VZCZCXRO2365
RR RUEHDT RUEHPB
DE RUEHWL #0388/01 3220441
ZNR UUUUU ZZH
R 170441Z NOV 08
FM AMEMBASSY WELLINGTON
TO RUEHC/SECSTATE WASHDC 5538
INFO RUEHNZ/AMCONSUL AUCKLAND 1791
RUEHBY/AMEMBASSY CANBERRA 5320
RUEHAP/AMEMBASSY APIA 0509
RUEHDN/AMCONSUL SYDNEY 0757
RUCNARF/ASEAN REGIONAL FORUM COLLECTIVE

UNCLAS SECTION 01 OF 04 WELLINGTON 000388 
 
SIPDIS 
SENSITIVE 
 
STATE FOR STATE FOR EAP/ANP 
PACOM FOR J01E/J2/J233/J5/SJFHQ 
 
E.O. 12958: N/A 
TAGS: PGOV PHUM KDEM NZ
SUBJECT:  WHY THE LABOUR PARTY LOST THE NZ ELECTION 
 
WELLINGTON 00000388  001.2 OF 004 
 
 
¶1. (SBU) Summary.  Ever since John Key took the helm of 
the National Party in December 2006, Helen Clark and 
the Labour Party seemed flat, out of step, and headed 
for defeat in the 2008 election.  Economic issues were 
at the forefront of voters' minds and National 
convinced the electorate that it was better placed to 
steer New Zealand forward in poor economic times as 
well as adopt more pragmatic fiscal policies for the 
majority of Kiwis.  Voters questioned whether Labour's 
legislative priorities mirrored public concerns.  New 
Zealand's growing law and order problems largely went 
unaddressed by the Labour Government.  Helen Clark's 
continued support for embattled Foreign Minister 
Winston Peters appeared more desperate than principled, 
and the Labour Party's dirty tricks campaign also 
signaled a party more interested in discrediting the 
opposition than running on its record.  Finally, 
Labour's much-vaunted grassroots network in Auckland 
failed to get out the vote, which had helped Labour win 
the election in 2005.  As the first step towards 
recovery, new Labour leader Phil Goff has acknowledged 
some of the party's missteps and promised to address 
them.  End Summary. 
 
Pulled Down by the Faltering Economy 
------------------------------------ 
 
¶2. (SBU)  While Labour had made a number of policy 
missteps in the lead up to the election, the economy 
emerged as the most important issue for voters as 
commodity prices rose and the international financial 
crisis arrived at New Zealand's doorstep.  Despite 
presiding over the longest period of growth in a 
generation, Labour went into the election with the 
economy in recession and years of government debt ahead 
for the foreseeable future.  The Labour Government's 
rollout of economic enticements just before the 
election was ill-timed as voters wondered how the 
government could pay for everything while the world 
economy was in free fall (and also why the government 
had not been generous earlier when budget surpluses 
were plentiful).  In a surprise move, the Government 
announced that it would buy back the national rail 
system at a cost of over NZD 1 billion, without any 
public discussion or study period.  The decision 
appeared to many observers to be the Labour Party's way 
of spending down any surplus discretionary funds so 
that National would find an empty Treasury on coming 
into office.  National's long-standing platform of tax 
cuts and greater fiscal prudence won voters over as 
polls showed that the public trusted National more than 
Labour to rebuild the economy and recalibrate the 
government's tax and revenue base to move the country 
forward. 
 
¶3.  (SBU)  Deputy PM and Finance Minister Michael 
Cullen resisted tax cuts for years, and this turned out 
to be a key factor behind Labour's loss.  As rising 
commodity prices ate into household budgets over the 
past year, Cullen danced around the issue of tax cuts 
and criticized National's early call for tax cuts as 
imprudent.  With the economy in recession and families 
strapped for cash, Cullen's belated tax cut 
announcement was viewed as too little, too late.  Many 
voters saw it for the short-term bribe that it was -- 
and many remembered that Cullen had promised a tax cut 
on the eve of the 2005 election, but then cancelled the 
tax cut after Labour won the election.  They suspected 
this too would be a benefit that could easily evaporate 
once Labour was assured of three more years in office. 
 
Disconnect with the Public 
-------------------------- 
 
¶4. (SBU) A central explanation behind Labour's loss of 
support was a perceived disconnect with the greater 
part of New Zealanders.  Many of Labour's policy 
decisions and its legislative agenda over the past 
several years did not line up with the priorities of 
most New Zealanders.  Consequently, a good portion of 
the electorate believed that Labour no longer 
represented the interests of "ordinary" New Zealanders. 
This perception was underscored by the Labour Party's 
refusal to acknowledge New Zealanders' growing unease 
over the rise in violent crime in the country.  One of 
 
WELLINGTON 00000388  002.2 OF 004 
 
 
John Key's first major policy announcements in 2008 
centered on National's proposals to address law and 
order issues, and law enforcement groups welcomed the 
policy proposals.  In contrast, the Labour Government 
argued that there was no problem to begin with, and 
suggested that the media were simply reporting more 
crime.  Justice Minister Annette King also downplayed 
any increase in crime in late 2007/early 2008, blaming 
it on the hot weather. 
 
Questionable Legislative Priorities 
----------------------------------- 
 
¶5. (SBU)  A number of Labour policy decisions 
underpinned Labour's disconnect with voters.  Two 
controversial pieces of legislation that the Labour-led 
Government passed into law in 2007 stand out: the 
'anti-smacking' (spanking) law and the deeply divisive 
Electoral Finance Act.  In response to growing concerns 
regarding child abuse in New Zealand, Labour pushed 
forward a bill promoted by its support partner, the 
Green Party, which effectively banned parents from 
spanking their children.  The National Party gave 
lukewarm backing to the bill, qualifying their support 
by noting that if good parents were unduly targeted for 
administering occasional corporal punishment, National 
would rethink the law.  However, many in the New 
Zealand public viewed it as Labour taking away parental 
rights and unnecessarily interfering in a family's 
right to discipline its children.  The law remains very 
controversial, and a petition to overturn the law was 
presented to Parliament before the election. 
 
¶6. (SBU)  The Electoral Finance Act (EFA) sparked one 
of the biggest controversies in New Zealand politics in 
¶2007.  The purpose of the Act is to increase state 
oversight of political activity and to restrict 
unhealthy influence of wealthy interests.  However, the 
law received almost universal disapproval from New 
Zealand's media and legal experts alike for being 
unworkable, poor drafted, anti-democratic and conceived 
to advantage Labour.  Ironically, the political party 
that was deemed to violate the EFA the most during the 
recent election campaign was the Labour Party -- a 
factoid gleefully proclaimed by the media. 
 
Nanny State Under Labour 
------------------------ 
 
¶7. (SBU)  Throughout its nine years in power, Labour 
was often criticized as having a 'Nanny State' 
mentality - moving public policy into the realm of 
legislating social behavior.  The anti-spanking and 
electoral finance laws were both perceived by much of 
the population as government overreach in areas where 
the government should stay out, e.g., parenting and 
political expression.  Labour reinforced this 
perception in the weeks before the election when it 
considered regulatory measures that would limit how 
much water pressure New Zealanders could use in the 
shower as a means to control energy costs.  Call-in 
radio show commentary indicated that the public viewed 
it differently and PM Clark was forced to announce a 
policy retreat. 
 
Controversial Bedfellows 
------------------------ 
 
¶8.  (SBU)  Although not part of the Labour-led 
coalition government formed in 2005, the Green Party's 
polling numbers in the lead up to the 2008 elections 
increased the party's political profile as an 
attractive post-election partner for Labour.  To 
attract Green Party support, Labour changed its 
Emissions Trading Scheme legislation to accommodate 
Green Party concerns.  National accused Labour of 
placing political expediency and Clark's desire for a 
fourth term in office above the interests of the 
country by passing ideologically-driven legislation. 
Business leaders railed against the ETS as too costly 
for a country the size of New Zealand, particularly as 
the economy was already contracting.  Amending the ETS 
remains one of the priorities of the new National-led 
government. 
 
 
WELLINGTON 00000388  003.2 OF 004 
 
 
¶9. (SBU)  Clark's reluctance to distance herself from 
scandal-ridden Foreign Minister Winston Peters when he 
was engulfed in a political funding controversy 
undoubtedly hurt her politically and served to 
undermine a central theme of her election campaign: 
trust.  Only when Parliament censured Peters for 
providing misleading statements did Clark direct him to 
step down temporarily from his ministerial portfolios. 
New Zealand voters recognized that Clark needed Peters' 
New Zealand First party support, assuming his party 
returned to Parliament, to govern.  Revelations that 
Clark knew more about the funding controversy than she 
had admitted undermined her efforts to promote trust as 
a central theme for the election.  Prior incidents, 
such as her signing a painting she herself did not 
paint for a charity auction and misuse of taxpayers 
money to fund advertising in the 2005 election, meant 
that Clark and the Labour Party were seen by some 
voters as not entirely honest. 
 
Dirty Tricks 
------------ 
 
¶10. (SBU)  National's campaign throughout the election 
period remained forward looking and geared to the 
issues.  Labour, on the other hand, ran negative 
television and radio advertisements accusing National 
of a secret agenda and hiding its real policies from 
voters -- a tactic that had helped Labour in its 2005 
campaign.   While it may have swung a few percentage 
points for Labour within the electorate this time, the 
negativity may also have backfired as the 
scaremongering had little impact on voters.  Moreover, 
the media lambasted Labour Party President Mike 
Williams when he flew to Australia at taxpayer expense 
to dig up dirt on National leader John Key over a 
finance scandal dating back two decades -- for which 
Key had already been cleared. 
 
¶11.  (SBU)  A youth activist, while never linked 
explicitly to the Labour Party, also made headlines 
during the campaign for secretly taping conversations 
with National Party senior leaders at a National Party 
convention earlier in 2008 and then leaking them to the 
media months later during the campaign for maximum 
potential damage to National.  Although mildly 
embarrassing, none of the conversations convincingly 
showed that National had a radical right-wing or secret 
agenda that it was shielding from voters, and Labour's 
continued references to the tapes looked increasingly 
desperate. 
 
Winds of Change 
--------------- 
 
¶12. (SBU)  After nine years of a Labour-led government, 
the desire for change was strong among voters who had 
witnessed the historic U.S. election just days earlier. 
Many Labour MPs have been on the political scene for a 
long time and despite attempts to rejuvenate its ranks, 
Labour's senior, and most visible, cadre remains 
essentially the same.  In contrast, National Party 
leader John Key is a relatively recent arrival in 
Parliament and was not associated with previous 
National governments or unpopular policies of the past. 
National also introduced a number of fresh faces among 
its rank and file, including women and ethnic 
minorities.  Labour, by comparison, was seen as tired 
and old. 
 
13 . (SBU)  It could be argued that Labour's previous 
election victories - 2002 and 2005 - were largely due 
to the relative weakness of the opposition National 
Party at those times.  The 2008 version of the National 
Party is considerably stronger and more unified than in 
recent election years.  Key has moved a sometimes 
fractious party into the political center and presented 
Clark's most formidable opponent since she become Prime 
Minister in 1999.  In the three head-to-head debates 
between the two leaders it was Key who on balance came 
out on top.  Debating has been a particular strength of 
Clark and her inability to best Key in this arena 
damaged Labour in the lead up to the election. 
 
Where Was South Auckland? 
 
WELLINGTON 00000388  004.2 OF 004 
 
 
------------------------- 
 
¶14.  (SBU)  On election night, National Party 
supporters resisted the urge to celebrate as the poll 
results came in and remained largely unchanged 
throughout the evening.  As National had learned in 
2005, the South Auckland vote (a traditional Labour 
stronghold) could tip the balance for Labour and give 
Clark a last-minute victory.  However, even as the 
Auckland votes were counted, the poll results and 
overall party vote did not change.  Media analysts 
noted that the overall percentage of voter turnout was 
the lowest in thirty years, and the South Auckland vote 
was not nearly as strong in 2008 as in 2005.  Labour 
Party supporters had a much more difficult time 
motivating voters to get out this year -- the reasons 
for which are still not entirely clear. 
 
Comment 
------- 
 
¶15. (SBU) In the year before the election, the polls, 
call-in radio shows, and the media continually said 
that the once formidable Labour Party machine, the 
Government, and even PM Helen Clark seemed tired and 
out of touch.  That may explain, in part, why Labour 
seemed inflexible in going against public will in 
pursuit of policies that lacked broad public support. 
The issues of greatest importance to voters -- the 
economy and law and order -- were at the top of 
National's list but largely ignored by Labour.  Since 
the election, the new Labour Party leadership has 
acknowledged that Labour had lost the pulse of the 
public, and new Labour Party leader Phil Goff has 
promised a review of how there came to be a disconnect 
with a significant proportion of the electorate. 
 
McCormick