Key's handling of the asset sales programme has been incompetent for months. This was a long way from where he was at last year's election, when he had shrewdly pitched to sell only a minority share in our public utilities to "mum and dad" investors. As Labour had run on an anti-privatisation platform, Key could legitimately claim, after his poll victory, that he had a mandate to sell.
The partial privatisation programme was the defining issue between the Government and the Opposition. Earlier this year Key had started to win over public opinion and his political opponents were beginning to resign themselves to the inevitable. The biggest pitch was that it made economic sense and was financially prudent. Most of us glaze over when men in suits talk economics so we were susceptible to this spin.
However, it started to unravel when respected economists in recent weeks started saying the numbers didn't stack up.
Then the Maori Council blindsided him.
The council fortuitously got a hearing with the Waitangi Tribunal. It started innocently enough. The tribunal was asked to give an opinion on whether it was appropriate to sell public power companies, which use vast amounts of water, before claims over water rights were held.
Instead of staying out of it, Key couldn't help himself, saying no one owned water. When it became public that the Government had made past Treaty settlements that included water rights, he changed his position, claiming everyone owned water. That implied property rights over water. The Waitangi Tribunal logically supported the Maori Council position.
With the increasing chorus around the economics of the sale and the absolute certainty that Maori would seek an injunction if the Government tried to proceed, the Cabinet caved.
Whatever the Government spin, most New Zealanders will see this as Key bowing in to Maori extortion. He will now be perceived as weak and questions will be asked about his judgment. His new position, that he'll consult with iwi leaders, will embolden Maori negotiators and enrage his own conservative voting base.
This year's Budget had the premise of the Government getting billions from the sales to spend on education, infrastructure and job creation. The delay will have far-reaching consequences for the economy. The Government's present budget forecasting is in tatters. Does this mean National will have to borrow billions more dollars to pay the bills or will it have to make savage cuts to meet the shortfall?
The opposition senses an opening and its tails are up.
And it gets worse. The asset sales delay will guarantee time for the referendum petition campaign now under way to reach the number of signatures it needs. Once completed, the Government will be forced to hold a voter referendum on whether New Zealanders support sales of assets.
Presumably the referendum will reject the Government sale programme. If this happens National is in a no-win position.
If Key tries to proceed he will be acting against the will of the people, thus giving his opponents an electoral gift just months before the general election.
If he backs off from his sales programme he will be seen to be capitulating over his central policy of the last election.
He's doomed either way.
This may well be the week National lost the next election.
