The master of all he surveys

BARRY O'Farrell has the mandate for sweeping changes in NSW.

THE weeks and months ahead will be consumed by bloodletting inside the NSW Labor Party following Saturday's thumping state election defeat. For new Premier Barry O'Farrell and his Coalition, time will be measured in years.

The size of O'Farrell's victory - reducing Labor to 20 or so seats in the 93-seat Legislative Assembly and a Coalition primary vote above 50 per cent - has given the conservatives a strong mandate.

"It also looks like the Coalition will have a workable majority in the upper house with the conservative cross benches," John Howard's long-time chief of staff Arthur Sinodinos notes.

"But I don't think that will lead Barry to drop his election commitments or change what he has said he will do," he quickly adds.

Despite O'Farrell's small target campaign that focused on the scandals and corruption on Labor's side, voters delivered more than a repudiation of the previous government. They largely avoided the temptation to support minor parties and independents, instead going that extra step and voting for a new government with a mandate to institute change.

However, with the exception of a small band of infrastructure commitments and standardised election platitudes - building the northwest rail link and hiring more police and nurses - no one is quite sure what sort of government O'Farrell will lead.

For example, during the campaign he didn't give any clear indications about intentions to cut the oversized public service to rein in recurrent expenditure.

In fact an O'Farrell spokesman said the Coalition would "need more public servants not less to fix NSW", when confronted with rumours O'Farrell was seeking advice from Max "the Axe" Moore-Wilton, John Howard's sometime Canberra public service cutter.

O'Farrell's government will start as a blank canvas with a blank cheque. We don't know whether the new government will be bold or cautious, swift or incremental, moderate or conservative in its policy considerations. O'Farrell himself is regarded as an ideological moderate, yet many in the party's parliamentary ranks hail from upper house MP David Clarke's hard Right faction.

The new government is as defined by its paradoxes as it is by any consistencies.

There are few incoming ministers with previous experience on government front benches, inevitable after 16 long years in opposition. O'Farrell himself started his parliamentary career when John Fahey lost government in 1995.

O'Farrell continues to use words like "fix" to describe what he intends to do to the public transport system and the health system. The rhetoric is reminiscent of Kevin Rudd's during the 2007 federal election. After he was elected that rhetoric quickly gave way to political reality as Rudd's plans to fix the health system morphed into the more moderate language of "improving" it.

The bottom line is O'Farrell has a budget problem he will need to do something about. Revenue is growing year on year at about 4 per cent but expenditure is outstripping that.

In health alone the yearly cost increases are 8 per cent and health takes up one-third of the entire budget. If O'Farrell is going to honour election pledges without new taxes or blowing the budget, he is going to have to find ways to trim the fat.

However there is a good chance that, contrary to the prevailing wisdom, expectations on the incoming government won't be that high.

As long as the O'Farrell administration avoids being tainted by corruption, scandal and early bouts of maladministration, it will do much better than Labor did in its final term.

And selling that message will be made easier by the dual realities of the dominance in parliament O'Farrell now has around him and the memory of how bad Labor became. Throw in that what's left of the parliamentary Labor Party will be consumed by navel-gazing, and the new government is likely to have things all its own way for a while.

"It was a perfect storm," says former Liberal leader Peter Debnam. "We started the change at the last election, but this term Labor had scandal after scandal."

Not in their wildest dreams did the Liberals think that they would pick up seats such as Campbelltown, Smithfield and Strathfield, all held by Labor with margins of more than 15 per cent before Saturday. The test for O'Farrell will come as he endeavours to retain the support of voters in electorates such as these which voted Liberal for the first time in their lives. That's where delivering on key infrastructure projects will be most important.

The Liberals' ecstasy makes the story of Labor agony a grim one. Labor forced two dozen sitting MPs into retirement to make way for party renewal, yet most of those candidates didn't win their seats, wiping out a generation of Labor talent before careers even began.

In her concession speech on Saturday night the outgoing premier Kristina Keneally declared she would step down from the Labor leadership to allow a new leader to rebuild "unencumbered' by the past.

Labor is expected, however, to elect former union hard man and transport minister John Robertson as its new leader. He moved from the upper house to the lower house electorate of Blacktown at this election, barely holding the seat despite a previous 22.4 per cent margin.

Robertson has the backing of Labor's Sussex Street machine headquarters to lead what's left of the parliamentary Labor Party in NSW. Yet he was the person who blocked electricity privatisation when former premier Morris Iemma and his Treasurer Michael Costa tried to push it through shortly after the 2007 election win. That move led to Iemma's departure and the domino effect of leadership changes in the premiership during Labor's final term after 16 years in power.

Many inside Labor blame Robertson for the "beginning of the end" of the Labor years, as one re-elected MP put it yesterday.

Once in parliament as transport minister Robertson presided over the most problematic portfolio area for the Labor government during its time in power: the policy area that caused the greatest backlash, especially in Labor's heartland. If O'Farrell can deliver on transport improvements, it will expose the failures of the very person charged with rebuilding the shattered Labor brand.

However Robertson isn't solely accountable for everything that went wrong with the government in NSW. There are many aspects which fed into Labor's defeat beyond the problems of privatising power.

On top of the scandals an "it's time" factor was an undeniable element in Labor's loss, even if the size of that loss was increased by more specific failings well traversed during the campaign.

"While the loss was huge and the challenge is daunting," Labor strategist and former premier Bob Carr's long-serving chief of staff Bruce Hawker notes, "history tells us that a well organised and disciplined opposition can make quick inroads." Such optimism will be necessary if Labor is to stay disciplined.

This isn't the first Labor government to lose an election with a massive swing against it. But when the results of other Labor governments defeated in landslides are stacked up against this one, the size of the loss is put in perspective.

In 1988, when the Wran years came to an end under the leadership of Barrie Unsworth, Labor still managed to win 43 of 109 seats. In Victoria in 1992 when the John Cain years lurched to defeat under the new leadership of Joan Kirner, despite nearly bankrupting the state, Labor won 27 of 88 seats. And in Western Australia after the Brian Burke years which landed the former premier in jail, Carmen Lawrence won 24 of 57 seats at the 1993 election.

For Labor to win only 20 of 93 seats at this election will surely leave it out of power for at least two terms. This will lead to a period of introspection. But it is hard to know what Labor will do to change its culture to restore faith among its working-class base. "There will be a lot of focus on personnel, and there are lessons there," AWU national secretary Paul Howes notes. "But we need to focus on ideas. Our working-class base abandoned us because they didn't think we were working for them. These people can come back to us quickly, but the lesson has to be heeded, including by the federal party."

There are two further noteworthy aspects to the NSW result: the underperformance of the Greens and the implications a change of government in NSW will have on the federal political paradigm.

The Greens have again (at state level) fallen short of expectations, as was the case in Victoria late last year. The party was quick to talk up its chances of winning the inner-city seats of Marrickville and Balmain during this campaign, and it gave itself a better than even chance of gaining control of the balance of power in the state's Legislative Council. Yet Labor's deputy premier Carmel Tebbutt looks set to retain her seat and even if the outgoing education minister Verity Firth doesn't hold Balmain, she is more likely to lose it to the Liberals than the Greens.

There is a lesson for the Greens in falling short of expectations at this election, and it isn't just to stop talking itself up in a way that leaves its supporters disappointed even when it secures more than 10 per cent of the statewide vote.

The Greens have been transformed into political insiders courtesy of federal leader Bob Brown's alliance with Julia Gillard, which means the more radical elements of its party are on the radar of voters in a way that they weren't when the organisation was simply a fringe group.

"The Greens don't measure up when placed under scrutiny," according to federal Infrastructure Minister Anthony Albanese who is married to Tebbutt. He notes that the Greens candidates in Marrickville and Balmain have both been local mayors: "That's a great platform for state politics but it also gives people a chance to question their performance."

The selection of damaged candidates such as Jamie Parker and Fiona Byrnes should lead the Greens to be more careful in their preselection processes in future if they want to take advantage of the political climate of the day.

There were question marks over aspects of Parker's business career, and Byrnes made Israel a local government issue.

Federally Gillard is faced with potentially contrasting fortunes from Saturday's result. She will benefit from the removal of an unpopular government. O'Farrell will also give her someone to work with who is moderate by Liberal standards, which could help her paint Tony Abbott as part of the more extreme end of the conservative movement. And voters like balance between state and federal tiers of government, which means another state Liberal government is another reason to keep Labor in power federally.

But there are downsides too for Labor. O'Farrell is committed to opposing Gillard's carbon tax. It won him votes on the campaign hustings and defers blame for cost of living pressures to the federal sphere. And state Liberal MPs in parts of western Sydney and the Hunter and Illawarra regions will give federal Liberal candidates logistical and infrastructure support where the conservatives have otherwise not had it. In modern campaigning that is important.

The political landscape has changed as a consequence of Saturday night's results. O'Farrell is now the most senior Liberal anywhere in the country in the same way that Nick Greiner was after he won the 1988 election. Premier of the largest state in the commonwealth trumps being opposition leader federally on the conservative side of politics where incumbency is always vital to political authority.

O'Farrell now has the authority. What remains to be seen is how he uses it.