It's the Economy, Stupid

The famous words uttered by Bill Clinton did for George Bush Senior. He was seen as too focused on foreign policy and not focused enough on fixing the economy. While those holding the reins frequently get blamed, it's often not exactly their fault. So it goes for Labour today. Media shots of ministers arriving for cabinet meetings in swanky new BMWs did not look good at a time when domestic budgets up and down the country are being squeezed. But correlation is not causation. We need to look a bit harder for that. So, did Labour cause our current economic problems? Did they contribute? Can they fix them? Should we blame them?

High commodity prices, high oil prices, and high interest rates are not, largely, Labour's fault. At least I would argue that way with anyone for a good while. But many things they did, or chose not to do, may have contributed, my favourites are:

Petrol: every time Petrol goes up by one cents because of current demand, the retail price goes up slightly more than 2 cents because of tax. That's extra revenue, and with a massive surplus, it's hard to claim its needed.

Tax: If they'd actually delivered some decent tax relief over the past three years, they could have pointed to that and claimed that the high price of petrol was a green tax, and that consumers were compensated with a greater incentive to work and more after-tax income. But they hate tax relief.

Housing: The current housing bust was pretty predictable. Many have been saying a correction is on its way for a while. Even yours truly. Possibly the moment Labour bought this crisis and deserves to get tagged with at least some of the blame was when it declined to implement anything from the McLeod tax review in 2001. This recommended, to widespread horror, the idea of applying a capital gains tax to property investing, and balancing that with some personal tax relief. This would have helped damp the boom, and make the bust less bad. It was ignored.

These are long-run issues where the arguments have all been well rehearsed in public. The choices were made - and as you can see, some of the choices were damn tough ones to take. Only the greens were really keen on a capital gains tax - so a government of any colour would probably have flunked that test. So is there any blame to be attached to Labour?

Competence. With such tests failed, the Government's record of sound economic management is under threat. Richard Prebble once said that Labour never gets elected unless it's got economic credibility. The polls seem to reflect the voter's worry that Labour's sure hand has deserted them.

Caring. Furthermore, in a major brand crisis, the caring party just doesn't seem to give a damn.  John Key asked whether the Government should  be more focused on the economic issues facing voters than attacking him. It drew a remark that may have sounded smart at the time: "diddums" - from Helen Clark. That seems to be all of a piece with the obsession with the Electoral Finance Act, silly conference songs, and new BMWs. A less amusing, but more technical answer, listing all the Government's clever plans to help releive the pressure on voters would have got less radio play, but meant so much more to voters.

Confidence. Finally, the question must be asked... is it too late? Can a flashy new initiative restore the confidence the electorate once seemed to have in Labour. In the last election, when National launched a policy of tax cuts Labour launched "Working for Families" and to the average voter, it seemed pretty similar - and the conclusion "better the devil you know" was understandable.

But what is Labour known for now?