Bloomberg News

Key Set for N.Z. Win as Barbeque Beer Beats Credit Downgrade

December 07, 2011

(Adds two-day national tour in 19th paragraph.)

Nov. 24 (Bloomberg) -- Under John Key’s watch New Zealand’s unemployment rose to a decade high, the budget deficit ballooned and the country lost its top credit rating. That won’t stop the prime minister from registering the biggest election win in 60 years, according to opinion polls.

Billboards with a smiling Key alongside National party candidates across the country testify to his allure with voters who head to the polls on Nov. 26. A former head of foreign exchange at Merrill Lynch & Co., Key’s financial resume has also bolstered his appeal even as protesters abroad rail against bankers and six of 17 euro-region countries have lost their leaders this year.

“People don’t think that all the disasters that have befallen New Zealand, be it earthquake or global financial crisis or international recession, are the fault of John Key,” said Claire Robinson, a Wellington-based associate professor at Massey University, referring to a Feb. 22 quake that killed 181 people in Christchurch. “They think that because of John Key’s experience as a money trader, and somebody who’s made a lot of money, that he implicitly understands about how to run an economy.”

Key’s National party got 54 percent support in a poll of 1,000 voters published yesterday, with the opposition Labour backed by 26 percent. That would be the biggest victory since the National party won 54 percent in 1951. The Fairfax Media- Research International poll had a margin of error of 3.1 percentage points.

Opposition Failure

Opposition leader Phil Goff, 58, has failed to capitalize on the economic slump, the deadliest earthquake in 80 years, an oil spill that coated beaches and a mine explosion that killed 29 people. Goff, whose picture doesn’t appear on Labour billboards with party candidates, had a popularity rating of 12.5 percent in the Fairfax survey.

Key “seems to have both the ability to show that he is an exceptional, talented person while at the same time being the incredibly down to earth sort of person that can quite convincingly drink out of a bottle of beer by the barbeque,” said Bryce Edwards, a lecturer in politics at Otago University in Dunedin.

The prime minister was photographed drinking beer while cooking meat on the barbeque with Prince William in January last year, when the U.K. royal visited Wellington.

Key, 50, has an All Blacks’ rugby jersey signed by national team players hanging in his office. At the opening game of the World Cup on Sept. 9 in Auckland, he sang the anthem alongside the players on the field, and was on the podium to shake the hand of captain Richie McCaw after the team won the final on Oct. 23.

Fatal Disasters

The win, which sparked three days of victory parades, came after a year of fatal disasters. Twenty-nine men died on Nov. 19, 2010, after being buried underground when an explosion rocked the Pike River Mine near the town of Greymouth on the South Island’s west coast.

Three months later the magnitude-6.3 earthquake hit Christchurch, devastating the business district. A larger temblor had shaken the city in September 2010, with no casualties. The nation experienced its worst environmental disaster last month when a container ship off the North Island’s northeastern coast leaked oil and blackened beaches.

The earthquakes led to a slump in consumer spending in Christchurch, the second-biggest city, and the country faces a NZ$20 billion ($14.9 billion) repair bill. The economy grew 0.1 percent in the three months through June from the previous quarter and the jobless rate has stayed at or above 6 percent since the second quarter of 2009, compared with a 4.8 percent average over the past decade.

‘Greece Imploding’

While the Treasury Department forecasts annual average growth of 2.3 percent in the year ending in March, the central bank has said the country may not be immune to a worsening of the European debt crisis.

New Zealand lost its top credit grades at Standard & Poor’s and Fitch Ratings in September, with both assessors citing concern that government and household debt was too high, at 70 percent of gross domestic product in June, according to Fitch.

“We’ve done the best that we can, but the judge of that will be New Zealanders,” Key, who first won election in 2008, told reporters at a Nov. 8 campaign stop in Christchurch. “They see the nightly news. They see Greece imploding, unemployment of 9 percent and above in a lot of countries in the world. On that basis New Zealand, it’s not perfect, but we’re doing the best we can.”

Currency Record

The New Zealand dollar peaked at a record high in August, above 88 cents against the U.S. dollar, before sliding back to less than 75 cents yesterday as the European debt crisis worsened. New Zealand stocks are the developed world’s best performers this year, with the NZX 50 Index down 1.2 percent.

The prime minister is pledging to sell state assets, end budget deficits through spending cuts and create 150,000 jobs if reelected. Goff has promised a capital gains tax and income tax increases for the highest earners to help pay for spending plans, and rejected the government’s asset sale plan.

Key, whose personal fortune is estimated at NZ$55 million by the National Business Review, grew up in public housing in Christchurch after his father died when he was 6. His late mother, Ruth Lazar, an Austrian Jew, had fled to the U.K. in 1938 to escape the Nazis. She married George Key, an Englishman, and they moved to New Zealand in the 1950s.

Hired by Merrill Lynch in 1995 after getting a start in currency trading at Bankers Trust in Auckland, Key rose to global head of foreign exchange in London. That’s where he earned the nickname “the smiling assassin” after firing 50 members of his team in the wake of the 1997 Asian financial crisis and 1998 Russian debt default.

Campaign Stumble

Key today began a two-day bus tour of the nation’s North Island, the most populous, by mingling with commuters that were getting off trains at Wellington’s railway station. Supporters and candidates would be invited to join the Prime Minister on the 50-seat vehicle that will cover 500 kilometers (311 miles) of the country, according to stuff.co.nz.

The election campaign hasn’t been trouble-free for Key. He walked out of a media briefing last week after reporters grilled him about a recorded conversation with a politician at an event in an Auckland coffee shop meant to highlight his endorsement of a small party that could be an ally in parliament. The discussion contained negative remarks about the elderly supporters of the New Zealand First Party, according to the website of TV3 News.

Polls show his plan to sell as much as 49 percent of four government-owned energy companies to private investors is unpopular. Just 26 percent of people in a Colmar Brunton poll for Television New Zealand said they supported the sales, while 68 percent were opposed. The poll of 1,006 voters was conducted from Oct. 29 to Nov. 2 and had a margin of error of 3.1 percentage points.

‘Gray Man’

Goff’s problem is that “he does a poorer job of being that down to earth, authentic politician,” Edwards said. “He’s the gray man of politics.”

At the unveiling of a sign for a new retirement village in Christchurch, Key worked the crowd, chatting to laborers about the New Zealand Cup, a popular annual horse-race event.

“Taking the afternoon off to go to the races?” he asked. “Don’t tell the boss you’re doing that.”

Later at the race he bet on Choise Achiever, handing several 20-dollar notes to a woman at a mobile tote.

His pick came in fifth. When the votes are counted on Saturday though, few will be betting against him winning a second term.

For news and related information: Stories on New Zealand elections: TNI NZ ELECT <GO> Reports on John Key: NSE JOHN KEY ZEALAND <GO> Most read New Zealand stories: MNI NZ BN <GO>

--With assistance from Tracy Withers in Wellington. Editors: Peter Hirschberg, Anne Swardson

To contact the reporter on this story: Chris Bourke in Wellington at cbourke4@bloomberg.net

To contact the editor responsible for this story: Peter Hirschberg at phirschberg@bloomberg.net


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