John Armstrong: The Peters uncertainty principle and the risk for Labour

Power regained - but at what price for Labour?

Winston Peters may have had Labour over a barrel. But it turns out the barrel is rather small.

He has secured the prized foreign affairs portfolio. But substantial policy "wins" are few once the numerous "reviews" of existing Government measures are excluded. No wonder Michael Cullen was smiling.

The net effect of Helen Clark's "enhanced" confidence and supply agreements with NZ First and Peter Dunne's United Future is to shift Labour slightly to the centre.

The Labour leadership may consider that conservative tinge is no bad thing electorally speaking.

And some in Labour will be glad to be shot of the Greens.

In turn, the Greens will be asking themselves whether Labour connived in their shafting at the hands of Mr Peters and Mr Dunne. He did not utter the word, but "blackmail" was scrawled on Rod Donald's notes as he and Jeanette Fitzsimons vented their disgust at Labour at an impromptu press conference in the Beehive basement.

Their grim faces stripped the gloss off the Prime Minister's announcement a few minutes later in the Legislative Council chamber confirming she had a majority to govern. That majority is courtesy of fair-weather friends to her right.

Despite that, because the Government now stands and falls on the votes of two parties of the same hue, rather than three or four disparate ones, the new Clark Administration may be more stable than anyone dared think possible on election night.

But back then no-one thought the Greens would be so dispensable. Labour correctly calculates the Greens have nowhere to go.

They have retaliated by saying they will now abstain on confidence measures for the next three years.

But this is simply a gesture on their part - albeit an understandable one. They accept Labour had little option but to succumb to Mr Peters' "threats". The first was his vetoing any Green ministers inside or outside the Cabinet; the second was his talking to National when NZ First was supposed to be negotiating with Labour alone.

What annoyed the Greens was Helen Clark's failure to call Mr Peters' bluff and force him to come down on Labour's side given a National-led centre-right alternative was never viable.
She argues she was not prepared to go to the Governor-General with Parliament split 57-57 and uncertainty about how NZ First's seven votes might fall.

That aside, Labour has emerged from four weeks of haggling relatively unscathed. While the list of apparent concessions to Mr Peters is lengthy, hardly any require Labour to swallow a dead rat.

Labour has agreed to a modest increase in New Zealand Super payments - but it is far short of what NZ First promised before the election. Dr Cullen will have to budget for 1000 extra police - 750 more than it planned. Contrary to some expectations, however, Mr Peters did not get a cut in company tax - just another "review".

Crucially, Labour has secured Mr Peters' and Mr Dunne's votes to pass its key pledge-card promises, including abolition of interest charges on student loans and the extension of income top-ups under Working for Families.

Perhaps best of all from Helen Clark's view, Labour is still able to run a minority Government with only one minor partner - Jim Anderton - at the Cabinet table.

The big minus is having the huge uncertainty and risk inherent in the "Peters factor".

This will be his third stint as a minister. Twice before, prime ministers felt obliged to withdraw his warrant a year or so down the track. Helen Clark will have fingers crossed this is third-time lucky.