Key stands behind comment that S&P more likely to downgrade Labour govt than National; Says received comment in email from 'source'

Key stands behind comment that S&P more likely to downgrade Labour govt than National; Says received comment in email from 'source'

By Alex Tarrant

Prime Minister John Key is under fire for a comment he made in Parliament earlier this month that rating agency Standard & Poor's had said it was more likely to downgrade the government's credit rating if Labour was in power.

Key said he stood behind the comment, which he received in an email from a trusted source who attended a meeting between New Zealand and Australian bank economists, and Standard & Poor's analysts, in early September.

Labour this morning accused Key of lying about what he said Standard & Poor's had said, following comments from S&P analyst Kyran Curry to the New Zealand Herald that Key's version of events would not have happened.

"In Auckland last month, I might have talked about the importance of the Government maintaining a strong fiscal position in the medium term but I would never have touched on individual parties," Curry told the NZ Herald.

"It is something we just don't do," Curry said. "We don't rate political parties. We rate Governments."

Got it in an email

At his post-Cabinet press conference in Wellington on Monday, Key told media he was not at the meeting with Standard & Poor's in September, but that he had received an email on September 6 from a trusted source who was at the meeting.

That source told Key Standard & Poor's said there was a one-in-three chance that New Zealand would get downgraded and a two-in-three chance it would not, "and the inference was clear that it would be the other way round if Labour were in power," Key quoted his source as saying in the email (see the full email below).

“The person is known to me, they’re known to be very trustworthy. I rang the person, had a conversation with them and it was relayed exactly as I relayed it in the House," Key told media on Monday.

Key said he had not spoken to Standard & Poor’s to confirm whether S&P had made the comment.

“The person was at the meeting. I simply got the email, thought it was rather interesting, rang the person up. I’ve dealt with them before. They’ve given me information before which has been correct,” Key said.

The person was obviously confident that what he was telling Key was correct, he said.

“I wasn’t at the meeting, but all I’m telling you is it’s not a random comment I made up. I received the email, I verified it with the person. That’s it.”

What Key said in Parliament

Here is an extract from Alex Tarrant's October 4 article, Credit rating downgrades take centre stage in Parliament's last week as Opposition parties lay blame with govt, National blames Labour.

New Zealand's credit rating was now the same as Spain's, Goff said, adding National had constantly derided Spain as being an economy in trouble.

"It may well be, it sounds logical," Key said before quoting a line from the Fitch release which noted New Zealand was well-placed among the world's highly rated sovereigns.

"I will say this," he added. "When Standard & Poor's were giving a meeting in New Zealand about a month ago, what they did say was there was about a 30% chance we would be downgraded - that's what happens when you're on negative outlook. They did go on to say though, if there was a change of government, that downgrade would be much more likely."

See Key's comment in the clip below at 7 mins 20 seconds:

The email

The Prime Minister's staff released the email (without the name of the sender) to media after Key's press conference on Monday. The email was sent on September 6 at 11:24 am. See it below:

Hi John

I was part of a session with a range of economists yesterday morning – every year they do this session – with economists from Aus plus all the main NZ banks, and this year two from Standard and Poors, including the guy who obviously has a lot to do with the NZ grading.

Anyway, the S&P guys were very complimentary about how the NZ Govt is managing fiscally and their trust that what you say will happen happens, and your unwavering commitment to getting NZ’s balance sheet sorted for the long term.

But there was a key one-liner that I thought you could well use. S&P said that there was a 1/3 chance that NZ would get downgraded and a 2/3 change it would not, and the inference was clear that it would be the other way around if Labour were in power. They discussed the impact on interest rates if NZ got downgraded and how that would quickly impact on the home owner mortgage market, so net net there is a much higher risk to NZers that they will face higher interest rates under a Labour Government.

Don’t know how you use it but they were quite serious.

Labour attacks

Following S&P analyst Kyran Curry's comments in the Herald this morning, Labour leader Phil Goff accused Key of misleading Parliament with the comment. Goff said Labour would lodge a privileges complaint about the comment.

"The Prime Minister must now apologise for misleading Kiwis instead of running around claiming he relied on information emailed to him from an unnamed ‘source,’" Goff said in a press release.

"If his ‘source’ is in fact his Finance Minister Bill English, then he made a big mistake trusting him. He's the guy who went to visit the ratings agencies and when they downgraded New Zealand said he didn't see it coming," Goff said.

(Updates with the email, what Key said in Parliament, video of Key in Parliament, video of Key answering questions at post-Cabinet press conference)

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Updated with Key answering media questions at post-Cabinet press conference this afternoon

 As I mentioned here :

Politicians cannot be trusted. The NZpublic incl. media needs to wake up and make our government accountable.

 Big words from Minister Steven Joyce last night on “close up” and “Campbell live” – neither of the interviewers was up to the job – asking the right questions.

 Please, read on why:

 go to page 58 booms - 61 skimmers. Reading through the documents in my opinion despite the relatively high risks New Zealand is simply not equipped enough and with modern safety gears to fight such an oil spill - emergency plan ?

End of the day we see another investigation by the government, costing millions - about its own failure.

What a shame that session with Key wont be played in full at the start of the main channels evening news. I suspect most Kiwis would be surprised to see a different side to Mr Smile and Wave.

"we rate governments"

Did you note that,John?

Key looks completely baffled at that presscon, just doesn't seem to get that as long as his source remains "unnamed" he has no credibility when contradicted by the S+P analyst "named " Kyran Curry. Come on John, who is it?

It all has an air of being sloppy, dodgy, and vey old boys network.  Sums the fellow up really

First Rule of Holes: When You Find Yourself in a Hole, Stop Digging. 

Stephen, you shouldn't expect too much from Key - the behaviour under discussion is simply consistent with his personality:

Megalomania is a psycho-pathological condition characterized by delusional fantasies of wealth, power, or omnipotence. 'Megalomania is characterized by an inflated sense of self-esteem and overestimation by persons of their powers and beliefs'. Historically it was used as an old name for narcissistic personality disorder prior to the latter's first use by Heinz Kohut in 1968, and is used these days as a non-clinical equivalent.

And The Slog today has a relevant article on the mental health status of selected world leaders:

" Key has simply not delivered " ..... there you are very wrong , Hugh . He has delivered on the majority of his 2008 election promises .

He promised a steady-as-she-goes 3 years . No asset sales . No changes to NZ super entitlements . No fiddling with Michael Cullen's seriously dopey vote buying bribes ; WFF and interest-free-student loans .

Key delivered on what the electorate wanted . They want someone else's money . And he gave it to them , either from business and wage earners in NZ , or from savers in Asia .

... the voting public are just as much to blame . The real rot set in in 2005 , when they gave Labour another term in parliament ...... big mistake . That was when Cullen turbo-charged the government spendfest and wastage . Those 3 years have led us into the structural deficits and the  debt pits .

.. " but that is still  better than your bed buddies who wittingly aiding and abetting the fraud for personal financial bribes " ......

WTF is that supposed to mean , Iain ? Where did you go to school !

.... and how is your personal structural deficit ? .... still paying off the mortgage that those kindly bankers gave you ?

Bankers really are great , aren't they . Hickey gives them a hard time , I know . But I think that the rest of us all agree that banking is the lifeblood of our economy . We'd be lost without it .

Praise be the bankers , for they so elevate our lives to richness beyond imagine , and they put a roof over the Parker family's head .

Rubbish.....considering we are in a fairly decent state while the likes of Greece is totally borked not to mention Ireland and Iceland is testimony to JK not having broken things.....and arguably done better than Labour would have.

Spend our way out of the the context of normal crises yes you can as shown by the Great Depression, however with peak oil and being a global crisis on a scale bigger than the GD, no you cant....but key has been right but for the wrong reason IMHO.

Key has delivered on his mandate and in not turning us into a basket case, maybe by a fair slice of luck if nothing else granted.....but we could have been in far worse a state.



No and er, yes.

No, Im serious in that we are still in a fairly  decent state financially....I mean our housing market bubble could have popped 3 years back and we would be looking at carnage....Im not fan of National but they could have screwed it up far worse than it is. Mostly we are at the whim of external events so its questionable just how much we could have done....indeed any Govn could have done.

Yes, I think it was more luck than planning, but there was an attempt to be short on action....and ride it many and too big changes would have risked a great deal.

Yes, because I think they are going to find that they are going to be very short on options in the next 2 or 3 years.

Yes, because they are ignoring the likes of peak oil like the doo doos they are....

but then so is 99% of the world...


From the anonymous email:

Don’t know how you use it but they were quite serious. 

Has the 'Hollow Man' syndrome all over it.

Can't believe his staffers released it.

You're not suggesting Bill set John up, are you Kate!

I trust Bill will face the direct question in Parliament very soon - that will be interesting.

Could well lead to a constitutional crisis if we find the leader and the deputy leader colluding to mislead the public.

No more Parliament sittings this term sorry Kate. It all ended last week.

Hopefully the new Parliament will sit in December.



storm in a teacup or serious issue?

Just been to the Herald website and minimal coverage there 


This is particularly concerning, surely the credit rating agencies are interested in policy and the economy. Not who is in government at the time.

the email says that there was an "inference" that it would be different under Labour. An "inference" relies on an interpretation - the definition of "infer"

"deduce or conclude (something) from evidence and reasoning rather than from explicit statements"

To me, this is quite different from S+P actually saying what Key claimed they had said. Key's statement implied an explicit statement from S+P, this is clearly not the case


Just because you infer something to be true, that does not mean that you are incorrect. S&P are hardly going to say this much in public however.

What I don't understand is that Key would be naive enough to admit this in parliament, or why anybody in National would want this miss-stated in parliament if its just fabrication.

My interpretation is that this is very embarrasing for National and not at all for Labour. I would think that the less well liked a party is by American finance, the better for the NZ economy their economic policy is likely to be.



I agree that the inference MAY be correct, but it's still an inference. Key portrayed it as a clear and unambiguous statement from s + p

What Key told parliament is different to what his 'trusted' source (question as to his judgement there) Emailled him, and different again to what S&P say they said.

Given that there were likely 20+ economists at the S&P's meeting, why don't we just stand back and wait for the flood of support from them confirming Key's statement to parliament about what S&P said at the meeting.

There are only two interpretations of what John Key DID say to the press conference, either John Key is very influential at S & P and would have NZ downgraded after a change of government, or the more obvious fact that S & P are very much influenced by who is the NZ government regardless of government policy.

Only thing I don't understand is why anybody in government would want such a statement to become public, least of all the prime minister.


Oh no, his populist PR machine broke down, the spin cycle went onto wash, his PR advisor and spin specialist gets a yellow card.

And this from John Armstrong - along with comments; 


If I was Goff  Id be a bit careful on the lying accusations lest someone asks him or his deputy about " Hataitaigate "   -  covering up the Dazza Hughes affair

Why dont you sing it from the roof tops if you think whatever " Hataitaigate " is, is true?

Funny thing...somehow if it was a genuine smoking gun I just cant see how you would be not pulling the trigger aiming to do as much political damage to Labour as possible......conclusion its a figment of your imagination....

The truth should always be out there.....

regards is not a substitute for substance. The country does not need a dilettante prime minister. It needs someone whose No1 priority is the state of the nation. Less blokey joshing and more attention to detail would be in everyone's interests.

Shock, horror - the Dompost editorial slates its poster boy.