Colin James: Companies must weigh party pick

What's the business call in this election - short-term or long-term, tactical or strategic? Most would say short-term tactics require a policy shift. But long-term strategy needs durable policy. Do the two match in this election?

The simple business call goes something like this: lower tax, less regulation, a national interest override of local yokels on resource consents, more roads, guaranteed energy at reasonable prices.

That leads to a general business preference for National over Labour - with recent exceptions in 1987 (except for farmers and manufacturers) when Roger Douglas was on the charge and 2002 when Bill English didn't cut the mustard.

But what might you get on the side?

Don Brash is a boardroom mustard-cutter and so is John Key. Their credibility, however, may well have seen off Act. And without Act in the picture, there is fog. Which is why there is a strategic as well as an immediate dimension in this election for business.

To make a government will take around 48 per cent. If United Future gets 2 per cent to 3 per cent, National would need a near-unimaginable 45 per cent to 46 per cent to make the sort of Brash government business imagines - unless the Greens just miss 5 per cent, when 43 per cent to 44 per cent plus 2 or 3 per cent might do the trick.

Otherwise Winston Peters is in the frame and maybe the Maori Party if the contest is very close. Either means some dilution of National's policy.

On present indications the Maori Party would probably prefer not to have to make a choice but instead acquiesce in a government led by whichever party assembles more votes.

National could count on support from United Future for most of its economic programme, except to the extent it involved real cuts in social spending (which is a constraint on tax cuts).

New Zealand First favours tax cuts but has declared National's promise unaffordable. That is because New Zealand First has substantial spending ambitions, to which Labour could accede more readily than National and which Peters could present as trophies to his constituencies.

Labour would also probably furnish Peters with more than National to attack over the likes of immigration, crime and political correctness - more trophies for his constituencies.

A Brash government dependent on New Zealand First would have to make concessions: among other matters, on tax, some aspects of deregulation, some spending. Abolishing the Maori electorates would be dead because Peters says that must be decided by a referendum of Maori voters. How many concessions would depend on how many seats New Zealand First gets.

Moreover, a Brash government's two most important figures, Brash himself and Key, would be learning the ropes. That has the advantage of freshness and energy but the disadvantage of taking time to get fully in charge.

Now stir in a slowing economy and, as a result, grumpy indebted households. Those are not likely to be easy conditions in which to win voters' gratitude and ready accommodation to business-friendly deregulatory change - especially if Helen Clark and Michael Cullen stick around to exhume 1990s bogies.

The risk for business is that a combination of compromise, newness to the job and a slow economy might give way to the return of a Labour government in 2008 claiming vindication for its higher-tax, more hands-on approach.

In opposition National's rapidly improving front bench would become formidable. National might even knock Peters out in 2008 for a clearer policy run.

And if in government, Labour, the ungrateful beneficiary of the reforms in the 1980s and 1990s and high commodity prices, would reap voter displeasure at the slowing economy, especially if accompanied by static or falling house prices and electricity blackouts. It would also earn displeasure from its special interest groups, especially gays, women and ethnic minorities, if Peters could block new concessions to them.

And that does not take into account the centrifugal impact of a third-term Clark government's dependence on the Greens.

Those would be promising conditions for National to set up a long-run period in government.

But try a different what-if.

Say the economic slowdown is short-lived and households get their balance sheets back in order without undue pain. What if National in opposition went through some leadership agony and/or upheavals getting rid of past-era MPs? What if Labour, having started to address its managerial failures this year, was able to complete that and so defuse the attacks on its competence - and if it didn't need Peters in its governing mix?

National might not then find 2008 a walk-in. Moreover, a number of policy settings, especially in the labour market, might have bedded in and so be harder to reverse.

Getting confused? Now stir in instability. Voters don't like instability.

Peter Dunne will campaign mainly on "stability". He understands best among the small-party operators how much their future depends on keeping MMP and how much MMP depends on stable, predictable government.

A close-run election and pivotal roles for Tariana Turia and Peters would not be a recipe for stability. It might just be a recipe for a referendum sponsored by Labour and National to adjust MMP.

That would enhance the chances of the long-run National government business would prefer.