John Armstrong: Labour the living dead after tax fiasco

It could have all gone horribly wrong for John Key during the Christchurch Press-sponsored leaders' debate last Tuesday evening.

Had David Cunliffe known the answer to Key's attempt to catch him out on the detail of Labour's proposed capital gains tax, then Key would have looked a bit silly. But Cunliffe did not know the answer to Key's question. He froze. In an instant it was obvious the Labour leader was floundering.

On such moments election campaigns can turn. This was one of those moments.

Key took a punt. But it was thought to be a pretty safe one. National believes Cunliffe does not bother to get on top of detail. For him, a capital gains tax is a means to satisfy the Labour left.

Key's question more than did the trick. It shifted the debate about the tax from arguments about its benefits in terms of fairness and shifting money into productive investments to questions about detail and its impact on middle New Zealand.

As one sage observes of Labour's crusade for such a tax: Everyone likes the idea. But no one wants to pay it.

National had a field day for the next 48 hours highlighting anomalies and contradictions in Labour's proposal. Cunliffe managed to prolong the firestorm by getting it wrong again, this time on how the tax would apply to a home inherited from dead parents.

Labour should have foreseen National's onslaught. It should have devised a strategy in readiness to counter it.

But Labour may have been lulled into a false sense of security. Labour's intention to implement such a tax was part of its 2011 manifesto.

But National did not aim its heavy artillery at the tax that election. Labour may also have thought it had already won the argument by virtue of a broad consensus in the financial sector that such a tax is long overdue and as a result, National is the one which is out of touch and the pressure has been on Key and Bill English to come into line.

Beyond issuing a 10-page backgrounder which added little that was not already in the 2011 manifesto, there was no briefing, press conference or attempt by Labour to spin its way out of this disaster.

Already struggling to make any impact, Cunliffe's campaign has taken a potentially fatal knock. With two opinion polls yesterday showing Labour marooned at around 25 per cent and National registering at 50 per cent or more, the election campaign may effectively be over.

The only question now is whether growing backing for Colin Craig's Conservative Party will translate into actual votes on September 20 and in sufficient numbers to clear the 5 per cent threshold - and thus allow Craig to come to the negotiating table with enough seats for National not to have to deal with Winston Peters.

While it is too late to gift Craig an electorate seat, it is likely Key will make some carefully worded statement in the final week of the campaign giving licence for potential National voters to tick Conservative.

The possibility of Labour being in a position to form a government now looks to be virtually non-existent. With two weeks still go, Labour's campaign is The March of the Living Dead.

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