The Key Govt believes it has regained the momentum its critics claim it was losing. The PM himself is remarkably buoyant, despite having to dance on a pinhead over earlier declarations he would not raise GST. And he also confessed to being “sloppy” in disposing of his shares in an Aust uranium exploration company. These political peccadillos, and apparent differences with coalition partner the Maori Party over the scope of its Whanau Ora policy, have hardly dented either the PM’s, or the Govt’s, popularity, with the February Herald Digipoll recording National’s support still around 56%. Other polling indicates many respondents liked Key being “Prime Ministerial,” giving the country the leadership in charting new directions for the economy.

The initial focus was on the cash for individuals (through tax cuts) rather than on the behavioural changes the tax reform is meant to produce, both for individuals and property investors,or on the very substantial economic programme, embracing resources (water, petroleum, minerals), science and innovation, a hub for global financial services, infrastructure investment, and social sector reforms.

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The Govt’s tax programme looked at first to be no more than a matter of shifting the cash around, rather than developing a tax system with lower rates of income tax, and a broader base, as an essential element of growing the NZ economy. The full impact of the tax reform will become clear in the detail: how far Bill English will go, not just in lowering the top rate of tax, but the intermediate and lowest steps. He was preoccupied this week with GDP revisions, which showed the economy has been grinding along in first gear since 2005 (less than 1% growth) when everyone thought it was booming.

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