John Key: tips his Conservative hand, reveals a 'many baskets' strategy for next election

Why National could save itself by losing some support, how John Key is strategising for next year, where Colin Craig's Conservatives fit and what it means for the other minor parties...

On Firstline this morning John Key was talking up National's many coalition options at next year's election, as if he was a man who could walk into the election shop and help himself in the pick n' mix section. It's not going to be that easy, but it could be easier than some people think as the vote on the right fragments.

Yesterday Key spoke openly to Paddy Gower – at least as open as he's been thus far – about the possibility of endorsing Colin Craig in a north Auckland seat and this morning has reaffirmed that, making it apparent that this is a strategic announcement by National. Finally, the signal the Conservatives have craved and which has seemed so inevitable, has finally come – a year out from the election.

Gower pronounced that the Conservatives are now serious players, something I've been saying all this term. It won't please either New Zealand First and United Future, who see the Conservatives as a new competitor in a small slice of the electoral marketplace. Winston Peters has always refused to appear on television with Craig, Dunne called Craig's party "crackpots" at his party conference this weekend – if you want to know who a party fears, look at who they insult or try to ignore.

But National doesn't have the luxury of being that kind to its existing friends; it always seemed likely Key and co would need another option if Labour was able to eat into its 12+ point lead. What Key's willingness to engage on questions about the Conservatives shows is National conceding that the Labour-Greens lift this year to a polling position that has the pair of them neck-and-neck with National has stabilised. Heading into election year, it's the new normal. National's hope that it might be able to govern alone (or all-but alone) now seem forlorn.

And that means National will be forced to use its mana to enhance another potential partner.

What's notable is that Key seems to be leaving the door open to all four potential coalition partners – the Conservatives, ACT, United Future and the Maori Party. It's a policy of not putting your eggs in any one basket. It might seem obvious to keep your options open, but it doesn't come without risk. A glance at that grouping of parties shows a rather messy group of conflicting ideals and personalities. It recalls Labour in its quest for a fourth term, when National mocked its desperation to bring coalition partners on board and warned voters of a "five headed hydra" government.

So why is Key opening the door to his own hydra-government? Because he has little other choice.

One thing the polls have consistently told us this term is that National risks being a victim of its own success (and its partners' failings). As ACT has been sucked into an electoral black hole of its own making it has become very hard to see the party delivering more than one seat, and that only with a pretty clear backing from Key himself (and that he cannot give without some damage to his own brand). Even Epsom voters will be loathe to vote for John Banks, with the smell of corruption still so strong, but history has shown that they are loyal and strategic National supporters and will likely hold their nose in the event of a close race.

Peter Dunne's margins in Ohariu shrunk from 2002 to 2008, before rallying slightly in 2011. But his majority of 1392 is small and still utterly dependent on split votes by National voters. He's most certainly a one-seat party at best.

The Maori Party are under intense pressure - so much so that they're in talks with Mana and Labour likes its chances in the Maori seats. They are most likely a two seat party next year.

So the three current partners are unlikely to deliever more seats than they did in 2001; probably they'll deliver fewer. No government seeking a third term would expect to grow its share of the vote. All of which tells you that National will need something extra.

Winston Peters and New Zealand First? Key has pointedly not ruled him out as a coalition partner, which given the personal antipathy has an air of desperation about it that's unusual for the PM. There are well-rehearsed every good arguments on both sides of the argument as to whether National and NZ First could come together. Peters spoke with a passion against National in 1996 before doing a deal... Would be play third fiddle to the Greens?... Would he join a third-term, dying administration or help launch a new one?... What does he make of Cunliffe?

The reality is that any decision by Key will be poll-driven. But Peters is often painted as the passive figure in this scene awaiting Key's judgment. Duncan Garner reckons Key will make a call on Peters early next year, but I wonder whether Peters might beat him to the punch and make his own call on National prior.

Which brings us to the Conservatives. TV3-Reid has them at 2.8 percent, which is higher than most polls. We'll only see whether that's a trend in polls to come, but I don't think it's disputable that Craig has built himself a strong launching pad. Win a seat and on that poll he'd have three or four MPs on board - the second largest party in government. I'd guess by late next year he could add another one or two.

Gower characterised a National-Conservatives coalition as a potential shift to the right. But it's not as simple as that. The Conservatives pull both ways - socially conservative on smacking, marriage, tougher prison sentences and climate change, for example, but also conservative (as opposed to liberal) economically.

As we have seen with ACT and United Future, coalition partners can't expect that much out of this National government - the odd charter school, perhaps, but not much more. So if the Conservatives can only expect a couple of policy gains, it's as likely they might pull National to the centre as further right.

On housing, the Conservatives would ban foreign buyers and force land-bankers to use their land or else. If National hasn't sold Genesis before the election, that or any other partial asset sales would be off the table. And so on.

So yes, Key certainly has choices. But they are small choices, he may need many and, worst of all, they may be contradictory. The big glaring problem with the Conservatives is that it could kill any other minor party it touches.

Could Colin Craig and Peter Dunne sit around the same table, for example? Could Craig and his anti-Waitangi ideals sit down with the Maori Party? United Future or the Maori Party wouldn't survive that deal.

The best case scenario for Key would be a continuation of the status quo. If that's not possible - and it seems unlikely to get him across the line - then what Key must be realising by now is that the next best option could be the Conservatives on their own, hence this week's signal.

However you put the jigsaw together the Conservatives always seemed like a player to me. But now that Key has acknowledged the new party and admitted it is part of his equations, that means one thing for certain: It will only get stronger. And that could mean some desperate plays by the other minors.