John Armstrong: Left, right - Key sets up a moving target

John Armstrong

So the National Government is variously inching, shifting, drifting, veering or lurching to the right, depending on where you stand on the political spectrum. Surprise, surprise.

If anyone thought National was going to be some pale reincarnation of Labour minus the political correctness, then they were fooling themselves.

John Key may have portrayed himself as a moderate pragmatist in Opposition - indeed he is still doing exactly that as Prime Minister - but he is still the leader of a party, the fundamental ethos of which is firmly centre-right.

National did not spend its longest period in Opposition since World War II just to keep the government benches warm for Labour's eventual return.

Nevertheless, the Government is a more ideological beast than many expected. The pertinent question is how ideological?

Those who argue National was a wolf in sheep's clothing before last November's election point to what has occurred subsequently - public service spending cuts, the overhaul of ACC, the privatisation of prisons, the unsympathetic treatment of TVNZ, the review of the Overseas Investment Act, the stop on contributions to the Cullen superannuation fund and the hard line on the financial performance of state-owned enterprises - to name but a few things.

The list is hauled out as evidence that National - in league with Act and using the cover of economic crisis - is running a far more right-wing agenda than it flagged in Opposition.

The clues that National would not be a Labour clone were present before the election, the biggest being National's tax policy which vividly showed Key was not quite as centrist as he might have appeared.

Key and Bill English wheeled out a three-stage programme of tax cuts which favoured the middle and top ends of the income scale. Then, to underline this was an exercise in income redistribution from the less well-off to the better-off, National mounted a $3 billion raid on KiwiSaver to pay for part of the tax cuts, leaving many low to middle-income savers far worse off in terms of entitlements than they would have been under Labour.

The other policy which highlighted National's real intentions was its manifesto commitment to revamp the public service. Key may have made reassuring noises that National was going to freeze existing staff numbers overall rather than cutting them. But National's intention to put more resources into the "front-line" necessarily meant cutbacks in the Wellington bureaucracy. It also meant that if some departments needed more staff, others would have to cut their staffing levels. The policy was transparent on where these should come from by highlighting the explosion in policy analysts and public relations, communication and media staff.

Much else of what the Government is doing - such as privatising prisons - was equally well-signposted in the party's election manifesto.

What has perhaps been surprising is the speed at which National has moved in areas where its underlying motive will be questioned. Demanding larger profits from state-owned enterprises is being interpreted by Labour as the first step towards privatisation, if not in this parliamentary term - something National assured voters will not happen - then the next.

Labour was much more cautious, giving advance warning of its intentions before making big changes. But early on, Helen Clark moved audaciously leftwards on some matters such as the scrapping of the Air Force's combat wing and abolishing knighthoods.

There is a similar steeliness about National, which likewise feels empowered through having its mandate reinforced by a post-election wave of popularity.

National - and particularly Key - are much more unpredictable than Clark and Labour were. Each week brings surprises, be it the restoration of knighthoods or the swift appearance of legislation allowing private companies to run prisons.

There is a window of opportunity to do things not that popular before the Budget in late May. After that, circumstances may not be so politically benign with the onset of winter and mounting job losses.

Internal factors may be forcing the pace. Key is results-driven. He does not stand still. He has written to all his ministers asking them to spell out their priorities. He intends to talk to them about their portfolio work and actual or potential problems. This performance review style of management increases the pressure on ministers not only to deliver, but to look tough and in control.

Sometimes this can go too far - the case with ACC and its minister, Nick Smith.

His inflammatory remarks about the corporation's accounts, its levies and costs, and the effect on entitlements helped create the perception that National was moving rightwards.

Smith's behaviour indicated the Government was not above using the tight fiscal constraints as the rationale for pushing more to the right. But in the Beehive, Smith is seen as having badly overcooked things. The subsequent ruckus has probably made it impossible for National to privatise ACC, even if it wanted to go beyond its stated intention of opening the work account to competition.

The better example might be the Cullen fund. National has never been keen on it, so the decision to halt contributions would not have been difficult. Another weather vane is the review of the Overseas Investment Act. New Zealand already has among the world's most liberal rules, and it has been decades since an application to buy a stake in a New Zealand company above the trigger point of 25 per cent ownership and $100 million in asset value was turned down.

Further liberalisation would suggest an ideological motive - and the Government is thought likely to raise the asset threshold. But it will do that to help boost a common market with Australia.

There are other reasons for having a review. After last year's blocking of the sale of shares in Auckland International Airport to Canada's state pension fund, further clarity is needed on what is a "strategic asset" and what is "sensitive".

And the length of time for applications to be processed has officials warning that overseas investors are having second thoughts about bringing their money here.

But all this ignores the other half of the right-left ledger. Such things as increasing the minimum wage, financial help for the unemployed and those on a nine-day fortnight, stopping the SIS monitoring MPs without good cause, fixing up state houses, continuing with the electrification of Auckland rail, being relaxed about flying a Maori flag on Waitangi Day ...

On those scores, the Key Government not only echoes its Labour predecessor, it surpasses it in some instances. It is a world away in ideological terms from National during Ruth Richardson's heyday.

It is highly interventionist, in part because of the recession. But nowhere as much as Sir Robert Muldoon was.

In short, the Key Government is hard to pigeonhole. It is likely to remain so. Its excursion to the right may only be temporary as the dictates of a three-year electoral cycle make themselves felt.

When that happens, National will - as always - not be so much inching back to the left as charging back.