John Armstrong: Key caught in squeeze with Peters, Cullen

Trouble to the left of him; even bigger trouble to his right.

Squeezed between Michael Cullen and Winston Peters on stage at yesterday's Business New Zealand forum on the economy, National's John Key must have pondered which rival poses the greater danger to his party's promised tax cuts.

For all of Dr Cullen's noisy, angry warnings about the unfairness, the unaffordability and the unworkability of National's package, Mr Peters will have the leverage which makes him the bigger threat.

It may have been slightly unnerving for National's finance spokesman that the first question from the audience in Wellington's Inter-Continental Hotel asked whether NZ First would back National's package in its entirety, given Mr Peters' party is likely to be the only viable coalition partner able to offer sufficient numbers for National to govern.

The typically ambiguous reply from Mr Peters suggested he views the sudden desire to know his stance on tax cuts as a welcome lifesaver in getting his party back into an election campaign from which the minor parties have been shut out.

He criticised National's package for being inflationary. He said it failed to address the "real issues" such as business profitability. He said it did not stack up because National would have to borrow to pay for it.

"So that means 'no'?" ventured Dr Cullen optimistically.

"No. No. No," Mr Peters responded, implying that he was not saying "no".

But he was hardly saying "yes" either. If Mr Peters continues to cast doubt on his willingness to support the package, National will be the loser because voters will believe the cuts will not end up being implemented in their current and generous form.

That was a conclusion which the Prime Minister was yesterday doing her level best to get voters to draw.

But Mr Peters must tread carefully.

He cannot behave oblivious to the pent-up pressure for personal tax cuts which National has fostered. Neither do voters want to be subjected to another guessing game.

Like Mr Key and Dr Cullen, he will be waiting for the next round of polls to reveal how much lift National gets from its package, if any, and be guided accordingly.

In the hiatus, Mr Key and Dr Cullen will continue to flail one another by press statement and media interview about who has been the most irresponsible.

With three weeks to go, they may well succeed only in fighting one another to a standstill.

However, Labour believes its warnings about National's cuts are unnerving voters worried about where the money is coming from and whether it will necessarily mean reductions in Government services.

"Cuts. Cuts. Cuts," repeated Dr Cullen endlessly, as he sought to get the last word in Tuesday night's Close-Up debate with Mr Key.

It was like the dull thud of a metronome and designed to penetrate even the thickest skull.