Armstrong on Key

John Armstrong warns National must brace for an end to the honeymoon:

The Prime Minister will win plaudits for his composure after being manhandled by a couple of lone protesters and for his determination that the incident not deter him from returning to Te Tii Marae in future.

Once again, Key has displayed the kind of leadership that makes a nonsense of Labour’s pre-election spin that he was too shallow and too inexperienced to hold the country’s most challenging job.

Labour should worry that it misjudged Key so badly in the run up to last year’s election, and that he is coping so comfortably with the demands of prime ministership, while building mana, prestige and authority in the process.

Yes, it was almost amusing as they kept sneering how weak and incompetent he would be, and how he could never match Helen. That ended with the first Leader’s debate.

The wake-up call, however, was the latest household labour force survey showing unemployment rising by 10,000 in the final quarter of last year.

It is the jobless and economic growth statistics on which Key’s Government will ultimately be judged. Everything else will be peripheral.

I tend to agree. In fact I think the economic crisis really means there is no honeymoon. What will be important though is to compare what actually happens over the next three years with the forecasts of growth and unemployment (and debts and deficit) that Labour left National.

It is basically impossible that there won’t be more people unemeployed in 2011 than 2008.

Labour would have spent more infrastructure-wise had it remained in Government, partly because the second phase of its tax cuts would have kicked in a year later than National’s and partly because the Opposition thinks more should be spent.

I disagree with this assertion. Labour could only match 20% of National’s broadband infrastructre plans. Labour couldn’t match National’s planned spending on roads. In fact up until a few weeks before the election, Labour was criticsing the level of National’s infrastucture spending as reckless and dangerous. The tax cuts are also a red herring, as they are funded from cutting KiwiSaver subsidies.

Where the parties differ is in David Cunliffe, Labour’s finance spokesman, urging National to think again and cancel April’s tax cuts because they favour the better-off and the extra cash will be saved rather than spent on consuming goods and services.

The tax cuts were financed from cutting KiwiSaver subsidies. Under Labour’s policy 100.00% of the cash would have been saved and 0.0% spent. By converting Kiwisaver subsidies to tax cuts, a far larger proportion will be spent.