Key's coalition list a sign of weakness for National, re-birth for Peters & Dunne

It was a day for two Comeback Kids, as John Key announced who he might dance with on election night and Winston Peters & Peter Dunne returned from the wings to take centre stage

This evening, as high winds continued to batter Auckland, I picked up branches in our front yard and thought about Winston Peters and Peter Dunne. In recent years both have been written off as broken men: Peters in 2008 when he and New Zealand First failed to win a seat in parliament and Dunne last year when his refusal to cooperate with the Henry inquiry saw him forced to resign as a minister. It seemed that after long years of service and stickability, the winds of political fortune might finally blow them down.

Yet at the start of election year 2014 they look as sturdy as any trees in the forest of parliament; political necessity, it seems, offers deep roots. Today's announcement by Prime Minister John Key that he's open to a coalition deal with New Zealand First and his reinstatement of Peter Dunne as a minister in his government provides political shelter belts for both late in their political careers and, frankly, saves two men who might otherwise have struggled to win again.

Key has, as promised, laid out who he's willing to work with should National be in a position to negotiate a government after this year's election. United Future, ACT, and the Maori Party top the list as members of the current government.

But as we all know, we're talking about a third term here with the centre-left Labour-Greens coalition neck-and-neck with National in the polls. This is like no election year Key has faced before and he no longer has the luxury to espouse the sort of principles that saw him rule out a coalition with Peters in the past two elections. So onto the list come the Conservative Party and New Zealand First.

In short, as I wrote in November, Key knows the election will be close and his job may depend on just one or two seats. Today's announcement confirms his "many baskets" strategy. That is, he's admitting that his current four-pronged coalition is unlikely to be enough to win the Treasury benches for another term. All four parties have lost support this term and can expect to receive fewer votes than in the past election. So to command a parliamentary majority he's going to need another friend or more wasted votes (and he can't risk relying on the latter).

Key's hope will be that the Conservatives can do the job for him and that its leader Colin Craig doesn't over-reach between now and November. Talking about repealing this law or that in January only serves to box in National and the Conservatives and is unhelpful in the extreme. It just goes to show that he can't gamble the House on Craig alone, and so he has to swallow a dead rat and refused to rule out his nemesis, Winston Peters.

This shows just what lengths he's willing to go to in his desire to stay Prime Minister. Because let's make no bones about it, Key will have hated opening the door to Peters. Hated it.

Key and Peters do not like each other. Key's refusal to do business with Peters in the past has cost New Zealand First votes and earnt Peters' ire; it cost him a seat in 2008 when older conservative voters who might otherwise have backed New Zealand First were told that a vote for it was essentially a vote for Labour and the Greens. New Zealand First got 4.07 percent, Simon Bridges got Tauranga and Peters got three years in purgatory.

Today's announcement removes the hold Key had over Peters; indeed, it's an acknowledgement that Key's dominance of the New Zealand political scene is waning. A Prime Minister who has been able to govern pretty much however he's wanted for five years, today admitted he may need an enemy to be his friend, while that enemy has no need to return the love. Not until the day after the election, anyway.

While still far and away the most popular and powerful politician of the day, Key can no longer presume to have enough votes to not care about whether New Zealand First makes it back or not. And he knows it. As a result, Peters, already on a healthy 4.3 percent in Pundit's poll of polls, can refuse to say who he might work with after the election and therefore maxmise his votes from both the centre-left and centre-right. He can do what he does best – campaign on the platform that he'll "keep the other buggers honest".

And to what must be his deep chagrin, Key has today built his hustings for him.

(The greatest risk to Peters is now Colin Craig and Key might hope that the cranky vote splits and New Zealand First gets stuck on 4 percent, thereby usefully wasting some anti-government vote. But that's a line of thought for another post).

And what of Peter Dunne? After the Kitteridge report was leaked and everyone pointed their fingers at Dunne (despite his repeated denials), he cut a tragic figure. For some, he was a laughing stock. He refused to show the emails between him and reporter Andrea Vance to the inquiry investigating the leak. He claimed a point of principle around privacy. Others saw a man hiding the smoking gun. Either way, it cost him his ministerial portfolios. But now he's back, a minister outside of Cabinet once more.

What's he done to deserve that? What's actually changed since he resigned on June? Well, nothing really.

It was Helen Clark who created the trend of temporary sackings for ministers and Key has continued with the ploy. But it's one I still don't pretend to understand. Last June Key said Dunne had to hand over the emails or resign. Dunne resigned. The inquiry Key launched effectively said nothing could be proved and failed to nail a culprit, but insisted there were no other suspects except Dunne. Key had been determined to find the source of the leak, saying this was all a "very serious matter".

Seven months on, we still don't know who leaked the report. Most observers assume it was Dunne, Dunne denies it. Key can't say who leaked it. Does he, like most others around parliament assume it was Dunne? Or does he think his inquiry missed someone? If not, does he then think Dunne is lying to him and to the public? And if so, how is Dunne now fit to be a minister again?

Even if he's not lying, what has changed that made him unfit to be a minister in June, yet fit for service today? It seems completely inconsistent to me.

Yet today Dunne got his reprieve. To answer my earlier question, he's back because he's given National the votes they needed for law changes such as the SkyCity deal and because he's committed United Future to National for as long as they both shall live. Whether or not he leaked and lied, loyalty has its reward.

As a result, Dunne is likely to be able to celebrate not just a renewed ministerial career (and his associate conservation role will allow him to again try to win the huntin' and fishin' vote) but a tacit endorsement by National in Ohariu. Again, Key has had to admit he needs Dunne, whether he likes it or not.

It's not a day Key will have enjoyed, but it was a necessary day; a day any leader looking for a third term would have grudgingly but willingly endured. And it sets the scene for a compelling political year in which strategy and the pull of Peters, Dunne and other minor party leaders will be as important as major party policy. Game on.