ignored Mr Goff's release (finally) of some new policy at Labour's election-year congress last weekend.

But Mr Key takes nothing for granted. He's determined the coming election will be fought on his terms - as Winston Peters discovered in February when Mr Key declared he wouldn't work with the New Zealand First leader.

Now Labour is likewise finding out to what lengths Mr Key will go to spike its guns, even though it is largely firing blanks.

Labour's efforts to look fiscally responsible have been leg-ironed by National resorting to such skulduggery as "banking" the proceeds of its part-privatisation of some state companies in the Government's accounts before the shares have even been sold. That leaves Labour - which would not sell the assets - with a $4.5 billion hole in its capital spending budget before it has even started.

Mr Key circled Labour's congress like a great white pointer waiting to strike and chomp Labour off at the knees while Mr Goff was still persuading the public his party was standing on fiscally balanced feet.

Delegates had barely wound up last Sunday when the Prime Minister was slamming Mr Goff's promise to raise the minimum wage to $15 an hour and reintroduce tax credits for firms with research and development programmes, the latter being funded by bringing agriculture under the emissions trading scheme in 2013 rather than National's (now movable) date of 2015.

The following morning, the Beehive spin-machine was at full throttle, pulling predictions out of Department of Labour documents showing job losses of 4000 to 6000 workers from a $15 minimum wage.

Moreover, incorporating agriculture in the ETS would spark price rises for milk, butter and cheese.

As for the R&D tax credits, Labour's estimate of the maximum cost for the open-ended scheme of no more than $200 million a year was significantly below the levels Labour itself had budgeted for just before losing office in 2008.

This was classic attack politics. You get in first with your version of events.

You paint the worst possible scenario as the inevitable consequence of what your opponent is proposing. You leave the facts behind. You know in a sound-bite democracy, no-one remembers your opponent's rebuttal.

So Mr Key didn't mention that the Labour Department had told ministers international evidence of the impact on the job market of raising the minimum wage was mixed and that most businesses simply absorbed the cost.

As for dairy prices, Mr Key was swiftly reminded National had insisted they were set by the international market.

Mr Key can't have it both ways. But that won't stop him saying prices across other sectors such as transport would have been even higher had National not revised the ETS.

Mr Key was also on weak ground with the R&D tax credits. Two months ago, Science and Innovation Minister Wayne Mapp was hailing Statistics NZ figures showing a "dramatic" increase in spending on R&D since National took power.

In fact, our level of R&D spending remains pitiful - just 1.3% of gross domestic product, below the 2008 OECD average of nearly 2.3% and hopelessly adrift of Finland (3.45%) which New Zealand politicians hold as a role model.

National abolished the tax credits in part to fund its personal tax cuts, finally persuading the Treasury that would do more for economic growth.

The absence of the latter should have given Labour an advantage. But Mr Goff got bogged down, unable to answer questions on a policy which is hardly going to be the game-changer Labour so desperately needs.

What should worry Labour is that even in the one area where it has public opinion firmly on its side - partial asset sales - Mr Key will most likely blunt Labour by flagging tight conditions on foreign ownership.

In short, Mr Key's strategy is to keep squeezing Labour so hard it's struggling to retain what's left of its core support. But it is not just about wrecking Labour for this election.

That already looks to be in the bag. It's also about leaving Labour in poor condition to fight the next one.

 - John Armstrong is The New Zealand Herald's political correspondent.


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