PM KEY's BUSY AND POPULAR FIRST 100 DAYS

UNCLAS SECTION 01 OF 03 WELLINGTON 000047 SIPDIS SENSITIVE STATE FOR STATE FOR EAP/ANP PACOM FOR J01E/J2/J233/J5/SJFHQ E.O. 12958: N/A TAGS: PGOV PHUM KDEM NZ SUBJECT: PM KEY's BUSY AND POPULAR FIRST 100 DAYS WELLINGTON 00000047 001.2 OF 003 ¶1. (SBU) Summary. The first 100 days on the new National-led Government have been active and largely well received by the New Zealand media and public. The Government has kept its campaign promises pushing through tax relief and tougher law and order measures, starting to reform the bureaucracy, and advancing relations with Maori. Key's government has begun to address the economic crisis. At this early stage, Key and his ministers have managed to avoid missteps and have polled a stronger satisfaction rating among the public than going into the election last November. End Summary. Record Pace Set at Forming Government -------------- ¶2. (SBU) As Prime Minister John Key completes his first 100 days in power, the country's love affair with his National Party Government shows no sign of abating. Key impressed with the speed at which he established his government after the November 8 election. Traditionally, the formation of a government in New Zealand takes weeks as various parties engage in lengthy negotiations over policy and cabinet positions. Clark took one month to form her government after the 2005 election. By contrast, Key formed his with the Maori Party, ACT and United Future in a mere 11 days. While Key's desire to participate in the APEC Leaders Forum in Peru was a driving factor, National insiders predicted that the government would form in roughly two weeks after the election because Key's plans were already worked through. Judgment Calls on Cabinet Vindicated -------------- ¶3. (SBU) Key faced skepticism as to some of his cabinet appointments. Although most appointees were well known and signaled well in advance, some came as a surprise and raised questions about Key's judgment. None provoked more skepticism than the elevation of Paula Bennett, a 39-year old with only three years in parliament, to the important position of Minister of Social Development and Employment where she would have control of welfare policy and a NZD20 billion budget, the largest in the public sector. The appointment of Bennett, who once lived on welfare for five years while she raised her daughter, drew a sympathetic but nervous initial response from those working in the welfare sector. Labour supporters called her a lightweight and her appointment reckless. Yet, Bennett has turned out to be one of the early high flyers of the new Government, not least because she personally broke up a fight between youths in her West Auckland electorate, but mostly because she has proved to be a hardworking and competent minister. Competent Forays into Foreign Affairs -------------- ¶4. (SBU) Key's performance overseas as Prime Minister has been generally well-received in NZ. The NZ press praised Key's first appearance on the international stage at APEC in Peru, impressed by his energy and self assurance. At the January 27 Pacific Island Forum Leaders meeting in Papua New Guinea, Key worked hard and successfully to establish relationships with his counterparts. Key's statesman credentials have been burnished by his successful hosting of Australian Prime Minister Kevin Rudd and the President of Timor Leste, Jose Ramos-Horta since coming to power. In March, Key is expected to host the President of the Republic of Korea Lee Myung-bak and plans to visit Rudd in Australia. ¶5. (SBU) The new Foreign Minister Murray McCully has warmed to his new role despite an early stumble over the closure of Bangkok Airport. He has continued the previous administration's call for a return to democracy in Fiji and held firm in the face of provocation from interim Fijian leader Frank Bainimarama. The new Trade Minister Tim Groser has spent more time out of the country than in it during the first 100 days. He has worked hard to advance NZ's agenda of trade liberalization overseas and recently announced from Delhi that New Zealand and India will launch bilateral Free Trade Agreement negotiations. Although the Government faced isolated and predictable criticism for not speaking out against the Israeli incursion into Gaza (as Helen Clark continued to do as opposition foreign affairs spokesperson) others praised its efforts to rebalance New Zealand's Middle East policy. Overall, the Government's limited forays into international affairs since coming to power were seen as measured, competent and in keeping with NZ's traditional postures. Quick on the Legislative Agenda -------------- ¶6. (SBU) The pace set by Key in establishing his government carried over into the opening act of his first 100 days in power. On his WELLINGTON 00000047 002.2 OF 003 return from APEC, he quickly enacted his legislation agenda. He ordered parliament to go 'into urgency' (i.e., extending its operating hours) to introduce and even pass a series of bills. These included passing new tax cut legislation and introducing a raft of tough law and order bills. National also repealed the highly unpopular Electoral Finance Act as they had repeatedly promised to do while in opposition. Outside of his legislation agenda, Key immediately instructed health officials to make the breast cancer drug herceptin available for 52 weeks. Faithful to his campaign pledge to address bureaucracy largesse, he also ordered public sector chiefs to open up their books to examine expenditure. The legislative session lasted until mid-December, when parliament adjourned until February 8, 2009. Holiday Period Break Invited Criticism -------------- ¶7. (SBU) The National-led government's 100 days of action was largely put on hold for the traditional four-week summer holiday with only a skeleton operation running throughout the period. Labour leader Goff, hoping to score political points, castigated the Government for its perceived inaction on the economy during this period. Goff was supported by his predecessor Helen Clark who said other governments had cut their Christmas breaks short so they could continue to focus on a response to the global crisis. However, such criticism failed to resonate with New Zealanders because a) Key was reported to be on holiday but still busy with government affairs, b) the New Zealand public expects the government to take time off in summer (as Clark always did),and c) many New Zealanders were also vacationing during this period. Key Acts Cautiously on Economic Intervention -------------- ¶8. (SBU) Despite being a supporter of free market principles, Key has embraced a certain degree of economic interventionism in his first 100 days in power. Many of his spending proposals are existing capital expenditure projects that would move ahead regardless of the economy. Key resisted pressure from Labour to adopt an enormous stimulus package, but has explained that what he has proposed puts New Zealand's package (on a per capita basis) among the top five developed countries. Key, however, will try to portion out spending over time to target specific weak points and maintain the momentum of capital spending. Mindful that New Zealand has an operating budget in the red and a vulnerable credit rating, Key has not been prepared to spend freely if it means indebting future generations of New Zealanders. While he has cut regulation to stimulate business growth, he has pointedly refused (so far) to commit public funds to bail out struggling NZ businesses. This position, though, may be difficult to defend if the integrity of NZ's important export sector worsens and unemployment rises above 10 percent as some economists are predicting. Kept Promises Earns Support -------------- ¶9. (SBU) A hallmark of Key's first 100 days in office has been his determined implementation of campaign promises. His initial phase of governing has tracked closely National's First 100 Days Action Plan announced in April 2008. By closely adhering to his campaign promises, Key has effectively undercut pre-election claims by Labour that he has a hidden right-wing agenda despite his centrist credentials. Prior to the election, Labour repeatedly called Key untrustworthy and labeled him "Slippery John." However, Key has frustrated his opponents by establishing in his 100 days a popular agenda that has been clearly signaled well in advance. Although he did invite the hard-right ACT Party into government, Key has so far kept it at arms length and even signaled a willingness to work with the left-wing Green Party. Despite Labour's claims, Key has satisfied New Zealanders that he is delivering what he promised the country and what the country had voted for - a pragmatic and moderate government. Race Relations Prominent in Early Days -------------- ¶10. (SBU) Even before he came to power, Key had made significant strides in building a constructive relationship with the Maori Party and the wider Maori community. In power, Key has made this relationship one of the most prominent features of his Government's first 100 days in power. Since the election three events have underlined Key's positive relationship with Maori. The first was his invitation to the Maori Party to join his government, even though National did not technically need its support to govern. The second was Key's successful February 6 National Day visit to WELLINGTON 00000047 003.2 OF 003 Waitangi, the birthplace of modern New Zealand. There he was greeted with genuine warmth by Maori leaders in a manner not seen in recent visits by political leaders. The third was Key's signaling that his Government intends to continue the momentum established by the previous government in addressing the historical grievances of Maori, although National says it will expand the Maori middle class rather than to fund state programs that incentivize a continuation of an underclass. Country Gives Key Seal of Approval -------------- ¶11. (SBU) Recent polls shows that the pre-election popular support for the National Party has carried over into the immediate post-election period and even soared to a record high in one poll. The February 18 3-News poll found that National recorded the highest-ever level of support for any party at 60 percent compared to the Labour Party's 27 percent. (Note: Traditionally, the 3-News poll tends to favor the Labour Party. End Note). The poll also showed that Key is New Zealand's most preferred prime minister with 52 percent. Labour's leader Phil Goff, who has struggled to get media coverage since taking over from Helen Clark after the 2008 election loss, only registered 3.7 percent support. Goff was easily eclipsed by Clark who polled second behind Key at 13.8 percent. Four out of five respondents believed that Key has performed well as Prime Minister and has exhibited strong crisis management skills and sound judgment. ¶12. (SBU) The February 22 Colmar Brunton poll, New Zealand's most prominent political survey, also underscored that the Government's post-election honeymoon shows no sign of diminishing. The poll found that support for National had reached 56 percent, double that of Labour at 28 percent. In preferred prime minister ratings, the Colmar Brunton poll reflected the 3-New poll with Key at 51 percent with former Labour leader Clark on 10 percent and current Labour leader Goff at just 6 percent. The February 1 Roy Morgan poll showed more modest support for National over Labour at 48 percent to 31 percent, respectively, but still a large 17-point gap. Labour out of Step -------------- ¶13. (SBU) Key and his government have continued to receive positive press. Leading political commentator Tracey Watkins of the Dominion Post daily wrote that Key "has barely put a foot wrong since the election." Goff and Labour, however, are viewed in less glowing terms and have faced press criticism in the wake of its clear-cut election defeat. In his February 14 column, John Armstrong of the New Zealand Herald posited that by "installing Goff and Annette King as leader and deputy, Labour is failing to undertake the generational shift which Key's leadership has done for National." Armstrong concluded that Labour in opposition lacks humility. Wrote Armstrong, 'It is as if last November's election result was some inexplicable mix-up which placed Labour on the wrong side of the chamber; a horrible mistake which will be rectified when everyone comes to their senses." Comment -------------- ¶14. (SBU) Despite the economic recession and continued law and order issues, the public in general still seems to trust Key and believe he has proven a competent and strong leader. However, Key will be aware that at this stage he, like the public, is still in a relative bubble, as New Zealand has yet to feel the full effects of the global economic downturn. Public feeling could sour quickly, particularly if people start losing their jobs in large numbers. Nevertheless, National has a large cushion of goodwill at the moment. If Key manages to replicate Clark's once-magical ability to always stay one step ahead of the media and the public, and to constantly scan the horizon for trouble, then his honeymoon could continue for some time yet. End Comment. Keegan