KEY POINTS:
Maybe this time it really will be the economy, stupid.
Maybe this time the election will be won and lost on the amount of cash in people's hip-pockets. Maybe it already has been won and lost on that score. Maybe voters caught in the vortex of high-mortgage interest rates and rising food and fuel prices are a serious factor in Labour's slump in the polls, though a far less visible one than the series of continuing mistakes and mishaps that grabbed the headlines last year.
And maybe Labour's belated conversion to personal tax cuts has come far too late to make any real difference at the ballot box in November.
That is an awful lot of "maybes". However, lost in the pre-Christmas wash-up was a UMR Research poll which showed people's expectations about their standard of living were the gloomiest since 1991, the year the company began asking that question.
True, optimists still outnumbered pessimists. However, the poll also recorded a marked turnaround in economic outlook, which turned negative for only the second time in the survey's history.
While Labour will hope to start the new year with something of a clean slate, the news so far on the economic front is all bad.
The strong inflationary pressures resulting in part from soaring commodity prices mean there is no immediate prospect of a cut in interest rates. In the meantime, many households are finding their incomes being progressively chiselled away by mortgage interest rates now topping 10 per cent and ever-rising prices at the supermarket.
It all adds up to a less than cheery picture for ministers when the Cabinet meets next week, for the first time this year.
The economy is slowing. There is no argument about that. The question is whether - as the Treasury forecasts - there is only a slight decline in growth this year, or whether the global economy nosedives, cutting demand for exports and intensifying a domestic downturn sparked by the Reserve Bank's aggressive increases in interest rates last year.
If that happens, Labour's claim of stewardship of the longest period of sustained growth since the 1960s will count for little.
Whether people are feeling happy about their economic wellbeing matters more in electoral terms. A government's track record is important, but secondary.
A telling graph in the latest Reserve Bank bulletin shows that a family on the average income is paying almost 50 per cent of its disposable income if it is servicing a 90 per cent mortgage on a median-priced house.
This is up from an average 30 per cent in 2002 - the result of soaring property prices forcing house-buyers to take out larger loans and then being struck with ever higher interest rates.
Those with families have received some not inconsiderable assistance through the Working for Families income top-ups. But those feeling the squeeze rightly or wrongly view Labour as sitting on a mountain of cash.
That frustration has forced Labour to finally set aside $1.5 billion for personal tax cuts. To guarantee they happen, Labour is now willing to do exactly what it accused National of doing - essentially borrowing for tax cuts by borrowing to meet capital commitments previously funded by tax revenue.
But Labour's motives are so transparent as to render its tax cuts politically worthless. How the Prime Minister must surely curse not ordering Michael Cullen to cut personal taxes earlier.
Watching all this very closely, National's response is summed up in two words - at last.
No Opposition party can mount a truly effective challenge to the incumbent if the debate on economic management is shut down - as was the case in 2002 and 2005.
Then, the economy was happily bubbling along. With consensus on the Reserve Bank's operation of monetary policy and Labour shedding its former reputation for economic mismanagement by producing healthy Budget surpluses, National was left waging battle on the microeconomic front, arguing for reforms to things like the Resource Management Act.
This was like fighting a war with toothpicks. Few voters believed tinkering with something like the Resource Management Act would bring economic nirvana, and they were doing quite nicely thank you at the time anyway.
National then tried to shift the debate by arguing Labour had wasted the good economic times by failing to build an economic infrastructure that was not vulnerable to boom-bust cycles in commodity prices.
Labour's "economic transformation" agenda has sought to address that deficiency. The results have been slow in coming, but that has not mattered politically when the economy has been growing anyway.
National's concurrent theme has been to highlight the numbers of New Zealanders seeking a better standard of living in Australia as evidence of Labour's failure of economic management.
But National has never packaged this argument in a way that would make the comparison really hit home with voters.
However, National now believes a marked downturn in the economy has started, which, at a minimum, will mean there is a far more receptive audience for its arguments.
The party is already sharpening and simplifying its messages for election year. Bill English this week joked that while New Zealanders were leaving the country in planeloads, Australians were arriving here in kayaks.
John Key suggested New Zealand risked becoming little more than "an educational facility" for training Australia's future workforce.
Above all, National will be asking why, if the economy is performing so well after nine years of Labour, has New Zealand dropped down the OECD rankings?
There have been false dawns for National before. Two years ago, a string of job losses in January prompted Don Brash to make a prediction that the country was heading for recession the centrepiece of his annual Orewa state of the nation speech. The recession never happened.
Key is unlikely to make the same mistake. He will also avoid opening himself to any accusations of talking down the economy. But he and his colleagues quietly believe the economy will be a firm fixture on the election-year agenda.
And this time National is not going to have to fight the election with one hand tied behind its back.
