KEY POINTS:
Not often does a Prime Minister willingly admit that his or her Government has not always got it right and not always performed as well as it should have.
When voters are in the mood for change, however, the governing party has no choice but to reinvent itself to show it is adapting to the mood of the times, rather than trying to fight in vain against it.
So the Prime Minister used her speech to her party's congress last weekend to project Labour as not only refreshed and rejuvenated, but also more humble and more responsive to matters vexing voters.
She cited the veto of the sale of a stake in Auckland Airport to Canadian interests as an example of how Labour is listening - and she stressed that the party must keep listening.
The real test, however, of whether this new humility is anything more than cosmetic is whether Labour is willing to 'fess up to the complete and utter shambles that goes under the name of the Electoral Finance Act.
It would be hard to find another piece of legislation where Labour has not only got it so wrong, but also looked so arrogant in refusing to admit it.
Designed to stymie National booking an election-year splurge of advertising, the law has turned into the political equivalent of Frankenstein's monster, paralysing parties' communication with voters in ways that even the law's biggest critics did not envisage.
Labour's arrogance has started to wilt as it has become more and more difficult to ignore or explain away the ever-rising number of glaring faults and inconsistencies emerging in the legislation.
It is noticeable Labour is no longer defending the measure with any vigour or enthusiasm. It has instead resorted to hurling petty insults at Bill English for relentlessly highlighting the fact that the act is unworkable.
Labour has effectively run up the white flag. But it has yet to show it can truly eat humble pie by agreeing to an armistice to fix the law.
It has instead blamed officials charged with running elections as interpreting the law too strictly.
Of special concern is the Electoral Commission's view of what falls within the definition of "election advertisement" - and therefore what must be counted as an election expense. That has political parties terrified even the most anodyne piece of promotional material will be caught. That includes material paid for by parties' taxpayer-funded parliamentary budgets which was supposedly exempt.
Worried they might end up breaching spending limits before the official election campaign has even started, parties are now wary of doing anything which could be counted as an election expense and which might be lopped off the fixed amount they can legally spend on election advertising through to polling day.
Things got truly ridiculous this week with a ruling that an Act MP's email newsletter contained material that could be deemed party advertising.
It was the last straw, prompting United Future leader Peter Dunne to call for an all-party conference to rectify flaws in the legislation.
The reaction from other party leaders was lukewarm. While the minor parties are suffering because they rely heavily on their parliamentary budgets for out-of-campaign promotion, Labour and National are not hurting enough to sacrifice their own self-interest for the sake of the common good.
Dunne is not optimistic his suggestion will lead anywhere. He fears the two major parties would each approach talks with bottom-line demands which the other would find unacceptable.
National, for example, would seek a reduction in the "regulated period" during which the new spending rules apply. This is the simplest solution. But it would free up National to start advertising big time - the very thing Labour intended the law to stop.
Labour would likely want an all-party conference to approve amending legislation to explicitly exclude the millions of dollars in parties' taxpayer-funded parliamentary budgets from falling within the definition of election advertising.
It is in all parties' interests to free up that money, especially as a fair chunk of it will presumably lapse if it is not spent before June 30, the end of the Government's financial year.
Labour does not need National's votes to pass amending legislation, but it would prefer to get its rival to buy into it because that measure is going to look extremely self-serving. National will therefore not buy into it. It is in the box seat. It would still like to spend the money. But it is so far ahead in the polls it hardly needs to promote itself.
National could therefore sit back and accuse Labour of rewriting its own botched law to save its electoral bacon. Labour does need the money. But if it is going to cop a public backlash on its own, it might hesitate to bring forward amending legislation - especially as National would have kept itself clean, yet still be able to use its share of taxpayer funds for self-promotion thanks to Labour.
Labour may yet be helped out of its predicament by National having sought a declaratory judgment from the courts on what MPs and parties can spend their parliamentary money on without falling foul of the new law.
This is a clever tactic on National's part. If the courts take a more liberal view of the act's provisions than the commission, then the problem is solved to some extent. If the courts take the view the law is confusing and not working in the way it was supposed to do, that would justify a rewrite without those standing to gain - the parliamentary parties - looking too venal.
Under the latter scenario, National not only remains clean, but it gets the credit for clearing up the mess in similar fashion to John Key's initiative seeking a compromise on the anti-smacking legislation last year.
Labour will have difficulty swallowing that scenario - even if it gets the party off the hook. Labour could conceivably box on as is, ignoring calls for the law to be rewritten. In another three months or so, the day will arrive when only three months are left until election day. In other words, political parties would be within the three-month limit on spending that applied at previous elections. It would be a true snafu - "situation normal, all fouled up".
If National gangs up with the minor parties in the meantime, however, Labour would look isolated, obdurate and self-interested.
Labour still thinks this whole can of worms is of little concern to most voters. But there is no upside for Labour in letting things drag on.
As much as can be ascertained, Labour is contemplating grasping this nettle one way or the other. When tackled on the subject, the Prime Minister has been choosing her words very carefully. She has ruled nothing in. But neither has she ruled anything out. Watch this space.
