KEY POINTS:
National Party leader John Key says he could negotiate post-election coalition deals with parties such as United Future or the Maori Party even if National gained enough votes to govern alone.
He would not speculate on keeping United Future leader Peter Dunne as Revenue Minister, but said he had "proven himself over the years to be a competent minister".
Mr Key was commenting after the United Future conference in Auckland at the weekend at which Mr Dunne predicted "great change" in a pitch to work with a National-led Government.
Yesterday on TV One's Agenda, Mr Dunne said the election was "National's for the losing".
Last night he said: "Clearly we would consider what was going to provide the best stability over the period of the term and maybe for the future."
Mr Key said United Future's tax policy outlined at the weekend was "interesting and predictable".
It was in line with Mr Dunne's previous comments about dropping the top 39c rate and aligning the top rate with the business tax rate.
Mr Dunne announced a policy to simplify and cut personal tax rates to 10 per cent, 20 per cent and 30 per cent. It would take effect in 2010 and would cost $4.5 billion a year.
Mr Dunne said he had suggested such cuts to Finance Minister Michael Cullen for the May Budget.
The Budget set out a three-year tax-cut programme, starting on October 1, mainly through adjustment to the thresholds at which tax rates rise.
Mr Dunne's proposed tax rates are:
* 10 per cent on income up to $12,000;
* 20 per cent on income between $12,001 and $38,000;
* 30 per cent on income over $38,000.
United Future has long advocated income-splitting as central part of its tax reduction policy (where total family income can be split between the two earners, reducing the income on which high rates apply).
The party also wants gift duty abolished, and to abolish tax on the first $1000 of honoraria for volunteers.
Dr Cullen's tax-cut programme is costed at $10.6 billion over three years. The key elements are a new lowest tax rate of 12.5 per cent and a lifting of the thresholds.
Mr Dunne also set out proposed dates for various referenda he wants on constitutional issues, including MMP, the future of the Maori seats (2010), on whether New Zealand should remain a monarchy (2012), and a final referendum on a written constitution and the Treaty of Waitangi.
He told the 80 delegates that while he supported MMP, he believed the public expected another say on it and he thought it would be endorsed.
On the question of replacing the monarchy with a New Zealand head of state, he said he had never made any secret that he wanted a change.
"I'd like to see us have a constitutional system very similar to the Irish presidency, and I think that could be achieved."
The problem with the debate about the constitution was that all sorts of different issues - a republic, the Treaty, a written constitution - got wrapped up together.
"What I have tried to do is unbundle them and take them as bite-sized chunks. Let's make progress on things step by step."
A referendum on the Treaty would be about its current role and place and how it was to be reflected in constitutional arrangements.
While there was a view the Treaty should be there, it was important to structure the debate more clearly "so that if we do try and develop some new arrangements for New Zealand, the Treaty is not lost sight of".
