By JOHN ARMSTRONG
John Key's all-too-brief apprenticeship is over. The relative unknown National is grooming to run the party's economic policy is about to step out of Don Brash's shadow.
On Thursday, Michael Cullen presents his fifth and biggest Budget. It will be Helensville MP Key's job not only to pick holes in it but to spell out what National would do differently.
Much of the task of fronting National's response to the Budget will still fall on the leader - as it always does and was always bound to, given that Brash well nigh ran the economy from the top floor of the Reserve Bank for well over a decade.
However, the other pressures of leadership always meant Brash would have to hand over his finance spokesmanship to someone else long before the next election.
After ousting Bill English last October, Brash anointed Key as his likely successor in the shadow finance portfolio by appointing the former merchant banker as his deputy finance spokesman.
Since then, Brash has largely left Key to write the background papers from which the caucus will mould new policy. As part of the handover, Key has been sounding out business leaders and speaking to various sector group conferences, most recently the Food and Grocery Council and the Financial Planners and Insurance Advisers Association.
National has sought to further lift Key's profile by allotting him speaking slots at the party's regional conferences this month.
But with the next election little more than 16 months away and the Budget demarcating the territory on which it will be fought, it is time for Key to make the step up. How he performs will be closely watched within National.
The Budget's income assistance package will boost the annual incomes of low to middle income families by thousands of dollars through such mechanisms as enhanced tax credits and hikes in the accommodation supplement - cold, hard cash for many of the roughly 800,000 voters who earn between $30,000 and $60,000 a year and who effectively determine who wins elections.
National's overriding preference is for broad tax cuts, which it argues is the best way to spur the economic growth needed to restore New Zealand's slipping standard of living.
The party says the Finance Minister will be merely giving back money he should not be taking out of pay packets in the first place.
But come the election, Labour's package will be money in the hand; National will be left arguing the theoretical benefits of tax cuts. And simple tax cuts are a blunt instrument when it comes to helping families with children compared with the targeted assistance Cullen will deliver.
It is a political argument which goes to the core of what makes National and Labour different - the kind of argument Key must win.
Supremely self-confident, but modest with it, Key is already proving a sharp communicator able to distil the complexities of fiscal policy into simple messages.
But while few in National's caucus question his economic credentials, he is still short on political experience. And that matters, given that Brash, too, is a parliamentary novice.
A couple of weeks ago, Brash told his caucus he would reshuffle his shadow Cabinet towards the end of this year, with promotions subject to performance in the intervening months.
"It is my job to make sure Don has the confidence to make that decision if he feels it is appropriate at the time," says Key of his prospects.
If Key fails the audition, Brash will probably have to fall back on Bill English as finance spokesman. He has done the job before.
Otherwise, Brash would be looking at Lockwood Smith or David Carter, who had negligible impact before giving up the role to Brash.
Key's advantage is that he is a fresh face. So fresh, the public might well ask "John who?"
The Helensville MP has been in Parliament for barely two years. Alphabetically bottom of National's most recent intake, he is listed at No 27 out of 27 in National's internal telephone directory.
His official seat in Parliament is so far towards the back of the chamber that he sits further forward when he speaks in debates, still keeping a respectful distance from the power plays and ego-jostling on National's front bench.
Key's entry to Parliament is partly down to former party president Michelle Boag's icy determination to revitalise National's parliamentary line-up - a line-up which shrank from 39 to 27 following National's shattering defeat in 2002.
"We can't afford for him to fail," says one party insider of Key. "We can't afford to push him too far too fast and burn him." Key has had the luxury of being able to beaver away in the background while his boss has grabbed the headlines over Maori policy. But he has not been frightened to confront the savage wit of Cullen, tackling the Finance Minister for his attempts to talk down the dollar.
The forays in the House have been few. The economy is fair humming; opportunities to pillory Cullen are rare.
A father of two still in his early 40s, Key dresses like someone straight out of the money-market trading rooms in which he amassed his fortune before leaving international investor house Merrill Lynch, where he was global head of foreign exchange.
Despite his money market background and being exceedingly wealthy, he is seen as something of a pragmatist - and a listener.
Colleagues were impressed by the amount of door-knocking he did in his West Auckland electorate after defeating party stalwart Brian Neeson in a bitter candidate selection contest.
There is another reason why Key cannot be pigeonholed as some silver-spoon-in-his-mouth Tory high priest of market economics.
His father died when he was 6, leaving his mother penniless with three children to raise. They lived in a state house while she worked as a cleaner and night porter until she earned the deposit for a modest home.
"She was living testimony that you get out of life what you put into it," Key told Parliament in his maiden speech.
"There is no substitute for hard work and determination. These are the attitudes she instilled in me."
One of his biggest gripes with Cullen's Budget is that it will extend welfarism into more New Zealand homes by making families more reliant on state handouts to balance the household budget.
National's pitch - which will be hammered repeatedly over the next week - is that Cullen's surplus is the product of overtaxation, which has allowed him to mount a cynical vote-buying exercise when he should be cutting tax rates or increasing income thresholds at which higher tax rates cut in.
While National's priority is to also give tax relief to low and middle income earners, along with an immediate cut in the corporate rate, Key says there should be tax cuts across the board if conditions allow, "and there is no doubt conditions allow".
He sees room for lifting the level at which the top 39c rate kicks in from $60,000 to $75,000.
"I think it is a misnomer to argue the top personal tax rate is cutting in where people are rich. The incentives are wrong. The incentives are not to work harder. The message from the Government is redistribution will take place."
Key's inclination is to also cut the middle 33c rate to 30c. Alternatively, the $38,000 threshold at which that 33c rate cuts in could be lifted to $41,000.
A blanket option would be to cut the 33c rate to 21c or lift the $38,000 threshold to $50,000. However, that would not help low-income earners and National wants an "integrated" package which gives tax relief to all.
That leaves one question: will National scrap Labour's income assistance programme if it wins the next election?
Key says there are no guarantees National would not change it. If analysis showed Labour was delivering too much to families out of work and too little to those in work, "we would want to correct it".
Brash is far more cagey.
"The likelihood of us reversing the changes which he [Cullen] introduces is pretty low ... it would be very hard to reverse tax reductions or welfare increases he introduces."
But leaving the package in place will leave National with precious little revenue to cut taxes in the way it wants.
National will try to paper over the dilemma by opening a second front on the Budget, arguing it is a missed opportunity to make the economy less vulnerable to cyclical downturns.
National would cut company tax from 33c to 30c and lower that rate over time - rather than spending more on industry assistance which Key scathingly dismisses as "corporate welfare".
National argues the Government can also better boost growth by spending more on the country's infrastructure, especially roading where National would permit greater private sector involvement to "turbo-charge" construction.
National would devote more to the police and justice votes because National would lock up more people and lock them up for longer "because that is what New Zealanders want".
And, though this is yet to become policy, Key favours a review of baseline spending across all Government departments, saying a mere 1 per cent savings would free $400 million to do other things.
The third front on which the Budget battle-lines will be drawn is welfare reform.
With unemployment at a 16-year low, Labour has already made tentative steps towards prodding beneficiaries back into the workforce - and more is expected in the Budget.
However, welfare reform is one of five issues - race policies, crime and punishment, living standards and lifting education standards being the others - where National is seeking strong brand distinction from Labour and therefore must trump the Budget.
National would bring back work-for-the-dole programmes - something which would cost serious money to run effectively.
"We don't want to give the impression there is no role for welfare. The question is whether welfare should be a safety net - or become all-pervasive for all New Zealanders of all walks of life."
In his maiden speech, Key said he wanted to see a society which fostered personal responsibility - a society based on meritocracy, "where every citizen has every opportunity to reach the greatest heights their qualities allow".
Now is his chance.
Key role for rookie MP
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