Power play - there's a lot riding on it

POWER TO THE PEOPLE: Greens co-leader Russel Norman, left, and Labour leader David Shearer, right, are sharing the same policy frock - but Norman is definitely owning it more.
POWER TO THE PEOPLE: Greens co-leader Russel Norman, left, and Labour leader David Shearer, right, are sharing the same policy frock - but Norman is definitely owning it more.

There is a lot more riding on Labour's power play than an argument over electricity prices . . . because if Labour can't win the argument that households are paying too much for power, then the odds are it probably can't win the next election.

And the omens may not be good.

Far from landing the knockout punch, Labour ended the first round of the bout over power prices headed toward the ropes and behind on points.

The ferocity of blows from the Government and business lobby appear to have caught it on the back foot.

The number of Labour MPs leaping into damage control to defend the policy was a sign of its mounting panic. At last count, finance spokesman David Parker, deputy leader Grant Robertson and regional development spokesman Shane Jones were all desperately trying to counter the attack from their opponents.

Labour leader David Shearer, meanwhile, chipped in with the occasional soundbite from overseas.

Mr Shearer's absence may have been a mixed blessing for Labour. Any hesitancy on his part would have been crucified during the heat of last week's debate. And if the devil is in the detail, that is where he is often found most wanting.

Given the ferocity of the claims and counter-claims flying over the impact of Labour's policy, any mistake would have been amplified tenfold.

But it meant Labour lacked a single forceful voice to counter the combined clobbering power of the business lobby and Beehive spin machine.

Green Party co-leader Russel Norman could easily have filled that void but he was also overseas.

The obvious conclusion from the absence of both party leaders is that neither Labour nor the Greens expected such a vociferous reaction to their joint announcement over regulating the electricity market.

If they had, they might have lined up the numerous players who support their policy - and there were some, despite appearances to the contrary last week.

They included some budgeting agencies, consumer groups, the unions, the manufacturers' association and even some academics.

But any support for the policy change was easily drowned out by hysteria about a flight of capital from New Zealand should Labour and the Greens get into power.

The only surprise is that Labour did not see this coming.

Enough of its MPs are long enough in the tooth to have lived through the "winter of discontent" early in Labour's first term and learnt the hard way the consequences of getting offside with business.

Back then, there was a big drop in business confidence as a result of a Left-wing government winning power.

Policies like renationalisation of ACC and the Employment Relations Act fuelled the anti- government sentiment.

As then finance minister Michael Cullen noted in a speech in December 2000, the business confidence surveys were a way for business to thumb their nose at the Labour-Alliance government.

Some of that was no doubt fuelled by the infamous August 2000 statement attributed to Dr Cullen when the controversial Employment Contracts Act was repealed: "Eat that. You lost, we won."

But the problem for Labour of getting offside with business was that the ripples went far wider; it quickly fed through to a general loss in support as voters questioned its economic management.

As Dr Cullen noted in his speech, Labour carried some of the blame for the winter of discontent, for not communicating some of its policies better. But he also blamed business for failing to give a Left-wing government a fair go.

As he also noted, the anti- government sentiment ebbed away once business figured out many of the "alarmist prophecies" about Labour-Alliance policy failed to eventuate.

In fact, the Employment Relations Act which replaced the ECA remains largely intact today, even after more than four years of National government.

The renationalisation of ACC has not been reversed - and indeed the Government has by and large abandoned plans to introduce competition after realising it would not work.

If you look at some of Labour's other "anti-business" policies that caused an equally white hot reaction in their day - splitting up Telecom, or changing the rules halfway through the sale of 40 per cent of Auckland airport shares to a Canadian pension plan - National has so far been content not to reverse those moves.

So some of the overblown rhetoric about the Labour-Greens electricity plan making New Zealand the North Korea of the South Pacific has to be seen in that context.

Which doesn't mean National isn't winning that argument.

On the evidence of last week it was getting the upper hand, even at the expense of potentially sabotaging its own policy, the sale of shares in state-owned Mighty River Power.

Presumably it concluded that the short-term pain of a potential flop for the first share float was worth the long-term gain of damaging the Left's economic credibility.

Labour, meanwhile, may be ruing its failure to road-test the policy first with key business leaders.

Even more crucially, it may wonder whether failing to road- test its leader, Mr Shearer, on such a white hot debate might also prove to be a mistake in the long term, even if it carried risks in the short term.

The cauldron-like debate of the last week or so is clearly a taste of the campaign to come.

The Dominion Post