KEY POINTS:
Some might have heard the distinct sound of deck chairs being rearranged earlier in the week when Helen Clark softly reshuffled her Cabinet, but the Labour government is anything but the Titanic. It might have sprung a few leaks but this weekend's Labour Party conference on Auckland's North Shore is getting the solid message that the Government intends to stay in power next year.
The Labour Party machine looks in reasonable condition, if this conference is anything to judge by. Despite having paid back the $800,000 the Solicitor-General decided it had misspent, it apparently has more money in the kitty than it had at the same time before the last election.
Its membership has increased slightly, too. Apparently about 20,000 people claim to be members of the Labour Party, although at least 8000 of them have usually forgotten to pay their dues.
Undeterred by opinion polls showing National is well over 10 per cent ahead of Labour, Clark keeps reassuring the faithful that is exactly where Labour was at the same point in the cycle before the last election. It still got back in when it came time to stitch together support from other parties.
Labour could win power with just 40 per cent of the vote or it could lose with just 40 per cent - it depends entirely on its ability to work out a coalition and support agreement.
Labour is quietly hoping New Zealand First will crash and burn, which it might do, despite Winston Peters' fumbling attempts to play the race card. It doesn't have an electorate seat and is polling well below the 5 per cent trigger point. If it didn't get back into Parliament, that would narrow the gap in the House and leave Labour with a chance to cobble together deals with the Greens and the Maori Party that could let it sneak back in.
The worst thing for National would be for voters to get the idea that it might be able to govern alone because I get the feeling that, since MMP came in, Kiwis haven't been too keen on single-party governments. Too much power concentrated in one party makes people nervous.
However, if the Nats keep pounding populist policies and avoid babbling about selling assets and anything that smells of a user-pays doctrine it might stop its lead eroding.
For example, National has a somewhat doctrinaire policy of lifting the cap on GPs' fees.
That's hardly a vote winner, especially when former Health Minister Pete Hodgson was able to beat his chest that Labour had halved of the cost of a GP visit, which was boosting the health of New Zealanders who no longer delayed going to the doctor.
National needs to learn the basic rule that anything that puts money in people's pockets is good, anything that takes money out is bad. It's hardly rocket science but, apart from tax cuts, the Nats don't always get it.
John Key did hit the right note on law and order this week, for once not bungling a policy release. National is promising Tasers for the police, another 1000 frontline cops, tougher bail laws, better protection orders, compulsory DNA tests for criminals and a hardline approach to gangs. That will impress an increasingly jittery middle New Zealand.
National's finance spokesman Bill English is also right on target when he hits on high interest rates. Michael Cullen came out on Friday saying, somewhat disingenuously, that he wasn't planning an "election-year lolly scramble". English struck back correctly pointing out that the Government's $4 billion over-spending in the Budget was keeping interest rates high.
He quoted an ANZ bank report that says, "the biggest losers in an inflationary environment are middle- to low-income households". That's the kind of message he needs to push, because high interest rates are crucifying voters in the mortgage belt of the major cities.
Take a look at the property pages of the Herald and count the number of mortgagee sales and the recently sold homes that are suddenly back on the market again because the owners can no longer afford the interest on their loans.
Helen Clark, meanwhile, is pushing her usual cautious "steady as she goes" approach but maybe it's time she reappraised some of the economic theory driving this Government. The next election will be a close-run race and the key to victory will be winning the voters in the political centre.
She might like to take a leaf out of National's book and realise that it's the political centre that carries the mortgage burden and maybe it's time to force interest rates down if she really wants to win next time around.