KEY POINTS:
It's too early to state categorically that Labour's mid-winter funk is terminal, but the signs are not good for the ruling party.
In the past week, Labour has suffered parliamentary defeat over plans for a trans-Tasman therapeutics regulatory agency, faced criticism after suggestions by Finance Minister Michael Cullen he could suspend monetary policy, and been forced to defend the reputations of two Cabinet ministers (including the hapless David Benson-Pope) on conflicts of interest issues.
A slew of long-time Labour MPs will stand down at the next election to make way for new blood.
But there are no signs - yet - that the Prime Minister will deal to her own front row to enable up-and-coming Cabinet talent to make their mark before next year's election.
Former Act Party leader Richard Prebble maintains it would take "something extraordinary" for Labour to dig itself out of its current slide.
"If they knew what it was, they would have done it." He rates the party at 3:1 to lose next year's election.
Prebble points to the long-term trend in the rolling average of the four major political polls, which has National at just under 50 per cent and Labour consolidating at just under 36 per cent - close to its long-term bedrock support. "All John Key has done is hold the projection."
Helen Clark has earned a reputation as the master of MMP politics.
Some believe if National gets less than 50 per cent of votes at next year's election, Clark might still be able to negotiate enough support from third parties to form a fourth Government. Prebble contests that "myth". "John Key is a trader. Even though National may not have as many allies as Labour I suspect Key's a better trader than Clark. The Greens must know they have a better chance of making a National Cabinet than Labour. You might see a rainbow National Cabinet that includes Green and Maori MPs."
Auckland political scientist Barry Gustafson cautions National should not count its chickens too early: "It's by no means certain that the Greens would go with National."
He reckons National should aim to get an outright election majority.
Gustafson says NZ First's Winston Peters should not be counted out either, even though his party's poll ratings are well below the five per cent threshold needed to get representation in an MMP parliament. "While Peters says he will negotiate first with the party that gets the most votes, there's no guarantee as to the result."
Gustafson is particularly concerned over the apparent "cronyism" that has crept into Labour Government appointments, and the role Benson-Pope's office played in raising as an issue the appointment of Madeleine Setchell - who is the partner of Key's chief press secretary Kevin Taylor - as communications manager at the Ministry for the Environment.
Setchell had been upfront about her relationship during the hiring process, but was was forced out of her job after the minister's office drew the attention of the ministry's CEO.
"I think Labour is in real trouble," says Gustafson. A review team tomorrow begins hearings into a conflicts of interest affair involving a director on the Hawkes Bay District Health board, which has implications for former Health Minister Annette King and her husband Ray Lind.
Lind was alleged to have been one of two health board managers who were involved in pressuring a whistle- blower who spoke up about the alleged conflict of interest.
But the issue which has potentially the most implications for Labour's prospects is whether Reserve Bank Governor Alan Bollard raises interest rates again on Thursday.
If Bollard hikes rates, many in the mortgage belt will be feeling the effect at election time.
