National leads in bad-news poll for Labour

Labour will be reeling from a poll published today that puts National ahead and gaining enough support to form a Government with New Zealand First.

Labour's other nightmare, that New Zealand First might hold the balance of power, has become a poll reality, at least.

As in 1996, neither National nor Labour would be able to form a Government without New Zealand First, says the National Business Review- Phillips Fox poll conducted by UMR Insight.

The chances of Prime Minister Helen Clark now deciding on a July 30 election appear to be fading. A September election would buy Labour more time.

Today's poll follows the Herald-DigiPoll survey taken soon after the Budget two weeks ago which showed dissatisfaction over the tax cuts issue and National closing the gap.

The Government's Budget centre-piece, the KiwiSaver workplace savings scheme, has been overshadowed by the adverse response to small adjustments to the tax thresholds.

Since NBR's poll a month ago, National has gained four points to 38 per cent and is now one point ahead of Labour, which has fallen four points to 37.

New Zealand First is up three points to 12 per cent.

The Greens would scrape in, only just making the 5 per cent threshold.

None of the parties spoken to last night were dismissing the survey as a rogue poll.

Translated to seats (and assuming all present leaders with electorate seats keep them) NZ First would be able to form a Government with Labour with a one-seat majority, or with National with a five-seat majority.

The only other time National has led Labour this term was after the Orewa speech on race by National leader Don Brash in January last year.

By July or August last year, most polls had Labour back in the lead, a lead it has maintained until now.

Dr Brash said through a spokesman last night the poll was an indication the election would be a two-horse race.

"Only National can change this Government, and people perhaps are seeing this."

Acting Prime Minister Michael Cullen would not comment.

NZ First leader Winston Peters said he did not believe the poll was accurate.

"A growing number of New Zealanders are realising the old parties have almost identical policies and have presided over the decline of this country to the state it is in today."

Helen Clark is in Japan and is due home on Sunday. Her office dismissed rumours she was heading home early.

But the poll will be a jolt for Labour MPs and strategists who have been trying to assess where the party has gone wrong, and not just over the Budget.

The party caucus on Tuesday is understood to have been critical of the vitriolic attack by Trade Negotiations Minister Jim Sutton and Helen Clark on trade diplomat Tim Groser, who is to stand for National at the election.

One party source believed a combination of issues, including the David Benson-Pope and Peter Doone cases, had contributed to the result.