I’d hate to be Phil Goff right now…

For Labour, things have not got off to a strong start since the election. Helen Clark’s decision to resign on election night, while perhaps the right move for her personally, meant that Phil Goff taking over the party leadership happened when the attention of the nation was focuses on John Key and his new Government. As such Goff missed out on the sort of positive media coverage that new leaders often get, a fact that may be partly responsible for his staggeringly low ratings in recent preferred prime minister polls.

Since then things have been made even harder by how well…..good Key’s Government has been. Key’s first 100 days in office were marked by popular moves such as tightening bail laws, choosing to fund Herceptin (an expensive breast cancer drug) bringing forward infrastructure spending to stimulate the economy, and the much publicised job summit. Despite Labour’s attacks on Key for not doing enough to combat the recession, the Government seems to have the confidence of most New Zealanders, and no piece of legislation has proved deeply controversial in the way that things like the Electoral Finance Act or the repeal of Section 59 did under Labour.

Of course to expect a major stuff up within the first few months of a new Government might have been a stretch, but the tight ship Key seems to be running has sent a clear message that if Labour wants to make any headway in regaining the support of the electorate, its going to take a lot of hard work.

There are however, a number of opportunities on the horizon for Labour to make some real progress

Most of these chances are the result of the recession. Key’s Government is ultimately going to be judged on the way it handles the economic crisis, and the degree to which it can turn it around and keep voters from feeling the worst of its effects.

The National Government is taking an interesting approach to handling the crisis. Despite the publicity around the “rolling maul” of initiatives to save jobs, and Key’s infrastructure plans, National hasn’t increased Government spending by nearly the same level as most other western countries. Most of the infrastructure spending National has announced, for example, is actually just stimulatory spending already planned by Helen Clark’s Labour Government, but brought forward by a couple of months. As a percentage of GDP, the amount of money Key is spending to fight the recession and protect middle and lower income voters from the damage it will do is very small compared to Australia, America or Britain.

Key says that such money would be better spent on tax cuts, where by individual citizens will keep more of their own money, increasing demand and fuelling growth. However, Labour points out that under their proposed tax cuts which Key changed, almost a quarter of a billion dollars more would go to low and middle income families, rather than to those making more money as they do under Key’s plan. The rationale behind Key’s cuts is very standard right wing-post Regan thinking. Those with more money are more likely to invest it, thus creating jobs and growth, where as those on lower incomes will spend their tax cuts on things that have a less stimulatory effect on the overall economy.

While such thinking definitely makes economic sense it’s dangerous politically at a time when most voters will be feeling a pinch in their pocket, and see National choosing to give tax relief to those that clearly don’t need it.

Key is taking a big gamble. If his tax cuts do not have the desired stimulatory effect (as has happened overseas with the Bush tax cuts early in his first term) Key will have left himself open to major attacks for not doing enough to help the majority of voters at the next election. On the flipside if Key does manage to turn things around, don’t expect Phil Goff to be Prime Minister anytime soon.

The other major area for Labour to do some damage is National’s relationship with ACT. There are two major bills in the pipelines, ACT’s “Three Strikes” law and the proposed “Tax Payers Bill of Rights” which would cap Government expenditure to the rate of inflation. Both of these are expected to be supported by National.

If not seriously altered both bills could prove dangerous to Key’s image as a common sense moderate. Next week I’ll go into more detail on what is wrong with both of these bills, but Key faces significant pressure from a very important coalition partner to implement some seriously right wing policies, something that if Labour can properly exploit could do real damage to Key’s brand of centrism.

Labour, despite their weak current position, clearly has some areas where it can make progress. It just remains to be seen if they can do so.