KEY POINTS:
Why hasn't the Prime Minister sacked Winston Peters outright from her ministry, thereby stopping Labour choking on its entanglement with NZ First?
That question has loomed large over the hearings of Parliament's privileges committee since Owen Glenn made a nonsense nearly two weeks ago of Peters' version of the circumstances surrounding the business tycoon's $100,000 donation to pay the MP's legal bill.
It has loomed over the de facto start of the election campaign with two polls showing Labour's recovery stalling, presumably collateral damage from being chained too close to NZ First's ongoing strife.
Having stripped Peters of his portfolios at the onset of the Serious Fraud Office investigation into his party's handling of big business-sourced donations, Helen Clark was said to be ready to remove Peters' ministerial warrant completely following Glenn's damning evidence.
She had further reason to dump him this week when testimony from Peters' lawyer, Brian Henry, confirmed that in taking Peters at his word for months, she had been badly let down by her minister. However, Clark has switched tack, holding off any dismissal to the stage where that now looks more and more unlikely.
That she has not acted is much to National's delight. It allows John Key to paint Clark and Peters as remaining "joined at the hip". It enables Key to keep saying that Clark would rather sacrifice standards of good government than sacrifice power.
Clark does not put herself at such disadvantage without good reason _ the chief one being that it might temporarily suit Labour more to leave Peters hanging in limbo, than axing him completely. She does not want to sack him because that could well see him turn on Labour.
At the same time, he has gone way beyond what is acceptable for a minister for her to reinstate him in his portfolios, something he will still feel she is obliged to do should the SFO clear him and his party.
To ensure she is not placed in such a position, Clark this week took out some insurance by announcing any action against Peters would now hinge on both the report of the privileges committee and the outcome of the SFO investigation.
That served a double purpose. It gives her an out for not sacking him when the privileges committee comes down with its report next week and delivers what is hardly likely to be a glowing testimonial for Peters.
If the SFO clears him, Clark can refer back to the privileges committee report as reason why he should not be rehabilitated and instead left where he is _ a minster without portfolio.
Still, sacking Peters outright would stop Key highlighting the Clark-Peters "axis" throughout the election campaign. And ditching Peters would make Clark look tough and counter the finding of a One News-Colmar Brunton poll, which found 58 per cent of voters thought she had been too soft in her handling of the disgraced former foreign minister.
However, while Labour might feel a whole lot better doing that, what's the point if Peters then gets the snitch on Labour?
It is not simply a matter of keeping NZ First sweet in anticipation of post-election negotiations. Key's ruling out of any deals with Peters means the latter's options are considerably reduced. It's Labour or nothing.
Clark's more pressing worry is overhauling National's lead in the polls so Labour is in a position where it could form a government. That is going to be difficult enough, especially for the governing party which is far more likely to be blindsided by the unexpected during an election campaign _ as the international financial meltdown has shown this week.
The minor parties will also seek to gain traction by attacking the incumbent because it is seen as more vulnerable.
Clark will need no reminding of the distracting and damaging bitterness between Labour and the Greens during the 2002 campaign. She does not want a repeat performance with NZ First substituting for the Greens.
For Labour, the focus must be kept on National. For Labour, everything now rides on the party having a good election campaign. And National a bad one.
But Peters is fighting for his political life. To lever votes off someone else, he is going to have to attack, attack and attack. Labour would prefer to be a bystander rather than the target.
By treating him leniently, Clark is giving him no reason to go for her.
Labour MPs on the privileges committee have been correspondingly gentle on Peters. With the SFO, Peters bete noire, becoming involved in the hearing, Michael Cullen effectively sided with Peters by declining to express confidence in its director.
Clark likewise has made continual noises about Peters getting natural justice. Labour is going out of its way not to upset him.
That has had to be balanced against the public pressure to make an example of him. However, that pressure has dissipated outside the Wellington Beltway.
It is difficult for outsiders to keep following the ins-and-outs of the whole Peters-Glenn-Spencer Trust-NZ First saga.
People have made their judgment on Peters _ and Labour's role in the saga. On first sight, the One News poll is not good reading for Labour _ 63 per cent also think Clark should follow Key's example and refuse to work with Peters.
However, when the figures are broken down, it turns out Labour voters are more likely to believe their party should in fact not rule out dealing with him.
There is another reason why Clark and company are being ultra-careful not to offend Peters.
For him, salvaging the superannuitant vote is a matter of necessity for sheer survival.
But Clark is also chasing that vote because the Grey Power constituency is becoming even more vital for her to win when Labour's support is waning elsewhere.
Needing to win over the elderly is part reason why Labour is making "trust" the core element of its campaign.
There has been much public scoffing at Cullen's denigrating on John Key's economic management credentials on the basis Key once worked for Merrill Lynch, the investment bank which this week fell victim to the international credit crunch.
Likewise, Clark drew criticism for suggesting around 60 New Zealand military personnel would have returned home in body bags had Key been Prime Minister and committed troops to the American-led invasion of Iraq and subsequent occupation force.
Such tactics are widely seen as an indicator of Labour's desperation.
However, the target audience is not middle-class liberals. The target audience includes the elderly. They are cautious and want predictability. Labour's hammering of National's supposed untrustworthiness is designed to frighten the living daylights out of them and push them sooner than later into Labour's camp.
Trust has also been Peters' pitch _ as in whether either Labour or National should be trusted.
Again, Labour is usurping Peters. But there is little Peters can do about it. He cannot campaign effectively while under an investigative cloud. The longer Labour can keep him in such purgatory, the less damage he can do to its chances.
The Prime Minister is killing him with kindness. Rather than Labour needing to be rid of Peters, it is starting to look like Peters needs to be shot of Labour.
