John Armstrong: National seizes the moment

It is the $446,000 question which everyone can understand. Will the Labour Party pay the money back? National has struck the jackpot. Its chant of "pay the money back" slices through all the arguments Labour has mounted to justify its using public money to produce and distribute its distinctive pledge card during last year's election campaign.

This is Opposition politics at its simplest and most effective. Other things contributed to National's morale-boosting first week of the new parliamentary session - for example, Michael Cullen's hedging of Labour's promise to raise tax thresholds.

But National's overall victory was down to Labour's floundering over the ethics of the funding of its election advertising. In part that was because of the question National kept asking: will Labour pay the money back?

The beauty of it from National's point of view is that Labour cannot answer it. Labour is skewered.

Labour is most unlikely to have the cash on hand to say yes. It equally cannot afford the public derision from saying no. So it refuses to answer the question - which leaves it looking just as bad.

Reimbursement is the last thing National would want. That would enable Labour to make a belated scramble for the high ground in the tit-for-tat argument over who has flouted the rules covering publicity material funded out of parties' parliamentary budgets.

So far, though, Labour has shown no willingness to be contrite for its flagrant abuse of those rules which bar material which seeks to solicit votes.

Labour may have opted to admit nothing while the police decide if the party has a case to answer in failing to include the spending on the pledge card in its return of election expenses - spending which took it over its legal limit of $2.38 million.

Labour may also be punting that the police - who were called in by the Electoral Commission - may not prosecute. Labour could then argue it was in the right all along.

Legally, yes. But morally, no. The damage has been done. Worse, Labour's lack of remorse has compounded the original sin.

National's game-plan for this year involves painting the Labour-led Government as tired, arrogant and increasingly incompetent, but still power-driven. It is a strategy of attrition copied from Helen Clark's modus operandi between 1996 and 1999 when she hounded Jenny Shipley's struggling minority Government to the grave.

The Prime Minister scoffs at any suggestion her Administration is worn out and failing. But she knows she must work continuously to stop that charge sticking.

Her speech kicking off the new parliamentary year on Tuesday stressed that Labour was not in government just to manage the status quo.

But her message that Labour recognises it must guard against the dangers attendant from being in office so long was vastly at odds with her party's barely disguised snarl at being pinged by the Electoral Commission.

Labour's response has made it look arrogant, cavalier with public money and cynical about the lengths it will go to stay in office.

That is the very impression National seeks to create. But it recognises that denting Labour's standing in the polls is going to be an incremental process - and one which requires hauling back Clark's high personal ratings by undermining her credibility through questioning her integrity.

It was a major plus for National that Clark's face and signature were on the pledge card. It enabled Don Brash to argue that she was personally accountable and should be the one to pay the money back.

It was the first time he has drawn prime ministerial blood. National should have predicted the ferocious response the following day as Clark sought to smash Brash rather than allow him to adopt a more confident persona in the House.

She brandished a National Party pamphlet which, like Labour's pledge card, was funded out of the parliamentary leader's office and distributed during last year's campaign.

However, the National pamphlet had been produced a year earlier and its distribution was far more random than the pledge card which went into letterboxes nationwide.

Labour's attempt to mount the "people in glasshouses" defence was cleverly countered by National's Gerry Brownlee on TVNZ's Close-Up that night.

In one hand, he held up a number of leaflets and cards, both Labour and National, which he said had remained within acceptable boundaries. In the other, he held up Labour's pledge card.

Brownlee's point was that not everything Labour had done was illegal, but the use of parliamentary funds for a major electioneering tool was such a flagrant breach of the rules that it could not be defended.

Labour's mistake has been to try to defend the indefensible. It has been more a case of spinning wheels than spin machine.

Following its initial reaction to the Electoral Commission's announcement, Labour said it would be making no further comment. It has subsequently done nothing but.

The party has grabbed at any passing defence. These have become increasingly bizarre as the previous ones fail to get traction.

Labour is using Pete Hodgson, who has vast knowledge of election rules and practices, to front its case in the media.

But he sometimes tends to come at issues from a tangent and mount elliptical arguments that are not easy to comprehend when a simple sound-bite is what is required.

Crucially, no one in Labour seems to understand that the party dropped a bombshell in admitting the pledge card was also funded by the leader's office in 1999 and 2002. Labour just makes things worse for itself in trying to use this as justification for what it did in 2005.

This stubborn refusal to acknowledge the party is on to a loser is a puzzling departure from its normal method of handling such headaches.

Its usual practice would have seen it accept it was in error, take any punishment, order an immediate review of the electoral law on declaring expenses and promise a radical shake-up of the rules on promotional material emanating from Parliament.

But the departure from the norm may be a consequence of Labour's fixation with retaining the dominance it has enjoyed for six years both inside and outside Parliament and which is now under serious threat.

The last months of last year witnessed a post-election phony war. The new year has seen the outbreak of the real thing. Labour has not been of a mood to concede anything, particularly in the first week of a new parliamentary session.

But that is no excuse for completely losing the plot.