John Key quits while he’s ahead – so what’s next for New Zealand politics?

John Key has stepped down as New Zealand’s prime minister, citing a desire to spend more time with his family. AAP/David Moir

No-one saw it coming. Not even the press gallery did, even when called in early for Monday’s briefing from New Zealand Prime Minister John Key – who unexpectedly announced his resignation. This takes effect on December 12 when the National Party caucus will elect a new leader and, in effect, a new prime minister.

Key will later leave parliament altogether, but close enough to the general election to avoid a byelection in his electorate of Helensville.

We can speculate about hidden or ulterior motives, or even a caucus spill. But, for the time being, we may just take Key at his word: that he is standing down because he wants to take the toll off his family. He never saw himself as a career politician, so longevity in the job was never an end in itself.

Key’s legacy

Key will certainly be remembered as the prime minister who led New Zealand through disasters.

He came to power just after the global financial crisis of 2008. He did not impose strict fiscal austerity, choosing instead to borrow and spend.

He saw the country through the horrific Canterbury earthquakes, the worst natural disaster since 1931, and the Pike River coal mine explosion that killed 29 people. Just recently, another earthquake struck, in Kaikoura, and Key was out there in the helicopter to boost local morale and promise government support.

On becoming prime minister, Key made a controversial pledge that New Zealand superannuation would not be touched so long as he remained in office. This was not quite what one expects from a centre-right government.

So, now that he is going, we can anticipate a full-on scrap within government ranks about whether the new prime minister should attack that entitlement in some way, possibly as an election policy.

Key is, by training, a currency dealer; that’s how he made his fortune. And so he would no doubt hope to be remembered as a leader who boosted New Zealand’s economy and improved its chances in the world as an exporter. But with the Trans-Pacific Partnership now virtually a dead duck – thanks to US President-elect Donald Trump – he may not have a lot to crow about.

All the same, Key has been a remarkably popular politician, serving as prime minister since November 2008. But his popularity in some opinion polls was beginning to slide, even though the National Party brand is still riding high – at 48% support recently, up from 47% at the 2014 election.

So, Key quits while he’s ahead. He has loved the job, but has had enough and wants to leave with integrity on his own terms. He leaves as a leader, and not in defeat.

What’s next?

Many expected Key to lead the National Party into the next election, due in late 2017, and hence bid for a fourth term in office. But, by stepping down now, he makes a clean break and allows his successor to establish their leadership in the new year.

This need not come as a shock. Any sensible leader should think ahead about moving on and leaving the field open for a competent successor. Unfortunately, few leaders do it this way, and their political lives “end in failure” – as British MP Enoch Powell once rather brutally put it.

So, it’s now “game on” for the next prime ministership and for the next election.

The opposition Labour Party has just won an important byelection. That was a morale-booster, and now the contest at the next election is looking more promising for Labour leader Andrew Little.

Key’s successor is still unknown, but he has strongly endorsed his deputy, Bill English, to succeed him.

English is much more of a career politician, having entered parliament in 1990. He led National to a disastrous defeat at the 2002 election, when the party gained less than 21% of the vote. But English has performed well as finance minister; he is seen as a compassionate conservative and a sensible economic thinker.

The next prime minister, whoever it is, has post-earthquake reconstruction to think about and inherits an economy that only appears on the surface to be doing well. It’s largely boosted by immigration numbers and a construction boom, thanks to a shortage of housing supply and an asset bubble.

The New Zealand economy is no rock star when it comes to labour productivity, and too many Kiwis are being left behind in real economic terms. Many are struggling to make ends meet; many young people are simply giving up on the Kiwi dream of secure home ownership and a decent chance for starting a family. Homelessness, house prices and inequality will surface as critical issues at the next election.

The Labour Party has a new spring in its step, thanks to Key’s decision to step down. The outcome of the next election is not as clear as some pundits were thinking it was.