Colin James on Key’s management in the context of the 2011 election for Management Magazine August 2011
John Key looks to be cruising to a second term. But will that term be as cruisey as the first? Will he then have to place bigger bets? Does he have at 50 the nerve he had at 25? Will his decentralised management style still work or he need to exercise stronger and more definitive leadership?
In short, is the election on November 26 a ho-hum event, an obligatory tick-the-box in the life of the Key administration. Or will it mark a turning point from Key’s first-term clean-up after the GFC towards a strategic rebuild of the economy and reshaping of social services? Or a turn towards a younger generation of Labour MPs who represent the rising majority of the electorate?
There is a set of numbers that put Phil Goff in power, though alongside the Greens it needs Winston Peters, now more a setting than rising star, and/or the Maori party, still angry at Labour.
And it would need a shock for which National gets blamed or an outrage by the government — both unlikely. Some think Key’s determination to sell down state-owned enterprises comes close but that is more likely to shore up Labour’s core vote than drive voters out of National. In any case, Labour is not yet run by its generation X and Y MPs and its policy rebuild is still work in progress.
Moreover, Key and his ministers are playing safe. As in 2008, they are much keener to neutralise risks than take them. They are confident households’ necessary balance-sheet rebuild gives voters an understanding of and tolerance for national budget stringency. In any case, the pre-election impact of that stringency will be limited.
But after the election that may well change. Key and Co make much of the GFC’s impact, by any measure no easy induction. But the work gets harder on November 27. How Key responds will likely define his prime ministership.
He faces big policy choices in a rapidly changing world and country and his support matrix may not be cosy. That calls for smart and uplifting management — in short, leadership. Is Key that leader?
The incremental deregulatory track (asset sales, ACC, RMA, labour laws, all flagged to voters for decision at the election) does set a direction that is becoming clearer but will at some point need than ad hoc reasons to be convincing. Affordability of superannuation and health services may start to rankle more with under-45s. Unless China falters, the big wage gap with Australia is likely to widen. Maori matters are on the table with WAI262 and the constitutional review.
Sometime in the next three years “more with less” from the government will become “less with less”. There are limits to agency chief executives’ innovative capacities and back-office efficiencies. Voters getting less from less will become more numerous, building change-the-government constituencies for 2014.
And Labour might in 2012 get itself a leader who can distance it from the Clark era, build a forward-looking policy platform and solidify its vote.
Then there is the post-election majority makeup. Just possibly, though most unlikely, Key might get an outright majority but even so he would need to keep at least one support party sweet for a third-term deal unless he could get the election system changed to one favouring single-party government. Another super-majority, as now when he can make a majority with either ACT or the Maori party (which often vote against each other), is also unlikely but even if he had one, could he do the cosy deals he did in 2008?
Both have caught the support-party virus. ACT sacked its deputy leader, then its leader in a hostile takeover. The Maori party expelled an MP.
Don Brash is not back in politics for the perks. He will want real concessions and otherwise is likely to keep ACT on the cross benches. Pita Sharples and Tariana Turia — and whoever lines up to succeed them if next term is their last — cannot leave room for Mana to accuse them of selling out tino rangatiratanga or for Mana and Labour to associate them with National policies that can be painted as against the interests of their largely lower socioeconomic constituents.
Key has a powerful tool in his likeability and a capacity to soothe and placate that works a treat with lobby groups and ruffled support parties. He learns fast and (mostly) applies what he learns. He can be decisive and knows when and how to pull rank. And he binds ministers to him with his decentralised management style.
In a Management article in February 2010 Key drew a parallel between his management of his ministry and managing a trading floor: a collective house view is formed of the short and medium term, which must be supported by the economic fundamentals and take into account what clients are thinking but which also gives clients the “right” advice; individual traders are expected to take a view; they are held more accountable for whether they are making money than whether they holding to the house line.
So with his ministers. Simon Power, who has had wide latitude, has great respect for Key’s capacity to trust ministers but also keep a bead on them. Bill English described the cabinet in 2009 as a “loose coalition of the self-employed”, with, he added this year, “a healthy balance between decisive discipline and allowing individual ministers to pursue issues they think are important”.
The Key ministry’s first-term “house view” has been incremental pragmatism — what works. It has edged in a business-friendly direction. It has shunned big-picture goals in case that makes voters nervous. As a senior minister describes it, a proposal is put up for debate, it gets a tick and gets done and then the minister moves on to the next proposal. Steven Joyce has proved particularly adept at that.
There are three drawbacks with tick-and-move-on.
One is that some ministers squander capital (to take the trading floor analogy). Gerry Brownlee lost the eminently winnable debate on mining. Anne Tolley crudely imposed what should have been a saleable version of “standards” and got the backs up of the very people she needed for its successful adoption.
The second drawback is that if the government doesn’t paint a big picture, opponents will. This hasn’t mattered in the first term but, for example, as SOE selldowns get under way, getting a firm voter “tick” might need a better argument than holding down government borrowing.
The third drawback is that Key doesn’t look in charge. English has looked more in charge, in command of the money and across many portfolio areas. That, too, could be a problem in a second term as voters take a second look at some policies.
There are two other clouds in the Key sky. One is a willingness to do deals: a labour law change for Warner Brothers in return for bankrolling the Hobbit; extra gambling licences for Sky City in return for a convention centre. This has got some in business worried that politics is now back to special pleading and favour-seeking.
And there is a dark side to this sunniest of Prime Ministers. Unionists and teachers have had a flash of it. If the list lengthens, Key’s high ratings, National’s most powerful campaign weapon, might wilt.
Put it all together and a picture emerges of a second term much choppier than the first. Key looks about to be tested as he has not yet been in politics. He will need all his quick uptake, capacity to placate and ability to get the best out of high-performing ministers.
Clearer-sighted, longer-range, goal-oriented leadership could help. Whether he can do that in a second term is the big question underlying this election.
He has surprised repeatedly before. Want to bet he can’t do it again?