John Armstrong: Government under fire on four fronts

It was never going to happen, but Graham Kelly would have done his Labour Party colleagues a big favour had he tendered his resignation as High Commissioner to Canada. Helen Clark's administration could do with a bit of cleansing right now.

As he was not going to quit voluntarily, an example could have been made of Kelly by requiring the former MP's resignation for offending Maori, Pacific Islanders and Asians in one swoop at a Canadian Senate committee hearing.

He would have had little comeback. He would be less the sacrificial lamb and more like disposable hogget. In the Prime Minister's mind, Kelly would have the huge virtue of being utterly expendable. He could moan about being dumped, but that would hardly engender public sympathy.

On the other hand, sacking such a minion might have served to highlight that more deserving candidates for the high jump, such as George Hawkins, have escaped that fate.

Given that Kelly's injudicious remarks were made some two months ago and were immediately reported to Wellington, he should have been removed at that stage. If it was not a crime then, the Government would look self-serving had it decided it was a crime now. It would have looked like he was being sacked only because he had embarrassed Labour.

But despite those reservations, Kelly's retention of his ticket on the diplomatic gravy train is a reminder that in earlier stages of this Government's life-cycle, the Prime Minister's stress on accountability would more than likely have seen his recall to Wellington. Now, just when the Government needs to refresh its image, he is allowed to stay in Ottawa.

Labour's more immediate worry is that such negative headlines just keep coming when it desperately needs a period of relative quiet to restore voter confidence that it is still capable of delivering the basics of good government.

With nine weeks at most until the start of the formal election campaign, and confronted with a sudden slump in support, Labour is now punting on the coming four-week parliamentary recess giving it some respite from the Opposition onslaught.

The second stage of Labour's recovery plan - which follows a major review of strategy - will see Cabinet ministers fan out across the country in a pre-campaign drive to regain the initiative that Labour so dramatically lost in last month's shoot-yourself-in-the-foot Budget.

In recent weeks, a combination of overseas trips plus the desire not to pour fuel on domestic political bushfires has seen the Prime Minister adopt a lower-than-normal profile in the national media.

It has largely been left to Michael Cullen to front the Government's fight-back, with the Finance Minister striving to take the gloss off National's promised tax cuts before Don Brash releases the actual detail.

It is of some small comfort to the Government that National, whose support is stuck around the 35 to 38 per cent mark, does not appear to be the beneficiary of the paring in Labour's poll rating. It is of no comfort that "soft" Labour support has migrated to New Zealand First.

Labour's rating has plummeted from a comfortable 45 per cent to a far more problematic 40 per cent - a level at which it would have to scratch together a government that had to rely on a host of minor parties highly antagonistic to one another. The alternative would be to strike a deal with Winston Peters. It is difficult to decide which scenario would be worse from Labour's point of view.

It is therefore imperative that New Zealand First's surge in the polls be halted. But Labour must be careful. As Labour discovered with the Iraqi immigration fracas, there is no point fighting the battles Peters wants to fight. Even when Labour points out he has got his facts wrong, he gets away with it, because people want to believe he is correct.

This leaves Labour with a major handicap. It can argue all it likes about fiscal rectitude and how other parties' promises are fiscally irresponsible. It is losing the far bigger argument that has the likes of Peters, Tariana Turia and National's billboard advertising shrewdly playing to voters' emotions.

The governing party's support is now being chipped away on four fronts. The Maori Party's allure is its promise to lift Maori self-esteem. Peters is siphoning off low-paid Pakeha and the elderly. National is shaking Labour's hold on middle-income voters. And the Greens are rattling the consciences of well-off Labour voters by pushing tax cuts for the poor.

On tax, Cullen has been relentless in his warnings of public service cuts, more debt, and inevitable rises in interest rates.

His other tactic has been to try to ratchet up public expectations of the scale of National's tax cuts, confident that Brash cannot deliver, especially when it comes to matching the cash assistance offered by Labour's Working for Families programme.

But National is not stupid. Its tax cuts will match and probably better what Labour is offering election-swinging middle-income taxpayers.

National also thinks Labour has blundered by holding off the introduction of some Working for Families payments until after the election. By not putting more cash into more pockets beforehand and refusing to contemplate tax cuts when everyone thinks he is sitting on a fat surplus, Cullen has made himself appear mean.

Given many people who do not feel well-off miss out on Labour's assistance because it is targeted to families, Labour is conscious it needs to sell the package even more vigorously to those who do qualify. It also recognises it needs to stress just how generous it is being.

But the complexities of the varying entitlements in Working for Families make this policy difficult to explain - and consequently difficult to promote.

In contrast, National's tax policy will be easy to comprehend in dollar terms. Its tax cuts will also benefit some elderly, who, apart from possibly qualifying for the accommodation supplement, get nothing from Working for Families. Compounding Labour's woes is New Zealand First's promise to raise state pension payments.

This bidding war for the elderly has prompted Clark to line up a series of Grey Power-organised meetings in provincial centres next month.

She can continue to put reasoned argument ahead of emotion. But Labour really needs to stop being so polite to its opponents. It needs to put the fear of God into the electorate when voters start to seriously ponder the alternatives. Come the campaign, Labour surely will.