December 19, 2016

John Key’s departure from the political stage is at once both shocking and totally understandable. Ever the trader, he bought into the National Party when its stocks were tanking in 2002 and sold out with its polling at near record highs. Political watchers were aghast – why give up when you’re on top of the world? Key was on track to win the next election, which would have equalled Sir Keith Holyoake’s four straight victories, thereby placing him amongst the all-time great New Zealand prime ministers. Why throw it all away?

Publicly the National Party managed a smooth transfer of power to Bill English and Paula Bennett, although its short leadership contest pointed to difficulties ahead. Key’s announcement and the constricted timetable for choosing a new leader was designed for maximum shock and awe. It gave English’s rivals in Steven Joyce, Jonathan Coleman, Amy Adams and Judith Collins little time to organise against him. National MPs and supporters were left reeling; their talisman had gone and in such situations, it is only natural to reach for stability. Key made sure English was their man.

Outwardly National’s MPs and its boosters in the media have been all smiles. The party has transitioned to a new leadership team that balances experience with new faces, they say. They are united. Nothing much has changed. Yet talk to more considered people on the centre-right and privately they will express disappointment in Key for doing this. They have invested years of blood and treasure in his and their party’s success, and he has left them for purely selfish reasons – making obtaining a fourth (and fifth) term ever more difficult (even though Key’s personal stock had started trending down). In the past, Key has made a big play of being upfront with voters on issues like the date of the election and his preferred governing arrangements. Yet at the last election, he failed to tell the public or even give a hint he would only be in charge for two-thirds of the term before handing over to someone else. His supporters and voters are right to feel aggrieved.

The previous Prime Minister deserves accolades for the state of the country’s books and the growing confidence he instilled in its people, but the method of his departure should colour his legacy. In January Key said, “My position hasn’t changed: I enjoy being Prime Minister and leader of the party, I think I’m making a difference. In the end, I’ll only stay there as long as the party and the public of New Zealand want me, but that’s [a fourth term] my intention.” As late as 24 September, only a day or so after he’d apparently told wife Bronagh of his intention to quit before the end of year, Key told TV3’s The Nation he would be going for a fourth term and it was his intention to both stay for the full period and not hand the leadership over to someone else. Obviously, it was nonsense, but taken at face value it shows Key understands the importance of providing leadership certainty. The fact he abandoned his party and the country 10 weeks later has left a bad taste in many people’s mouths.

When announcing his resignation, Key said he had intended to go earlier but the earthquakes intervened. It was an act of God that could have far reaching implications for our new Catholic Prime Minister, given the delay means he is being introduced to the public at the worst possible time of the year. There is a reason Apple launches its new model iPhones in September rather than just before Christmas. While most of the public has been distracted by busy shopping malls and work parties, National turned the political world upside down. Political junkies have digested this news and accepted the new leader, but the voters will only just be starting to chew on it. Key is gone – and he was their guy. Now there is a new guy in charge. What’s his name? Feliz Navidad.

It will take a lot longer than a couple of weeks in mid-December for the voters to absorb what has happened. Key and English engineered a short leadership contest to knock out cabinet rivals, but in doing so they robbed the public of a level of understanding about why Key was going, why English was best to take over and what that means for the future. You only need to look at the Clark to Goff transition to see how a shock leadership transfer left the new captain without mana in the public’s eyes. It is not entirely analogous, given National made its change while in government, rather than after a humiliating electoral loss. But English will suffer from the same sense of illegitimacy that other installed leaders have faced. We can rationalise that prime ministers are not chosen at large, but democratic authority comes of the voters, for the voters and by the voters. It is not conferred by King John.

Further to that, the public is about to check out until late January. English will drop off the radar at exactly the time he needs to be creating a narrative about his leadership. Voters will arrive back in the real world with a new (old) leader and it’s all going to seem a bit weird. The messages about renewal will have faded. They didn’t elect this guy and that means English will be on the same potential-PM platform with Andrew Little a lot earlier in the election cycle than opposition leaders have enjoyed in previous contests. While English will be able to use the power of incumbency to execute policy initiatives and pass a budget, to the public he will have as much claim to legitimacy as Little. Both will start the year almost even-stevens.

Luckily for National, Labour has been slow to grasp the reality of the situation. Little looked positively prime ministerial on the day Key announced his retirement, magnanimously praising his former rival’s decade of public service. But by day two he was back fighting the last battle, attacking the Key government’s failings, rather than pinning the administration’s successes on the guy heading out the door. He then moved straight into questioning the new PM’s policy agenda, rather than hammering away for the next few months on the themes that should define the rest of English’s tenure. The only words Labour needs to utter until March are “the past”, “out of touch”, “illegitimate”, “not dealing with the real issues”, “National Party in disarray”, “arrogant” and “time for a change”.

Transfers of political leadership ordinarily lead to a loss of public support. Think Tony Blair to Gordon Brown, or the numerous Australian leadership spills. The public do not owe the new leader anything, and time robs him or her of any residual authority that being in government conferred. That’s why English made his first big mistake in ruling out an early election. His team’s reasoning is that it gives them time to establish English as prime minister, there is an expansionary budget to pass, and the public does not like voting early. Rubbish. The best thing English could have done would have been to signal an intention to seek a democratic mandate to lead. The act of doing so would have put him on the front foot and conferred the authority he lacks from having the swipe card to the ninth floor tossed to him by the last guy.

Throw in a disgruntled National backbench who were rolled by the new leadership team with frighting ease and there is a case to be made that National’s stock is heading for a correction. English’s second mistake was failing to adequately cater for the naked self-interest of his more junior colleagues. To avoid looking like a tired government, English didn’t need a new broom – he needed a Dyson.

Instead of achieving renewal, he left several ministers in place who clearly should have gone, and in the process built up a huge pool of resentment. While backbenchers bottled their ability to force change this time and advance up the rankings, it would be foolish to think future leadership questions will be resolved so bloodlessly. In addition to that thwarted ambition, there is growing fury in National’s rank-and-file at what they perceive (with some justification) as the left-leaning direction of the administration. Just as Helen Clark’s departure precipitated an internal realignment of Labour’s positioning and power structures, Key’s departure could burst the dam – unleashing a torrent of previously pent up factional currents. Collins’ leadership campaign, with its implied criticism of National’s current direction as soft, was but an aperitif to the BBQ buffet of discord to come (her cabinet demotion will not have helped either).

I’m not alone in likening Key’s shock move to a self-interested utility-maximising currency trade. That’s how he made his millions after all. The thing is, one of the most successful features of his administration was its predictability and certainty. The government made a virtue of setting clear targets for the public sector and holding itself accountable for them. Further, think of the big policy changes Key made, or its approach to any issue or crisis. It was all about building trust.

Key is a master of signalling his intentions, testing lines, assessing feedback and slowly building up support for a change of direction or acceptance of a negative issue. Shock announcements rarely feature. Had Key been following the same communications plan as he did for, say, the mixed-ownership model for state asset sales or the GST tax swap, he would have spent months dropping hints, building up the case, shaping his message, listening to feedback and gaining the public’s confidence, before announcing his decision, by which time most people probably think the decision has already been made or wonder what all the fuss was about. To use another trading analogy, markets love certainty and hate surprises – and Key has traded away his government’s certainty and given us the biggest political surprise we’ve had in decades.

New Zealand has long sneered at the instability of Australian politics and for a long time we have been justified in doing so. We’ve had five Prime Ministers since 1990. They’ve had five in the last decade. However, the way things are placed, we might soon join them in a prolonged period of political uncertainty. Key’s departure has stunned the political market. He bought low and sold high. Citing the same adage, the opposition’s stock looks a lot more attractive than it did just a few of weeks ago. It will take some time for the market to settle and we learn the true cost of recent events.

* This is the first Summer Newsroom contribution from our pseudonymous political insider Hon Jefferson Smith – a writer who is not a politician but has had close involvement in the machinery of NZ politics.

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