KEY POINTS:
Forget about National sleepwalking to victory. The party seems to have gone into suspended animation.
National has gone so much off the boil in recent weeks that Labour smells a rather large rat.
Labour suspects its main rival is running a deliberate non-engagement strategy to protect National's most valuable asset - John Key.
Labour may well be right. National seemed to be using such tactics in Parliament this week as Michael Cullen, whose current good humour is an accurate barometer of Labour's surprisingly high morale, took on the role of Acting Prime Minister in Helen Clark's absence.
Cullen was spoiling for a fight. Key wasn't. Cullen is Labour's designated chief attack dog hunting down National's leader.
Key has everything to gain in trying to knock Clark off her perch. But he had little to gain in allowing Cullen to go head-to-head against him.
The upshot was Key did not ask a question in Parliament all week. Claiming Key had lost his bottle, Labour was also fizzing after National's leader unveiled a new policy forcing everyone convicted of a criminal offence to pay $50 into a fund compensating victims of crime.
Labour was not alone in seeing the decision to release the policy in Auckland as a sign of Key's gun shyness in the face of the Wellington political media following his widely publicised slip-up over National's Treaty policy and the fuzziness which surrounded National's stance on the sale of shares in Auckland Airport to foreign interests.
National always knew Labour would focus on Key's lack of political experience. What it did not predict was Labour's relentless highlighting of any and every inconsistency or hesitancy, no matter how small.
It did not expect a Labour fightback of extraordinary intensity; and Labour is only just getting started. National also never expected the Government to recover its equilibrium so completely. National, at times, has looked blinded in Labour's headlights and consequently paralysed.
National's script demanded Labour continue to play the lame-duck, arrogant, tiring, accident-prone Government it seemed to be modelling during the first two years of the current parliamentary term.
From National's perspective, things had looked fairly straightforward. When you are the main opposition party and registering voter support of around 50 per cent, it is a matter of sitting tight, being disciplined, holding your nerve and resisting pressure to start releasing detailed policy ahead of your own timetable.
All that has changed. The Labour fightback has seen National lose control of the political agenda which it was setting at the start of the year.
Labour is largely dictating things, partly by using the advantage of Government incumbency and partly through a steady stream of fresh, politically seductive policy initiatives, many of which have the secondary purpose of trying to force Key to say whether they would survive under a National-led Government.
National is giving Labour too much free room to attack Key. This week Labour made much of some remarks he made about National reviewing the indexation of some state allowances. This was transformed into a claim that National would halt annual upward adjustments in benefits and superannuation entitlements. That was not what Key meant, but Labour ran amok for days with the claim going uncorrected.
It was not corrected because National's response has been not to respond. It believes - with justification - that Labour's attacks on Key have become so desperate it can, by and large, afford to ignore them.
While Labour's concerted effort to destroy Key's voter appeal and credibility might be getting traction inside the Wellington Beltway, National is firmly of the view that outside those confines people don't give a toss about minor mistakes Key has made. And anyway people have stopped listening to Labour.
In Labour's camp, the mantra is "water on stone". It does not expect instant results, but at some point, it believes voters will start to take cognisance of what it is saying about Key. The polls will move accordingly.
National argues Labour's fightback is more concerned with shoring up Labour's core vote which is under threat from the combination of consumer price hikes and high interest rates, rather than recapturing votes from National.
Labour has no illusions about the mountains it has to climb to hold on to power. But it has picked up its act. Labour is no longer stumbling from one self-inflicted crisis to the next.
It is doing what it should be doing - governing. And, more critically, being seen to be governing should restore some of its standing.
At the same time, National is not causing Labour any serious headaches. The exception has been Tony Ryall's efforts to tar Annette King as responsible for the shambles at the Hawkes Bay District Health Board. That has been a mixed bag.
Labour has copped a major backlash locally, but Ryall has been unable to elevate the mess into a major attention-grabbing national news story. At least he is not coasting, unlike some of his colleagues.
If Labour continues to display re-found competence and confidence, the blowtorch will rapidly go on National instead.
National is vulnerable. Voters still have no real idea of what a National-led Government would do, barring tax cuts, keeping the same number of public servants and sending young offenders to boot camps.
Key has made few direction-setting speeches, though this might change with National's round of regional conferences about to get underway. The release of fresh policy has been kept to the minimum needed to counter Labour's claims that Key-led National is offering nothing new because it stands for nothing.
Labour, meanwhile, is playing an extremely clever game. Key may have moved National to the centre to take votes off Labour. Labour is now trying to crowd him out by putting up centrist policies and challenging him to back them.
If he does, National's brand distinction fades and its flexibility to spend money is further constrained. If he doesn't, he is painted as extreme and out of touch with middle NZ.
Likewise, Cullen's admission his tax cuts will be smaller than National's may have been a similar ploy.
If Cullen can make his cuts as large as possible, that puts the onus on National to deliver even bigger ones.
If National doesn't do so, it again loses vital brand distinction.
If National is a lot more generous, it becomes easier for Cullen to brand his opponents as fiscally irresponsible.
Of course, in the end none of this may matter. National's support has been running at close to 50 per cent for around a year now. That says one thing: the electorate wants change and Labour can do little to stop it. But that won't stop Labour trying.
National was always conscious that Labour would be a formidable foe, now it is finding out just how formidable. Labour's new drive - Review, B5
